In the face of rising costs, charities expect to reduce their headcount

Approximately two-thirds (80%) of charities are looking at cost-saving measures.

The Charity Finance Group (CFG), a non-profit organization, found that more than one third (67%) of respondents expect to cancel expansion plans, such as hiring new staff or introducing new service. Two out of five (40%) say they are likely to cancel their expansion plans.

Nearly 90% of respondents (87%) were concerned about affordability, in light of the increase in employer National Insurance Contributions (NICs), which will take place on 6 April 2025. This is in addition to increases in the National Living Wage and National Minimum Wage.

CFG surveyed 446 charities from various sectors and services.

Many of the respondents plan to freeze pay and reduce recruitment, increase fundraising, apply for grants, decrease charitable activities and services, and raise charges for goods and services that have already been paid for.

CFG says that while these measures may be necessary for sustainability, their impact on the services provided by charities could be significant.

Caron Bradshaw CEO of CFG said: “Since Budget announcement in October, thousands charity leaders and financial professionals have expressed their desperate financial situation once again. I am concerned about the financial stability of the sector, and its ability weather further economic hardship.

They are moving very quickly to try to mitigate the unexpected and sharp rise in operating costs so they can be available for their customers and communities and meet an increasing demand. Many have little left to do after doing everything they could to survive the pandemic.

She warned that the requirement for charities “comes at a cost” to absorb the increase in NICs and urged government to work with the sector to find ways to reduce the risk of closings in the upcoming year.

Bradshaw said: “It’s inevitable that some will reduce services, activities and staff.” This will have a direct impact on those who depend on our sector, which too often fills in the gaps of public services and acts as a safety-net for the most vulnerable members of society.

“The government has a point when it says that the decade of renewal will not happen without our help. We are essential to a functioning society in all its areas. “We believe that the government values us and we understand the hard choices needed. But we also need them to consider and truly understand the impact their economic and financial decisions have on our sector.”

Richard Sagar is the head of policy at CFG. He said, “The increase in employer NICs, and the reduction in the secondary threshold for NI from PS9100 to PS5,000, has been a shocker to many.” These changes, along with the increases in NLW/NMW, have caused charities to recalculate and reassess their plans beyond 2025.

He said that while the increase in Employment Allowance was to be welcomed, it would not benefit many charities and will not compensate for the increased NICs.

He added, “We will work with the government to ensure that the voice of the sector is heard, and that charities receive the support they need to continue making the greatest difference in their communities.”

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