How to cut back during the cost-of-living crisis

Inflation is pushing up operating costs for most charities, with even the smallest expenses – from tea bags to paperclips – on the rise.

It’s also chipping away at the value of donations and grand funding. Pro Bono Economics has calculated that a £20 donation in 2021 will be worth £17.60 in 2024, while a £100,000 grant will be worth £88,100 by 2024.

Spiralling energy costs will hit some charities particularly hard, whether they’re keeping the lights on at offices or heating venues for in-person services.

As staff struggle to pay their own bills, some charities will find retention a struggle. And salaries may need to rise if charities want to hold on to talented team members.

Individual giving looks set to decrease. One Charities Aid Foundation survey found that 14% of people plan to cut back on charity donations in the next six months. 

While costs spike, demand for services may go up too. In a recent survey of 10,000 charities by FareShare, three quarters said that demand for their services was up.

It’s no surprise that so many charities are looking to cut costs. Here are our six top tips to get you started.

Automate

Using automated tools can cut hours of manual work, freeing up staff time and budget.

Take a look at your financial processes to check if there’s any unmet potential.

And it’s not just finance that can benefit from streamlining. You can automate countless small-scale tasks. For example, by using chatbots for triaging inquiries from people who need support.

Be willing to make structural changes

Swapping from premium to basic tea bags is unlikely to cut your running costs in half. Instead, take a look at your biggest expenses. Start with your chunkiest projects. You could ask:

1. Is this having the impact we want it to?

If no, begin the process of ethically and thoughtfully closing down this project.

2. Is it delivering value?

The impact may be high, but perhaps you can deliver the same, or similar level of impact, at lower cost. For example, by taking in-person services online or bringing in more volunteer effort.

And you can look beyond specific projects, too. Put all your processes under the microscope.

Consider staffing procedures, cash reserves, budget expense control, and core operating costs. Charity Excellence Framework has a brilliant guide to cutting charity costs, including links to tools you can use to check your charity’s financial health and seek crisis grant support. 

Don’t neglect small shifts

You’re unlikely to save millions by using cheaper printer paper. But small, consistent changes can still add up.

“All our costs have risen and we are cutting costs from the bottom up” says Kirsty Lowe, co-founder of MammaKind baby bank. "Our volunteers are even taking dirty washing home to help reduce our energy bills."

Seek pro bono support

While many companies’ corporate social responsibility budgets are slashed, support doesn’t have to be financial. Even when cash isn’t available, you may be surprised by how much staff time they can offer.

Some companies are experiencing bigger gaps between projects due to expectations of recession and may have more resource than ever to offer in pro bono support.

Harness volunteer power

Volunteers aren’t appropriate for every role, but they can add capacity to your team when used wisely.

Look for projects with clear, separate elements, and room for gradually increasing degrees of responsibility. To avoid demoralising – and costly – churn, check out our tips for how to keep your volunteers happy.

Offering online opportunities can make volunteering more accessible for many people, including disabled people and those with caring responsibilities.

It could also make your charity more appealing to a wider range of time-strapped volunteers and save you money that might otherwise have been spent on travel expenses or refreshments.

Cut unnecessary expenses

You probably regularly review your recurring costs, like outsourced support or software subscriptions. If you don’t, now’s the time to review them with a keen eye.

You could ask:

• What are our office needs? Do you have empty seats now that more people have chosen to work from home? Consider downsizing
• Can we sublease any unused desk space to other charities or companies? 
• Could we negotiate better prices? In some areas, COVID-19 and the expectation of recession have helped to drive down commercial property costs substantially

Cut costs, not morale

You may have to make tough decisions, but don’t let them come at the expense of your staff’s trust and wellbeing. 

Create regular opportunities for staff to ask questions about financial planning, and to share their ideas. Making it easy for people to contribute to improved financial processes could help some people feel a little less anxious and powerless.

If you do have to make redundancies, communicate this transparently. In the absence of clear messages from leadership, misinformation and speculation will quickly fill the void.

Senior staff in UK charities are typically white, wealthier, and more likely to be men. Junior staff are more likely to be women, people of colour, and less wealthy. Consider redundancies and pay freezes through a lens of equity. Why should the lowest-paid staff, who are most likely to be minoritised, take the hit?

Work with senior staff to see if you can agree to executive pay freezes, or substantial cuts, instead of laying off swathes of less privileged workers.

Whether you’re making tiny changes or swingeing cuts, try to send a signal that you value your staff, and you don’t see their wellbeing – or their job security – as items to be scratched off a list of expenses without a moment’s thought.