The Budget’s NI hike is setting off fireworks inside UK Charities

SF: The government’s investment in education, infrastructure, and the NHS is undoubtedly a welcome boost. However, the £1.4 billion cost burden placed on the charity sector is akin to lighting a bonfire under service providers, writes Laura Jones, Director of the gunnercooke Foundation.

As Director of the gunnercooke Foundation, supporting over 160 charity leaders nationwide, I witness first-hand the struggles the third sector faces in balancing the books while delivering impactful and essential services. The cost-of-living crisis has already placed huge amounts of pressure on our charity members, with many telling us they are suffering from reduced funding opportunities across the board, whilst in many cases, receiving a huge increase in demand for their services. In 2022, the British public donated £12.7bn to charities, but a huge 69% said they would need to make spending cuts due to increased costs of living.

Standing at almost one-million-people-strong, the charity sector has been filling the gaps in public services for years: it is made up of paid employees, not just volunteers. The recent budget announcement of a hike in National Insurance (NI) contributions will add an expenditure of £1.4 billion to the pot: many charities, both small and large, had not accounted for even the gentlest of rises.

Unlike businesses that might pass on increased overheads or costs to customers, charities cannot do this with ease, and as a result will find themselves with less budget to work with, potentially jeopardising their operations and already stretched staffing levels.

I joined the gunnercooke foundation as Director in 2019, and like our chair and trustees, I have a personal and deep commitment to supporting the charity sector. Via the Foundation, we’ve had several of our members tell us already that their staffing costs will increase by over £60,000 a year as a result of this decision, this comes in addition to the increase in the Real Living Wage. They are also likely to be impacted by increased costs from suppliers in the private sector, who may pass on their own NI increases to customers.  

At the Foundation, we work primarily with small to medium-sized charities, and time and again, the extent of their invaluable work goes unnoticed. Yet, if their services were removed the communities in which they work would suffer greatly.

The feeling on the ground is that the recent budget is a heavy blow, stacked onto already huge pressures on provision. Unfortunately, some of our charity members might not be able to withstand these increases. Many of our charities work in the mental health space and already cannot keep up with demand, while others rely heavily on donations of children’s items which have witnessed huge drops in supply as people can no longer afford to freely give items away.

Our charity leaders are feeling the pinch personally too, with salaries frozen in an already low paid sector. We know from our conversations that this has resulted in a number of charity leaders experiencing significant mental health issues themselves, as they deal with the continual drip and rush of demands and strains on their services.

Much of our work involves supporting charities that operate just outside the public eye. These smaller charities do not have expensive ad campaigns on television, but they have a real, true, and significant impact on their communities, and a real and true struggle in keeping those services going.

We live in an epoch where trauma has become a heightened part of daily life, with conflicts in Ukraine, Palestine, and Syria, to name a few, and the cost-of-living crisis exacerbating stress and hardship. Rising rents and unaffordable mortgages have plunged people into ever more stressful situations, leading to increased homelessness and mental health issues. Against this backdrop, charities support environmental clean-ups, awareness campaigns, musical initiatives, and art projects, all aimed at improving our daily lives. In amongst all of this, are young children and young adults, our next generation.

The wealth of support offered by charities is there to help us when we need it most. If charities cannot afford to operate while we await vast improvements in British society, what will be the outcome for those in need of these services? It is imperative that we recognise and support the vital role of charities in our communities, ensuring they have sufficient resources to continue their essential work and so we implore the chancellor to take a look at the sector in isolation and look at how to help it grow and thrive rather than be squeezed at a time when it is needed most.

Why should we, business like us, and the public support these charities? When we need them, charities are there to support us and the communities in which we live; often stepping in quickly with help where long waiting lists exist elsewhere. Charities are often the first responders, providing immediate relief and support, as seen during the pandemic, the cost-of-living crisis, and during emergencies. Imagine a society without them— that is one very bleak house.

Charities and voluntary organisations are invited to co-sign an open letter to the Chancellor, which is available on NCVO’s website.

Since its inception in 2012, the gunnercooke Foundation has been contributing a percentage of its profits from the legal and professional services firm, gunnercooke, into supporting charities.  Legal, business and tax partners help charities grow, by providing support free of charge. The foundation can assist numerous charities in navigating complex legal landscapes, enabling them to focus on their core missions.