How to talk to funders about the cost-of-living crisis

As every charity knows all too well, it’s getting ever-harder to meet the soaring demand created by the cost-of-living crisis. As costs rise and high inflation erodes the value of reserves and pre-pledged grants and donations, charities nationwide are being forced into impossible choices.  

In this context, we should all be regularly talking to our existing funders and donors. People who already support your work are the ones most likely to carry on supporting you, so keeping them well informed and feeling valued is crucial. At NPC we’ve been advising philanthropists on how to confront the cost-of-living crisis, and we want to help charities talk to their funders about the impacts of rising costs on their work. 

What funders and major donors will want to know 

Changes to service design 

How are you are adapting programmes? Are you pausing some work to consolidate resources? Or are you launching a new activity to meet new needs? Explain why you’re making these changes and how they will have impact, invite questions and share opportunities to learn more. 

Changes to costs 

Are you paying your staff more following the rise in the Real Living Wage? Has a key resource for your charity gone up in price? Or is there a big upfront cost to setting up a new service to meet new needs? Don’t downplay this. Be upfront about the additional costs and how this could affect your capacity for impact. 

Changes to income 

Have you had to decide not to renew a public sector contract? Are you expecting a major grant to not be renewed? Or are you seeing a sustained drop in public donations? Again, be open about this. Many funders want to understand the situation their grantees are in. 

Challenges around recruitment 

Are vacancies not being filled? Is staff turnover higher than usual? Are fewer people volunteering? Do you need to pay people more to recruit and retain the people who run your services? If so, funders need to know this. 

Changes to demand 

Have other services in your area closed? Or is the cost-of-living crisis having a disproportionate impact on the people and communities you work with? You could use our Local Needs Databank to help underline these challenges, or a case study from among your users that helps explain the situation. 

Being honest about the challenges  

It can feel daunting to be honest in conversations with funders and donors when times are hard, but your funders and donors know that these challenges exist and will want to know how you are adapting. You are not alone in finding circumstances difficult. Clear and open communication is a sign of a well-run charity. 

Where possible, highlight very specific examples of the challenges you’re facing and the changes you’re having to make. Ground the trends and changes you are seeing in numbers, so it becomes tangible for those who do not know the day-to-day reality of your organisation. While some quotes from those you support can add a personal sense of the challenges you are facing, many funders will be making difficult decisions with limited resources, so quantifiable data will make you stand out. If you can, offer to speak face to face, online, or by phone about these challenges in addition to a written update.  

Not every funder or donor will be able to give more money right now – but some will. Those who can’t give more will still gain a better understanding of your work and a stronger relationship with your charity. 

For further guidance on how charities should adapt to the cost-of-living crisis, see the How should charities adapt? section of our guide for funders.