Blog post

Cost of Living: How it’s affecting charitable donations

Jo Moran

January 17, 2023

The last few years have proved to be challenging times for everyone, and it has led to the cost-of-living crisis that we now find ourselves in the middle of. Inflation, interest rates and energy prices are all on the rise, which means that the vast majority of us are now feeling the pinch in some way or another.

This has meant that many households are now tightening their belts and cutting their expenses, and that means that charities are amongst the worst hit.

For further reading, we suggest taking a look at our guidance and support available for not-for-profit sector or if you’re interested in speaking to our Charity Accountants, feel free to get in touch.

Challenges for charities

When the situation in a country declines, it is the charities set up to help those in need who see the effects first. They are the ones who are on the front line helping those who are finding it tough. That includes those who help the homeless, low-income families, children, and even animals. It can mean that charities become overwhelmed with enquiries from those who are in need of help, and many charities are starting to worry about how they are going to manage, with 35% believing their charity may not survive this crisis.

Food banks are currently feeling a huge amount of pressure as more and more people have come to need their help. Those who were already struggling are now being joined by families who are struggling to balance rising energy and housing bills as well as the increased cost of food. They have therefore become reliant on food banks to be able to put food on the table. However, with 80% of food banks reporting that they have been struggling with supply issues, it is easy to see the problems that they are now facing.

In the last couple of years, the way in which charities have raised money has been greatly restricted. The lockdowns that came as a result of the COVID-19 pandemic meant that many of the larger scale charitable initiatives could not take place or had to be done in a very different way, and this meant there was also an impact on the amount of money that they received as a result. Thankfully, the fact that restrictions have been lifted does mean that charities are now able to get themselves out there and start finding new and exciting ways to raise money and awareness.

Many charities and not-for-profit organisations are also aware that the cost-of-living crisis is hitting their day to day lives as well, with many wondering, how they will pay for their ever growing utilities bills and food costs that are simply incurred just by operating. Heating and lighting for shops, shelters and offices are all proving to be more expensive than they can manage.

Charitable donations

The sad fact is that at a time when charities are needed most, the level of donations that they receive tends to go down. When everyone is feeling the impact of changes in their bank balance, they have less disposable income and donations to charities is one of the first things that they cut. According to one study, around 4.9 million fewer people donated to charity between January and April 2022 compared to the same period in 2019.

Some larger charities have reported that those who donate regularly are continuing to do so, but it is becoming harder to recruit new donors who are finding it difficult to commit to adding to their outgoings. Smaller charities, however, are finding it more difficult, and are even seeing the number of donations being made to charity shops beginning to decline.

Charitable donations come in many different forms, and that is not just cash. Many of those who were buying a little extra at the supermarket in order to donate it to a food bank are now feeling unable to continue, and bigger organisations who were making large scale donations are also counting the cost of doing so.

The COVID-19 pandemic brought about a great many changes to our lives, and one of the biggest was the move towards contactless card payments instead of cash. Whilst this helped to avoid spreading the virus and made life more convenient, it has also meant that very few people actually carry cash in their purse or wallet these days.

This has meant that those who have tins and buckets collecting for charity are finding much less is being thrown their way – not because people do not care but simply because they do not have anything with them that they are able to give. As many as 44% of people in Britain have said that the amount that they donate to charity has changed in the last two years, and 18% said that they donate less simply because they do not have cash with them when they are out and about.

Charitable alternatives

Whilst this might sound like a very gloomy picture, there are some positives that are emerging. The British people are a caring bunch, and so even when money is tight, many still want to do their bit to help. In one survey, more than half of people said they would be willing to give to charity in a way that did not involve money. This means that many are prepared to give up their time to help in a practical way, which is something that can always be put to good use.

Many of the big retailers are also trying to do their bit to support charitable organisations and are using their loyalty cards to do this. Many now offer the opportunity for customers to donate the points that they have built up to charity, which means that the charities still feel the benefit without customers feeling it in their pockets.

The sad reality of any cost-of-living crisis is that it increases the demand for the work that these amazing charities do, whilst decreasing that donations that they receive. This has meant that many charities are now stretched further than ever before and are struggling to keep up with the rising demand that they are facing.

Jo Moran Rogers Spencer
Jo Moran

Jo Moran is a Chartered Accountant at Rogers Spencer and has been working with us since 2011. Jo specialises in Accountancy Solutions, Audits and Payroll Administration. Find out more about Jo here.

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