The cost of living crisis demands a Covid-style response

 

Naomi Chapman

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Life is getting more expensive for everyone. In Britain, the official inflation rate is 9.1 per cent. America is not far behind at 8.6 per cent. Across the EU it’s averaging 8.8 per cent.

But it’s worse if you’re poor. The poorest households spend a greater proportion of their income on items for which prices are rising the fastest. Low-income families in Britain for example spend a fifth of their budget on energy, compared with seven per cent for middle-income families. Similarly, in the United States, a low-income family spends twice the proportion of their income on gasoline as the average American family. That means your own true inflation rate if you’re poor will be far greater than what the official statistics would have you believe.

For people already struggling, who have no luxuries they can cut back on, the cost of living crisis sweeping the world is existential. This is why the Trussell Trust gave out 2.1 million food parcels in Britain between April 2021 and March 2022, over 830,000 of which went to children.

This is as big a crisis as Covid, possibly bigger. So where is the mobilisation among funders that we saw at the start of the pandemic?

Of course, governments should do more, but philanthropists should not wait for this to happen. If you’re destitute you can’t wait. For philanthropists, now is the time to get on and give.

Charities proved during the pandemic that they can be remarkably adaptive in a crisis if given the right support. This support will be needed again now. The same factors which make life harder also constrain the charities and volunteers who try to help. A rise in the price of food, energy, and petrol is a big problem if your charity helps feed, house, or transport people. Funders, therefore, need to give more and give flexibly if they’re to achieve any impact.

Here are three ways you can make a difference:

1. Give more and give now.

Inflation is especially pernicious to charities, as it eats away at pre-pledged donations and reserves. So you need to give more if you want your money to achieve any impact. Funders should talk to their grantees to learn how costs and needs are changing and how they can help them adapt.

2. Improve the way you give.

Communicate openly with your grantees and make sure funding is unrestricted to help charities adapt to new needs and build capacity. Simplify your applications so you can get money where it’s needed more quickly. Be flexible on delivery, deadlines, and budgets, as many funders were during the pandemic.

3. Consider whether you need to rebalance your giving portfolio as needs change.

Some charities will be asking for more because their costs have gone up, others because needs have risen, and some because of both. You’ll need to factor this in when deciding how much to give to who. Use data to inform this. NPC’s Local Needs Databank is a good starting point. If you give to a specific cause, coordinate with others to maximise collective impact. Platforms like 360Giving are great for this. If giving to a particular place, work with local governments and community foundations to reach the communities who need your help.

When the pandemic first hit, NPC was quick to respond with a philanthropy guide on how to keep charities serving. Now, as this new cost of living crisis engulfs an already battered sector, we’re drawing upon everything we’re seeing and what we’re learning from the charities and funders we work with to advise on how needs are changing, and the new complexities facing the charities who seek to meet them. Our new guide Confronting the cost of living crisis: How funders can mobilise helps you to understand the pressures facing people in poverty, and how to fund effectively to help charities adapt.

Through the pandemic, we saw big changes in funder behaviour. The experience taught us all the importance of a systemic approach to strategy, more equitable collaboration, sharing data and intelligence, more flexible funding, and putting a social recovery at the heart of policymaking. We will need to remember these lessons today as this new crisis takes hold.

Confronting the cost of living crisis: How funders can mobilise is available at thinkNPC.org.

Naomi Chapman is a consultant at NPC, a think tank and consultancy that for 20 years has been helping funders, charities, and policymakers to maximise social impact.

Tagged in: Funding practice


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