Charities and Inflation

Recently I received an e-mail featuring a piece by Paul Ridout of Hunters Law on the effects on UK charities of growing inflation.

Whilst the economic situation certainly doesn’t favour charities, Paul’s assessment that we are entering a period of political and economic turmoil similar to the 1970s seems premature – and a bit alarmist. I lived through the 1970s and 24.9% inflation – somehow we managed, although lasting damage was caused to our manufacturing industries.

Few if any governments create policies which are especially favourable to charities. Most either regard the Third Sector as almost superfluous; or they view the Sector as a source of cut-price (ie. largely volunteer) labour which can deliver projects more cheaply than the Public Sector. One might also mention that charities often deliver projects more effectively too.

Paul suggests that donors will cut back on their giving as inflation increases. This view pre-supposes that people will always look after their own interests first, and those of people less fortunate than themselves second. I have to say that hasn’t been my experience. Most, if not all, the charities with which Minerva Fundraising works are experiencing similar levels of grant-making and giving to the pre-corona virus era. On a personal note, I am taking part in the Great South Run in October as part of a team for the Rubinstein-Taybi Support Group UK – and I am struck by the generosity of those who have donated so far via my JustGivng page.

Paul raises the old chestnut of charity mergers. Whilst there can be advantages in mergers, most people who have spent their time and money setting up a charity don’t want to see it merged with some other charity, even if they are working in similar fields. The better answer to the merger question is partnerships. Partnerships allow small charities to share expertise and experience, and offer opportunities to reduce costs, thereby making the partners more effective in delivering their work and enabling that delivery to be achieved more cost-effectively.

I am not sure that government putting more “resources” (ie. funds) into the Third Sector is the answer: the danger is that charities will become too reliant on statutory funding, as many did in the early 2000s; and, more importantly, that they will cease to be independent of the state and simply reflect the government’s views and priorities.