Charities fear for the future as cost-of-living forces many to cut services

28 November 2022

More than half of charities say they are worried about their ability to survive due to the rising cost of living, according to new Charities Aid Foundation research with nearly 700 organisations across the UK. This has climbed from just over a third (35%) in the six months since April.

Charities are running out of options to continue to meet the high demand for their services- such as providing food, and mental health and disability support - while experiencing falling income and rising operating costs themselves. Only half (49%) of the charities surveyed in November feel confident that they have the funds to meet current demand for their services, compared to 58% in October.

The result is that some charities are cutting back on the services they offer. Almost a quarter (24%) of charities say that they have made cuts to services but now have no room to cut further. 

Around half (51%) of charities are using their reserves to cover their core costs. That is a worse situation than in November 2021 at the height of the pandemic when previous CAF research found that two-fifths (40%) of charities used their reserves to help them through.

Neil Heslop OBE, Chief Executive of the Charities Aid Foundation, said: 

“Charities are running out of options, forcing them to rely on their reserves and cut back on the services they provide. This research provides stark evidence about how the sector is responding to the triple threat of soaring demand, falling donations, and rising costs. 

“Charities are at the heart of our communities and are carrying the weight of the worst effects of the cost-of-living crisis. The Government needs to recognise the critical role that charities are playing to care for those who are most vulnerable in our communities. As a start, these organisations should be placed first in the queue to receive additional support for energy bills from April.”

The research also provides further evidence on the triple threat of factors squeezing the charity sector: 

Falling income: Declining income from fundraising is the primary concern for two-thirds (67%) of charities as households cut back to cover their own bills. 

Rising operating costs: Inflation is driving up running costs for charities. Nearly three-fifths (58%) of charities say their most pressing concern is increasing costs, such as energy. 

Soaring demand: Charities are having to do more with less as an increasing number of families rely on their services. In November, nearly two in three charities (63%) report that demand for their services has increased compared to this time last year, including a third (33%) who have seen demand grow significantly.