The writer is chief executive of New Philanthropy Capital, a think-tank and consultancy
The cost of living crisis in Britain is just as big a threat to livelihoods as Covid-19. Many more people need help, yet charities find it harder to support them as inflation increases their own costs and erodes the value of reserves and pre-pledged donations.
We need the same kind of mobilisation among charitable funders as at the start of the pandemic, yet we’re not seeing anything like the required level of co-ordination or giving. Destitute people can’t wait. For philanthropists, this is the moment to get on and give.
For those in financial hardship the outlook was bleak even before inflation surged. Over 9mn people in the UK live on an absolute low income (below 60 per cent of median levels in 2010/11, once you adjust for inflation).
And although life is more expensive for everyone, for the poorest, for whom money was already tight, the crisis is existential. The Trussell Trust delivered 2.1mn food parcels between April 2021 and March 2022, 81 per cent more than five years ago — 832,109 went to children.
The poorest households spend a larger proportion of their income on food, energy and fuel, where prices are rising fastest. Unlike their better off fellow citizens, there’s not much to cut back on.
The Joseph Rowntree Foundation calculates that low-income families will spend a fifth of their budget on energy alone this year. For those living alone, it’s as high as 49 per cent. Compare that to middle-income families spending only around 7 per cent even on rising energy costs.
Unemployment is not the main cause — and a job may not provide an escape. According to Rowntree data, over two-thirds of poor households had at least one adult in work: this is the worst in-work poverty since records began. Meanwhile, 54 per cent of those receiving universal credit are still in poverty even with the taxpayer’s help. With both work and benefits failing to solve the problem, philanthropists must step in.
The same factors that make life harder also constrain the charities and volunteers trying to help. A rise in the price of food, energy, and petrol is a big problem if your mission is feeding, housing, or transporting people.
Magic Breakfast says its supply costs are up 17 per cent this year already, while demand for its pre-class school meals has doubled. Ark Resettlement says energy bills across its accommodation sites are up £40,000 on last year. These costs are fundamental; cutting spending means cutting services just when more people need them.
Of course, the government could do more and show the same courage it did with the furlough scheme. We will see. But philanthropists must step in.
First, the obvious: give more and give now. Unlike businesses, a rise in demand is nothing for charities to celebrate: you need to give more to achieve any impact. Talk to your chosen charities and learn how costs and needs are changing and help them adapt.
Think about how you can help build capacity. If you have a foundation or sit on a board, simplify applications so you can target money quickly. During the pandemic, 350 funders signed the London Funders pledge to be flexible on delivery, deadlines, and budgets, and to communicate openly with grantees. We need that approach now.
Consider whether you need to rebalance your giving as needs change. Use data: our Local Needs Databank is a good starting point. If you give to a specific cause, co-ordinate to maximise collective impact using platforms like 360Giving. Work with local authorities and local foundations to reach those who need your help.
The pandemic saw big changes in funder behaviour. We need to remember these lessons as this new crisis takes hold.
Source: Economy - ft.com
