Philanthropy

How philanthropy can help in today’s cost-of-living crisis

Oct 26, 2022

Two leaders of the UK’s non-profit community share three ways you might make a difference now.

When prices rise—whether it’s for food, fuel, heating or equipment—the most vulnerable in our society suffer.

Today’s cost-of-living crisis puts additional pressure on often already-stretched charities and philanthropic initiatives, who are faced with rising costs and a more difficult fundraising landscape.

What might funders do to support charities and the social sector during this challenging period?

In this briefing note developed from conversations with Rosemary Macdonald, CEO of UK Community Foundations and James Banks, CEO of London Funders, we shed light on the obstacles that charities are currently facing and propose some practical approaches that philanthropists can consider for their existing giving arrangements, or new initiatives.

Keep communicating

First and foremost, healthy communication with the organisations you work with continues to be of utmost importance.

Implementing trust-based philanthropy reflects a commitment to building relationships between funders and organisations based on transparency, dialogue and mutual learning. Reach out to the organisations you support to understand the issues they are facing now, and what they anticipate becoming difficult in the future. Aim for open and honest conversations so organisations can share their concerns and help you to understand where increased funding might be most useful.

Listening to the communities you are working with is crucial; they are best placed to advise on the reality of what is working and where more is needed. Both Rosemary and James reminded us to be realistic about cuts to the services and the hard decisions that charities will have to face as they seek to continue operations in these conditions – many will have to stop delivering at the level they were, and at the calibre they were operating at. Open communication with the organisations you partner with will help you to support them through these challenges.

Be flexible

During the pandemic, there was a significant rise in unrestricted funding.

James feels that this has broadly led to healthier relationships between funders and fundees. We would encourage philanthropists to consider a meaningful unrestricted element in any new grants and it may also be worth considering decreasing the constraints you have on existing grants. Keep in mind that onerous reporting requirements and financial restrictions can put pressure on the core work of a charitable organisation.

As operating costs rise, communication with grantees about the impact inflation is having on their ability to carry out their work—particularly when multi-year grants are concerned – is important. Rising costs may be impacting organisations in ways you hadn’t considered – for example those that rely heavily on volunteers, or product donations, are likely to see reductions in both.

The impact of the cost-of-living crisis will be long-term, Rosemary notes, and so embedding flexibility in grants will be central to thoughtful grant-making going forward.

Take a long-term approach and have a willingness to learn

Tackling the most entrenched problems in our society and supporting our hardest-to-reach communities is far from simple and can require risk-taking and innovation. Rosemary highlighted that funders should also be considering investment into new ideas and directions, whether that’s encouraging research and development, or backing an ambitious pilot program. Furthermore, collaborating with others – again a trend that we saw during the pandemic – can create opportunities for funders to work together to innovate and create long term impact.

James reminded us that in this fire-fighting context we should also not lose sight of the ultimate goal of your giving—be that poverty reduction, improved educational outcomes or another focus. Innovation should be encouraged with an awareness for the ultimate aim of your philanthropy, and it is clear that both the pandemic and the current environment are exposing and exacerbating inequalities and injustices that already exist in our societies. It’s a good idea to go into conversations with grantees with an open mind and a willingness to learn. Listening to the communities that you wish to serve is vital.

We are here to help

Time, a willingness to learn, combined with financial means, can lead to a powerful philanthropic contribution. Based on our experiences supporting clients’ philanthropic visions across the globe, we have seen that there can be nothing more satisfying than knowing that you have improved the lives of people or the health of the planet.

J.P. Morgan Private Bank is committed to helping you enhance your philanthropic impact by offering advice, thought leadership and learning opportunities across our global network. To learn more, we encourage you to contact your J.P. Morgan team.

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