Cost of Living Crisis and the Impact on the Charity Sector

The cost of living crisis in the UK is having a significant impact on charities across the country.

With rising costs of living and stagnant wages, many people are struggling to make ends meet. This is having a knock-on effect on the charitable sector, creating a 'cost of giving' crisis.

In this blog, we'll explore how the cost of living crisis is affecting UK charities and what can be done to address this issue.

Reduced Donations

One of the most obvious impacts of the cost of living crisis on UK charities is a reduction in donations. With many people struggling to make ends meet, they may not have the financial means to donate to charity, even if they want to. This reduction in donations can have a significant impact on the ability of charities to deliver their services and meet their objectives.

Increased Demand for Services

At the same time, the cost of living crisis is leading to an increase in demand for charitable services. As people struggle to make ends meet, they may turn to charities for support with food, housing, or other essentials. This increased demand can put a strain on charities' resources, making it harder for them to deliver their services effectively.

Staff Recruitment and Retention

The cost of living crisis is also affecting charities' ability to recruit and retain staff. With wages stagnating and living costs increasing, it can be difficult for charities to offer competitive salaries and benefits packages. This can make it harder for charities to attract and retain talented staff, making it harder to deliver their services effectively.

Increased Operating Costs

The cost of living crisis is also leading to an increase in operating costs for charities. With the rising costs of rent, utilities, and other essential services, charities may find themselves struggling to make ends meet. This can make it harder for them to invest in new projects, deliver their services effectively, and meet their objectives.

Reduced Government Funding

Finally, the cost of living crisis is also leading to reduced government funding for charities. As the government faces increasing pressure to reduce spending, it may look to cut funding for charitable services. This will make it harder for charities to deliver their services effectively, leaving vulnerable people without the support they need.

So, what can be done to address the negative impact of the cost of living crisis?

Here are some recommendations:

Increase Awareness

Firstly, it's important to raise awareness of the impact of the cost of living crisis on charities.

Many people just aren't aware of the 'cost of giving crisis'. Driving this point home is one way that the sector as a whole can try to maintain public donations.

It may be more difficult for charities perceived as less crucial or impactful to compete successfully for donations during this period, for example, cultural or research causes. Many charities are directly involved in working with people who have born the brunt of recent economic difficulties or disasters, for example, and these are more likely to win the battle when it comes to public choices on which charities to support.

Improve Funding and Diversify Funding Sources

Secondly, charities need to be able to increase their funding opportunities. Competition for government funding is growing, meaning it's essential for charities to consider diversifying their income. Encouraging more corporate social responsibility initiatives, increasing funds from private donors and evaluating financing options are just some of the ways charities can reduce their reliance on government funding. 

Finance departments are constantly looking at innovative ways to structure, manage and diversify income and funding, as well as managing costs and squeezing maximum value from every pound spent.

Collaborate and Share Resources

Thirdly, charities should collaborate and share resources wherever possible. By working together, smaller charities in particular can bring down their operating costs and deliver services more effectively. For example, joining forces on marketing campaigns can significantly reduce costs at the same time as increasing their reach and exposure.

Sharing best practice, skills and know how can be a huge boost to charities if they are short on staff or budget.

Improve Staff Retention

Finally, good staff recruitment and retention is important for charities to control costs and maximise value. Hiring skilled people will ensure that charities are run as effectively and efficiently as possible, driving more return from their human capital.

Traditionally, the charity sector has attracted staff by offering rewarding work which aligns with people's values, advantageous benefits packages and flexibility. Charities need to keep working on the development of their employer value proposition and employer branding to ensure they remain competitive. Since the pandemic, a greater degree of flexibility has become the norm, meaning charities have to evaluate how else they can compete, not only against other charities and non-profits, but also versus the private sector. Investing in staff training and development, working conditions and providing a fantastic workplace culture are all ways to do just that. 

Boston Hale can advise on talent acquisition and retention strategies within the non-profit sector. Our specialist consultants have specific charity sector knowledge and experience and have supported many organisations in charities, and the wider non-profit sector, with hiring, employer branding and wider talent strategies.

Conclusion

The cost of living crisis is having a significant impact on UK charities and their ability to raise funds in the traditional way, via public donations.

Raising awareness of the challenges - and of their cause, increasing diversity in funding, working on staff retention and attraction and increasing collaboration with other organisations in the sector may help to counter some of these challenges.

What is clear is that in some sectors, the services delivered by charities are needed more than ever. Food banks, housing charities and those tackling the effects of poverty among others are fighting at the front line, trying to alleviate the struggles felt by many throughout the cost of living crisis.

Overcoming these obstacles is essential if UK charities are to continue delivering these vital services to those in desperate need. 

 

If you are looking to hire for your charity organisation or are considering your next move in the charity sector, please get in touch with Catherine, Manager for non-profit hiring across Accountancy & Finance. 

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