Cost of living and foundations

2 September 2022

As ACF joins forces with other sector bodies to call for an urgent response to the cost of living crisis, Carol Mack, ACF’s chief executive, writes about how foundations are responding.  

Across the UK charity leaders are deeply worried about the level of need they are seeing in communities and their ability to keep providing essential support to respond to the increasing cost of living. It’s clear that only government can act at the scale that is needed, which is why ACF has joined forces with other infrastructure bodies to call for an urgent response

Foundations have their part to play in this too – and it is an important one. Government help may be limited in scope, and charities will likely be hit by falling donations from a hard-pressed public, at a time when other income sources are under pressure. But what can foundations do, when the need is so overwhelming and comes at a time when foundations themselves may be concerned about falling income and asset values? 

Talking to ACF members, some ideas are emerging, which I share below: 

• Think in the long term – one of the advantages of endowed foundations is that they can look at how grants and investments have developed over the past decade, not just the past 12 months. 

• Foundations that can increase their giving are doing this to take account of rising costs and rising need.

• Funders are talking to their grantees about how inflation, increased energy prices, and rising need are impacting on them to understand how they can help. Some are engaging with wider stakeholders too, including potential grantees, to understand their concerns and needs.

• Support grantee organisations to be good employers – don’t inadvertently push down wages or conditions by your own funding actions.

• Consider the impacts of what the rise in the cost of living means for different organisations – eg where energy costs are a greater proportion of spending – and for different groups. For example, it’s already clear that the impact of the increase in energy costs is being disproportionately felt by disabled people and people on low incomes. One of the big lessons from Covid-19 was that, if you do not fund with equity in mind, you run the risk of being inequitable by default.

• Switching to unrestricted funding or full cost recovery grants can help organisations better manage the impacts of inflation, with some foundations also looking at how to increase their multi-year grants in line with inflation. 

• Grant-making processes have a big impact on those you support - be clear about what you are doing (or cannot do) and provide good information to others, including for those thinking about applying.

• Consider collaboration as a way to make your funding go further.

At a time like this many organisations and individuals look to the foundation sector. Our reputation individually and collectively will be shaped by our response at this time. During the pandemic foundations stepped up and won plaudits for the way that they stood in solidarity with the communities and causes that they support. The lessons learned will be invaluable in helping foundations rise to the fresh challenges of this difficult time.  

I know from past experience that foundations will do all they can to step up to the challenges ahead. ACF will continue to support our members as they do this, every step of the way.