How to freelance in the charity sector

The pandemic has dramatically altered the charity employment market in a raft of ways.

 

While some charities have looked to reduce their workforce to balance books, others have looked to invest in in-house expertise, particularly in tech and online fundraising roles.

 

Another impact of the health crisis has been for more charity workers to consider freelancing. A desire to achieve a better work/life balance is among the chief drivers of this gig economy among charity professionals.

 

The move to remote and hybrid working amid the COVID-19 pandemic has also shown many workers that they do not need to be tied to an office to achieve job satisfaction. They can also enjoy their work by travelling to different clients’ offices and working at home.

 

Latest figures for 2021 show that there were 2.3 million freelancers in the UK and this is set to escalate in 2022 as more consider working for themselves.

 

Here we examine some of the key points to consider when becoming a freelancer in the charity sector.

 

 

Benefits of freelancing

 

Being your own boss is a major attraction for those considering freelancing. There is considerable freedom in setting salary and holiday time.

 

For those with childcare commitments, such flexibility is key to managing a demanding weekly workload, both professionally and domestically.

 

Another key benefit is the range of work and clients to work for. This expands charity professionals’ experience and knowledge. This is also a major benefit for clients, as freelancers can use new skills across their client portfolio.

 

 

Risks of freelancing

 

An obvious risk is where the next payment will come from without the security of an in-house salary.

 

In addition, charities often must cope with short-term funding, with money to fund roles appearing and disappearing on a yearly basis. This short-termism in funding can be particularly detrimental to freelance budgets, which can be cut because of money from a Foundation or government department drying up.

 

A top tip for freelancers is to shift their mindset to how they pay their bills and meet other financial commitments. Freelancers will face annual tax liabilities, rather than this money being deducted each month.

 

To avoid the risk of owing tax, freelancers are advised to save around a quarter of their income each month, if possible, for potential tax payments.

 

Another financial tip is to mitigate against sickness, injury or simply commissions drying up, by saving for a rainy day. Freelancers are advised to always have between one to three months’ salary in reserve to ensure they can cope financially should the worse happen.

 

 

Limited Company versus Sole Trader

 

When setting up as a freelancer, charity professionals are urged to consider whether they will be a self-employed sole trader or a limited company. There are pros and cons for both. For example, sole traders have less paperwork but carry personal risk, such as debt. They can lose personal assets should things go wrong.

 

Meanwhile limited company freelancers can be better protected from risk. Also, their tax arrangements can be more efficient by accessing better tax rates. However, they also face more paperwork and legal responsibilities, including having their company’s earning made public via Companies House, which may not appeal to all freelancers.