Impact of the rising cost of living on organisations we fund

We asked organisations we fund how rising costs are impacting their work. Esmée's Learning Officer, Philippa Wilkinson, shares a snapshot of what people told us.

At the beginning of 2023, we offered most organisations we fund a 10% uplift on their grant to support them with the rising cost of living. Organisations with an income of under £1m just had to tick a box to access the funding, and we asked organisations with higher incomes to tell us “What effect is the rising cost of living already having, or likely to have, on the work that our grant is funding?”. Our summary of their 214 responses is below.

The main impacts of the rising cost of living

Increased costs

82% of responses highlighted the impact of inflation on their costs.

Key findings:

  • Staff costs were most commonly mentioned (58%).
  • Half (49%) reported a rise in operating costs – with energy costs more than doubling for some organisations.
  • A third (32%) told us that the cost of delivering their programmes has increased.
  • Nine organisations told us they are using or planning to use their reserves to cover higher costs or support staff with cost of living payments.

Increased demand

1 in 5 told us they’re seeing an increase in demand for their services, support and advocacy work.

Organisations told us how the people they support are experiencing greater financial hardship and facing increasingly acute situations. For example, one specialist support organisation is seeing demand increase from a growing number of women in their service user group who are at risk of homelessness and destitution and can't access mainstream support.

And, not only has the level of demand increased, but organisations said that cases are becoming more complex and requiring more in-depth support.

Drop in income

Almost a fifth of responses (19%) told us that their real-time income is falling or harder to generate than forecast.

Key findings:

  • Organisations are finding grant funding more difficult and competitive to access.
  • Funding they receive from central government has not increased and local authorities have less money to spend on their services.
  • Organisations are also experiencing a drop in earned income e.g., from ticket sales and paid programmes.
  • Generating membership income is becoming more challenging – with organisations reporting an increase in cancellations and slower growth of new members.
  • Some are also seeing a decline in unrestricted individual giving income.

Recruitment, retention and strain on staff

11% of responses mentioned the impact on recruitment and retention with workers seeking higher salaries to cope with the increased cost of living. Despite increasing wages and giving staff cost of living payments, some organisations are still not able to keep pace with inflation, or are struggling to compete with salaries in the private sector.

In addition, it’s becoming more difficult to retain volunteers. One organisation told us their volunteers are having to seek additional part-time work to cover their own bills and can no longer give up their time.

Difficulties around recruitment and retention are also affecting activity – with high staff turnover posing a risk to project continuity and impacting stakeholder relationships. The importance of staff consistency when working with young people was also highlighted.

Furthermore, staff are worried about their own rising living costs with some also having to manage higher workloads because of worker shortages and increased demand – all of which is taking its toll on their wellbeing and mental health.

How different sectors we support are being impacted

In the environment sector, food price inflation and the increasing pressure this is placing on household food security is highlighting the need for better food and farming systems. Yet, sustainable food retailers are struggling with higher costs, worker shortages and reduced demand. We also heard how rising costs are making partnership work and collaboration more difficult.

Organisations working in social justice emphasised the disproportionate impact the crisis is having on the people they support, such as women, migrants, disabled people and communities experiencing racial inequity. For example, they told us how migrants with no recourse to public funds are experiencing greater insecurity and risk of destitution.

For organisations supporting children and young people, demand for their services has increased significantly and they are seeing increased anxiety among young people. Organisations also reported that the young people they work with are facing additional financial barriers to participation and becoming harder to engage.

In the arts sector, rapidly rising utility bills, coupled with a drop in earned revenue, are placing venues under increased financial pressure. Organisations are finding audiences have less disposable income to spend on arts and cultural activities, and private hire clients have less money to spend for events. We also heard about the impact the crisis is having on freelance artists, particularly those from communities underrepresented in the sector.

How are organisations responding?

Some are providing advice or have created dedicated cost of living resources for the people or organisations they support. For instance, they’re facilitating debt advice surgeries, introducing budgeting workshops, and infrastructure organisations are producing resources for the sector.

They’re also providing bursaries to ensure activity remains accessible to people experiencing increased financial barriers, providing food, and covering transport costs to ensure the most vulnerable and marginalised can take part.

And some organisations are changing and adapting the focus of their campaign work. For example, campaigning for emergency funds and measures to support people being most adversely impacted by the crisis. Organisations are also looking at changes to their business and delivery models to ensure they remain viable, or to make programmes and services more accessible​.

Some said they are either having to expand, or are considering expanding, their work to meet the increased demand.​ Or conversely, they’re being forced to scale back certain activities thereby potentially reducing their ability to achieve project outcomes.

Let us know what you think

If you'd like to share how the rising cost of living is affecting your organisation, we'd be grateful if you could complete our short anonymous survey. Alternatively, if you have any questions or would like to share your feedback by email, please email: learning@esmeefairbairn.org.uk.

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