Half of charities raiding reserves to meet running costs

Half of charities in England are having to use their reserves to meet running costs as they battle for survival amid the cost-of-living crisis, analysis has found.

Charities in the North of England are the most likely to raid reserves, with 63% of this region’s voluntary sector using this money to meet running costs.

The findings haver emerged in the Charities Aid Foundation (CAF)’s resilience index, based on surveys with charities on how they are being impacted by the cost-of-living crisis. More than 1,300 charities across the UK took part in the survey.

CAF fears the impact of the crisis on charities could worsen as government’s support for the sector to meet energy costs is to be cut from April.

This follows a sustained period of rising demand, falling income and the value of donations eroded by inflation.

Three in five charities are reporting an increase in demand compared to last year and a quarter say this rise is “significant”.

Less than a third have high levels of confidence in their current funding, CAF’s survey also found. More than half (53%) of charities are now concerned they will not survive the cost of living crisis, up from a third (35%) when asked in April 2022.

Seven in ten charities supporting disabled people, children and older people say they are worried about their long term future.

“Many charities face prolonged uncertainty as they continue to deal with rising demand for their help, increased costs and falling donation income – unlike businesses they cannot pass extra costs on to consumers,” CAF said.

“Even as the economic outlook might look brighter than feared, charities are saying loud and clear that they are still facing the squeeze,” added CAF chief executive Neil Heslop.

“The dramatic cut in Government support for energy bills from April will put many charities in an even more precarious position, particularly those who are helping the most vulnerable.

“But they are not businesses and have no way to pass their costs on. The Chancellor should use his upcoming Budget to acknowledge the contribution charities are making – and provide the additional ongoing support they need to face the future with confidence.”