Financial pressures during the cost of living crisis

Use this page to learn about the key trends which may be impacting your voluntary organisation's income and spending.

Voluntary organisations are continuing to face a period of significant financial pressure. Every organisation will be different. These could be some or all of the areas mentioned below. You need to understand how this might impact your organisation.

Costs are rising and will stay high

Inflation is the rising price of goods and services. Currently, inflation is higher than we've had for many years.

Goods and services will continue to increase in price over the next few years at higher rates than before. Higher inflation will mean the costs of running your charity will grow fast.

Learn more by reading the:

• Bank of England’s guides on inflation and interest rates
• Bank of England’s guides on how have prices changed over time

Staff costs are rising

Inflation also impacts your staff who face their own increasing costs of living. Staff may:

• ask for higher wages (increasing your organisation's spending)
• find new jobs with higher salaries (higher recruitment costs).

Currently, pay in the private and public sector is rising at approximately. 5 to 7% on average.

Learn more by reading the Office for National Statistics summary of average earnings (updated monthly).

Interest rates are rising

Interest rates typically usually rise with inflation. Rising interest rates will increase the repayment amounts you pay back if you have loans or mortgages.

Learn more by reading the Bank of England's guides to interest rates.

Donations from the public may fall

The public is also facing rising costs. They may be hesitant to start giving or need to reduce how much or how often they’re giving.

Read the Charities Aid Foundation research which suggests people may reduce their giving.

If these trends impact your organisation, we have guidance to help you decide what action to take.

Read our guidance on updating your budget and cashflow.

To help charities respond to financial pressures, the Charity Commission has guidance on trustees’ duties and decision-making when managing financial difficulties related to the cost of living.

It has particular guidance on what the regulator expects if you experience financial difficulties.

Read and follow the Charity Commission's guidance on the cost of living guidance.