On the day that I am writing this, the headlines all tell of a 40-year high in inflation. Driven by soaring energy costs, inflation in the year to April was 9%, according to ONS data. This compares with 7% in March.
The day before, there were warnings that school dinners, which are so crucial to many young people and their families, could reduce in size due to the increased costs of ingredients. Over the coming days, weeks and months, similar headlines on the return of inflation and its impact on the cost of living will be commonplace. For many people and families, this impact will be devastating.
As various articles in recent editions of this magazine have pointed out, inflation is a major issue for charities too. Many will see an increase in demand for their services. At the same time, they will face higher costs, lower donations as people’s disposable income shrinks, and pressure to increase wages to help their own staff through the cost-of-living crisis. This is a very difficult position to be in.
Some of these pressures (increased demand, lower levels of income) seem to echo the situation during the lockdowns. However, in this crisis there won’t be the same level of government support. There won’t be furlough, bounceback loans etc.
So, could inflation be a worse crisis for charity finance than the lockdowns were?
It is perhaps a little unfair to compare the two situations, despite some surface similarities. Nor should we downplay the impact of lockdowns on the charity sector and on wider society.
In this issue, we look at a study of the financial impact of Covid-19 on the sector, and analyse the signals that it is leading to increase in small organisations merging into larger ones.
Talking to people in the sector, there are worries about the long-tail of the impact of the pandemic too. Many charities were able to effectively hibernate during the coronavirus crisis, thanks to furlough. The real financial pain may only be felt once they re-emerge into the light.
Certainly, the inflation-driven cost-of-living crisis comes hot on the heels of the pandemic, meaning the turbulent and difficult times will continue for some time to come. The resilience of charities will continue to be needed – perhaps more than ever.
Tristan Blythe is the editor of Charity Finance