Why funders should help charities pay the real Living Wage

In this guest blog, Marina Ageyeva, Programme Manager at The Living Wage Foundation, shares why funders should help charities pay the real Living Wage. Opinions are the author’s own.

As the cost-of-living crisis intensifies, funders must support their grantees through an increasingly challenging context. Many charities, like food banks and social care providers, are on the frontline of responding to the ever-changing circumstances, whilst also bearing skyrocketing prices themselves. Donations are under pressure and the real value of their income is being hit hard by inflation, at a time when they are facing unprecedented need for their services. Many charities are now worried about their ability to deliver their crucial work. At the same time, funders are also increasingly worried about falling income and asset values. 

Given these pressures, wages can be a sensitive subject to bring up. While leaders broadly agree on the importance of paying staff a dignified wage that covers life’s necessities, the realities of many organisations’ budgets mean that real-time cost-of-living increases can be challenging to implement.  

The Living Wage campaign is an independent movement of businesses, organisations, and people who believe a hard day’s work deserves a fair day’s pay. Employers choose to pay the real Living Wage voluntarily – it provides an ethical benchmark for responsible pay.  

The real Living Wage is the only rate independently calculated to account for life’s essentials. This includes the ability to respond to emergencies and save for a rainy day – a necessity which will be crucial for low paid workers over the coming months.  

Even before the cost-of-living crisis, charities often had to overcome multiple barriers to paying the Living Wage. These included: 

• Juggling long-term financial planning and the short-term nature of much funding.  

• A resource-intensive fundraising cycle, which often leaves little space for staff development. 
• A shift to the commissioning of services, which many organisations felt led to a ‘race to bottom’ when applying for funding.  

Nonetheless, there are over 3,000 charitable and third sector organisations accredited as real Living Wage employers who have been providing their low paid employees with a year-on-year commitment to a wage that secures a dignified life.  

They do so for a good reason: low pay is inextricably linked to many of the issues charities seek to solve. From mental and physical health to employability and inequality, in-work poverty continues to contribute to the multiple disadvantages that the charitable sector exists to address. Overcoming this contradiction in many organisations’ missions is vital to reaching their goals. Paying your staff the real Living Wage should be part of your response to this crisis.  

Data emphasises the importance of fair pay in the third sector. Recent research by the Living Wage Foundation highlighted the problem of low wages within the sector, showing that 14.1% are paid less than the real Living Wage. Crucially, this research demonstrated that low pay in the third sector exacerbates existing inequalities. For example, jobs held by women are more likely to be low paid than men’s (16.6 per cent compared to 10.3 per cent). Equally, certain racialised groups face a heightened risk of low pay, as do disabled workers. The research is unequivocal: the real Living Wage must be at the heart of holistic solutions to these societal problems, including low pay and in-work poverty.  

The landscape might be challenging, but funders and charities have proved through previous crises, including most recently in their coordinated responses to Covid-19, that by working together we can overcome challenges to paying a fair wage. The rapid growth of the real Living Wage movement, which has returned over £2bn to the pockets of over 400,000 workers, demonstrates the impact we can have when we work together. That’s why at the Living Wage Foundation we are working with over 60 Living Wage Funders to explore the drivers of low pay and jointly build a road map to addressing it. Tapping into the power of the network, Living Wage Funders can use their influence to champion the real Living Wage among their grantees and other stakeholders. Funders interested in finding innovative ways of supporting their grantees through the cost-of-living crisis and addressing working poverty, are invited to join the Living Wage Funders scheme.  

The Living Wage Foundation are hosting a Living Wage Week event on Friday 18 November for funders working to end in-work poverty to explore responses to the cost-of-living crisis and practical steps funders can take to address low pay at this challenging time.