Businesses across the country are recognising their responsibility and role in supporting communities through non-profits. Our recent survey of UK ESG leaders revealed that 89% of businesses are actively giving to non-profits.
These leaders know that non-profit giving is an important tactic in successful CSR and marketing strategies. They invest great efforts crafting clever campaigns that can result in big PR opportunities. But not every giving campaign comes with big headlines. Sometimes we give just because we know it’s the right thing to do.
With the Cost of Living Crisis hitting the country hard, and mounting economic pressures for nonprofits, it’s vital to keep them from going bankrupt by helping cover their core operating costs.
The current state of non-profit operations
The last three years have been incredibly tough for non-profit organisations and for the people who turn to them for support. Just as we got through the worst of the pandemic, the cost of food, fuel, and electricity started to rise.
The Cost of Living Crisis has caused a huge surge in operating expenses over the last year, putting charities in a bind. Budgets that were already stretched must now go even further. And traditional avenues for funding (like grants and individual donations) are drying up.
We polled 4,000 non-profit and community group leaders to better understand their current realities. 82% report needing funding more than anything else. And the majority say that this need has increased substantially since last year. Hazel East, Community Arts Manager at Holborn Community Association, describes the situation:
[There’s a] combination of hugely increased overhead costs (energy, materials for activities) as well as more people needing our support and much larger pressures on traditional funding sources such as grant funding as needs rise across the sector. More than ever businesses can play a huge part in ensuring that the doors stay open and our activities can continue for vulnerable members in our community.
According to Charities Aid Foundation, more than 80% of non-profits expect to struggle with increased utility costs for their own buildings. Many must dip into reserves just to cover operating costs.
ActionFunder user Tony Harrowtown shares the challenges faced by his non-profit organisation.
Electricity and gas rise [are major factors at play]… The cheapest 1 year fixed price is [now] £11,500 per annum (£19,000 variable) minus any government support. The best case scenario is a bill of £7-8k. 20 years of savings will be wiped out in 2 years.
This example illustrates why nearly half of non-profit leaders are concerned that demand for their services will significantly exceed their capacity this year. With sky-high costs that are still rising, they simply can’t afford to cover their core operating expenses without making some cuts—to staff, services, spaces, etc.
With community need at an all all-time high, reduced output from these organisations will be catastrophic for society. Food banks, mental health services, homelessness charities, job services, and others are vital for many people’s survival.
It’s time for the private sector to rally and help non-profits keep the lights on! If your business wants to make a positive impact, supporting non-profits with core costs is a powerful action you can take.
A look at non-profit operating expenses
People often forget that running a non-profit comes with many of the same costs as running a for-profit business. This means that they have core costs to cover just to be able to serve the public.
Non-profit operating expenses include:
- Rent and building fees: Non-profits often lease building space, whether for offices, storage, or to provide public services (like shelters or food kitchens). All of these buildings have associated rent, maintenance, and utilities costs.
- Insurance: Like for-profit companies, non-profits must also have various types of insurance. This includes employers’ liability insurance (even for volunteer staff), public liability insurance, and (in some cases), trustees’ insurance.
- Staff: While non-profits are often powered by volunteer support, they do have some employee overheads. About 20% of the people working in non-profits are paid staff that come with salaries and benefits.
- Supplies: Depending on what they do, every organisation needs different supplies to provide service. Food banks need food and paper supplies; community gardens need seed, fertilizer, and flower beds; housing shelters need beds, linens, clothing, and personal care items. The costs of these items are rising fast with inflation.
Support local for the biggest impact
If your business wants to have the biggest impact possible, focus your support on local non-profits and community groups.
Why? There are two main factors at play here.
- Smaller organisations have lower administrative and operating expenses, so more goes to community action.
- They’re also known for being more resourceful than large non-profits.
Put simply—local groups will make your money go further than a large national or global charity.
It’s important to emphasise just how significant the impact of these types of donations can be. What may perhaps be perceived as a relatively small sum to a business may be transformative to a local community group. In terms of ‘bang for your buck’ – the value of a pound and the social impact that even a £3,000 donation can have is often far beyond what one might anticipate. – Muireann Meehan Speed, Oxford Mutual Aid
Local groups need your backing more than ever. They’re particularly vulnerable to surviving the Cost of Living Crisis due to smaller reserves, less financial buffer, and fewer resources to explore new funding sources. And they can have the biggest impact with the least resources, so you can empower them with relatively little money.
There are hundreds of local non-profits on ActionFunder that could benefit from your support. Learn how to start a fund to help a non-profit in your community.