UK charities feel post-Covid pressure as cost of living crisis hits hard

It is a sign of the difficult circumstances in which many people now live that at the Cedarwood Trust community center in the town of North Shields, in the northeast of England, business has never been so buoyant.

The number of people using the Meadow Well housing estate facility has tripled during the Covid-19 pandemic, and the cost of living crisis has inflicted a new wave of economic suffering on people already struggling to pay their food bills and of energy.

As a result, the Cedarwood center is now a lifeline for moms and toddlers using the free early learning center, or residents subscribing to a ‘community pantry’ stocked with surplus supermarket food. On the day the Financial Times visited, there were six new listings alone.

But growing demand for services means rising costs, and charity groups warn that the voluntary sector now faces unprecedented pressure: rising prices, falling donations and inflation eroding the value of pre-existing grants and contracts, all as the demand for their services. to skyrocket.

For a pensioner like Marion, 68, a retired civil servant caring for a 15-year-old grandchild who has just been told her energy bills will double from £120 to £240 a month, The role of the pantry cannot be overstated.

“Everything has gotten so expensive it’s just ridiculous,” she said after paying £4 to select a fixed number of items. “Every time you go shopping the prices are higher and higher, some things have doubled. This place is just such a help, it’s really a godsend.”

Wayne Dobson says it will be a battle for Cedarwood to meet anticipated demand © Ian Forsyth/FT

Cedarwood chief executive Wayne Dobson said that, like any business, it faced steep cost increases, but unlike for-profit companies, it could not pass those increases on to its customers.

Over the past year, the monthly ingredient bill at Cedarwood’s catering academy has risen from £1,000 to £1,500, while electricity costs have risen by £300 a month since April. Yet the value of the three-year contract with the local government to provide these services has been fixed in cash terms in 2020.

The financial pressure at Cedarwood is felt across swathes of the voluntary sector, which has grown rapidly over the past decade: it now employs nearly a million people and plays a growing role in providing a frontline community support.

Inflation also weighs on the real value of charitable donations and direct debits. Calculations by Pro Bono Economics, a charity providing economic expertise to the sector, have estimated that a grant of £100,000 in 2021 will be worth £88,100 in 2024.

Donations are also down. Research for the Charities Aid Foundation, an advisory group, found that 60% of people planned to cut discretionary spending, with 2 million fewer people donating to charity in February 2022 than the long-term average.

With larger grants now harder to come by and costs set to rise further, Dobson, who is already juggling pots to maintain his early learning center, said without further intervention it would be a battle for Cedarwood to respond. to expected demand.

“It will reach a point where we won’t have the funding to support the number of people who seek our services, and that means the people we rescue from the brink of crisis, tumble into a full-fledged crisis,” a- he declared. .

Bistro chef Michael Brown serves roast dinners at the Cedarwood Trust © Ian Forsyth/FT

Lindsey MacDonald, chief executive of Magic Breakfast, which delivers meals to schoolchildren across the country, said the organization had doubled the number of schools it served during the pandemic and, subject to resources, expected until that number doubles again.

“Maintaining our supply is going to be a challenge,” she said, urging the government to commit £75million to fund breakfasts. “We have several pressure points – rising breakfast food costs, rising staff costs and labor pressure, which understandably makes it difficult for us to compete for talent.”

The cost of living crisis comes at a vulnerable time for a voluntary sector that had depleted its cash reserves during the pandemic, according to Alex Farrow, networking manager at the National Council of Voluntary Organizations.

A Charity Commission survey found last October that a third of organizations expected to generate less revenue from fundraising in 2022, while nearly two-thirds anticipated “a threat to the financial viability of the ‘charity’ next year.

The NCVO is urging the government to produce a package of supports for charities, including deferring value added tax payments, offering matching funding to encourage donations and helping local government increase donations. existing contracts to keep pace with inflation.

“Demand is growing at a time when charities are facing falling revenues and rising costs. We need to see measures to alleviate the immediate costs of charities, encourage public giving and establish pathways to long-term funding,” Farrow said.

The Treasury did not respond to a request for comment.

Across the River Tyne from South Shields, at Gateshead Aged Assembly, a community center for the over-50s that sits in the middle of three of the country’s poorest neighborhoods, there is first signs of a tightening funding environment.

Ukulele players practice at Gateshead Older People’s Assembly in Gateshead © Ian Forsyth / FT

GOPA recently received an email from a local charity reluctantly informing them that they could no longer provide their £15,000 annual contribution due to a 75% drop in income following the Covid-19 pandemic.

The foundation noted that it was a bad time to withdraw funds, as winning grants had generally become “more competitive”, with many having less money to give away.

The loss isn’t existential for GOPA, but comes as demand for the center’s subsidized voice, music and exercise lessons has increased more than 40% since the pandemic began, according to chief executive Craig Bankhead.

“We’re asking for more and more grants so we can make more stuff for free, so people don’t feel like they have to cut classes,” he said, adding that GOPA had just started. to open its own food surplus program in supermarkets.

Thankfully GOPA’s finances are strong, but Clare Mills, policy director of the Charity Finance Group, which has more than 1,400 charities among its members, has warned that a growing number of organizations are under threat after running out of reserves facing the Covid-19 storm.

“I don’t think we’ve seen the full adjustment yet,” she said. “Over 40% of charities have no reserves, and we know that casualties don’t occur at the time of a financial crisis, but often 12 to 18 months later when reserves are depleted and people l ‘call a day.’

About Nancy Owens

Check Also

Alphabet director warns skills shortages could hold back economy as UK vows to become a ‘global tech superpower’

Saturday, June 18, 2022 12:26 PM Alphabet’s chief financial officer, Ruth Porat, has warned that …