Living Costs: The Impact on Charities

Felton Fundraising’s Director of Fundraising, Richard Felton commented on the impact on the sector. “As the cost of living increases it will inevitably have an impact on operational costs as well as charitable giving across the board. Any rise in inflation tends to impact regular giving by individuals. Meaning all charities will be impacted to some degree as the cost of goods and services rise. In effect it devalues what a charity can achieve with the same amount of income. It will probably be the case that the larger charities will be impacted more as their overheads are much higher. Charity board members and trustees need to be even more vigilant and prepare for what could be tough times ahead.” 

Which Charities Will Be in More Demand?

During a crisis of such magnitude, ‘in kind’ donations such as food for foodbanks will most definitely feel the impact. As the cost of food goes up there will be even less donors in a position to afford the contributions. Homeless charities will struggle to keep pace as families and individuals lose their homes as a result. Animal charities will also see an increase in the need for supporting pets when owners are unable to afford food and vet bills.

According to the Citizens Advice Bureau (CAB) debt will be a big struggle for many people, particularly single-parent families. They will have to contend with much more stress and strain as the cost-of-living crisis starts to bite even more. In a recent survey conducted throughout England and Wales of 280,000 individuals who contacted the CAB, ‘a staggering majority (88%) owed money either to the government or on essential bills, with £284m owed to  creditors.’ To help, the charity is urging the government to bring forward a package of support to help people with their bills. Learn more…

What Should Charities Be Planning For?

Wage Increases

The rise in inflation and the impending rise in National Insurance rates from April 2022 means that one of the largest internal concerns will be the need for an increase in staff wages. The recent NCVO almanac found ‘that staffing costs account for 37% of total charity sector expenditure’. To accommodate the changes, charities will need to ‘increase wages by 8.8%’. It’s therefore important that charities start to look closely at their wage bills and their internal structure.

Donations Inevitably Will Decrease

As donors start to tighten their belts, there is a likelihood that charities will also see a change in their historical donations via direct debit. Yearly projections through such channels are likely to dip. Discussions will be needed regarding these estimates of what services cost to deliver as inflation continues to impact on monthly contributions. This will also unfortunately be seen across the board for fundraising campaigns once again.

Grants & Reserves Will Devalue

Trustees will need to consider that recently awarded grants will devalue. For example, a grant of £100,000 per year in 2021 will be worth £6,000 less after accounting for inflation. This decrease will need to be a serious consideration for financial decisions moving forwards. The extra worry is that money held in reserve could also be at risk of losing value. Further talks should be held to ensure investment strategies align with the level in reserve.  

Our message is to be proactive, plan and react to the changes in demand for both the services needed and operationally. Look at sustainability rather than growth and expansion. Keep an eye on all aspects of your fundraising portfolio and where possible spread the risk evenly. Don’t become over dependent on one source and invest in developing in house fundraising knowledge and skills. 

If you’re a charity in need of guidance and support, we are here to help through our Trust Fundraiser coaching and mentoring service. Make the most of our internal resources and experience. Get in touch to find out more. Complete the form below or email us at info@feltonfundraising.co.uk.

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