4 ways the cost-of-living crisis is hitting hardship charities

How are charities that help people with the cost of living dealing with a cost-of-living crisis?  

We spoke to 58 organisations working to tackle financial hardship, who received grants from our Open Philanthropy programme earlier this year about the challenges that they’re facing.  

They told us that they were facing increasingly limited capacity for: service delivery and core needs, challenges securing adequate funding, rising costs, and were concerned about an inability to focus resources on strategic work. 

Limited capacity for service delivery and core needs 

Many funded charities reported soaring demand from service users, with waiting lists growing. Some also highlighted that ‘mainstream’ financial hardship support was not accessible for users with specific language/access needs, increasing demand for specialist services funded by the programme.

But it’s not just the case that projects need more resource—charities need core investment too. Some of our grant holders spoke about how growing services had led to a need to manage more staff and volunteers, changing the culture of the organisation, and putting strain on processes that were designed for a smaller charity. 

Challenges securing adequate funding 

Grant holders commonly reported falling donations (both financial, and in kind) and increased competition for the open funding opportunities that still exist. In response, many are continuing to try to diversify their funding streams and seek new ways to continue providing their services to those in financial hardship. 

Perhaps as expected, many mentioned that finding funding for core costs was becoming more and more difficult. The Open Philanthropy grants were unrestricted, and because of this, one organisation shared concerns about the sustainability of their work now that the funding was complete. As a one-off fund, we couldn’t offer multi-year or transition funding for those coming to the end of a grant, but where this is possible, funders should consider it.  

Rising costs 

Charities highlighted that costs were rising not just because of increased demand and high inflation, but also because of the increased complexity of financial hardship. Poverty is often driven by multiple factors, and as a complex problem often requires complex solutions that are resource intensive for charities.  

Inability to focus resources on strategic work 

Charities were concerned about missing out strategic work, such as centring lived experience within service design and delivery. As expected, given that the Open Philanthropy panels decided to prioritise user-led organisations, work on involvement was front of mind for funded organisations.  

But facing financial pressures, many expressed frustration that they couldn’t dedicate sufficient resources to harnessing the insight of lived experience without retraumatising service users, to ensure that services are relevant and accessible for users.  

Give more, Give better, Give differently  

It would be remiss not to mention that the organisations we spoke to also shared with us details of significant achievements over the last six months—including expansion of services, collaboration with other organisations within and beyond the charity sector, and significant impact on users.  

But the challenges they reported are frustratingly similar to those we anticipated when we published our original guidance for funders responding to the cost of living crisis. And so, our recommendations remain the same:  

• Give more: uplifting the grants you award in line with inflation and increasing payout ratios where possible. 
• Give better: reducing the restrictions on the grants you provide and increasing flexibility in your processes. 

• Give differently: targeting your grant making where the demand is soaring, through organisations that are best placed to reach the communities you are looking to support.  

If you’d like to become more open in the way you make grants, and reach different organsiations with your funding, read the Open Philanthropy toolkit.  

You can also read more about the Open Philanthropy programme, and see our full list of grantees.