Sometimes it feels like it all started with lettuce.
Back in 2022, soaring prices of the humble iceberg lettuce became the unlikely symbol of rising inflation. The not-so-perfect storm of supply chain issues, floods, international pressures and Covid began to wreak havoc, and we’re not out of it yet.
So, as inflation continues to hover around 7%, how can you make sure your project budgets and funding requests are accurate?
We spoke recently to Simon James (Partner, Advisory and Assurance) at chartered accountant and advisory firm, HLB Mann Judd, about this very topic.
Simon’s advice underpins one of the big reminders we always give here at team SG: now more than ever, relationships with your funders are crucial.
“Rising inflation is not a secret – philanthropists and funders are aware of these challenges facing organisations. Right now, those funders want to understand how inflation is affecting your particular operations, and how your organisation is factoring that in,” James says.
He went on to say that staffing costs are one of most volatile expenses for charities right now and advises charities to account for changing people costs over the coming year.
“The war on talent is affecting all businesses including the NFP sector. People costs are often the highest expense for an NFP and therefore wage inflation would impact a NFP considerably.
“Demonstrating this inflationary wage increase should be easily achievable in the budgeting process.”
Your project budget checklist
- Where possible, demonstrate to your funder that you’ve considered the impact of inflation in your application.
- Talk to your funder before you submit an application (as always!) and ask them how they prefer to see your budget outlined.
- Think about each element of your service delivery and allow for inflationary pressure.
- For example, if an organisation provides patient transport, they should be considering the rising cost of fuel, insurance premiums for vehicles, staff cost of drivers, uniforms and mobile phone contracts.
- Track down the person/people in your organisation who can help you estimate these costs – they may well become your best work friends!
- If needs be, engage with an adviser who can assist with forecasting and budgeting.
- Although your costs may be greater, be clear on how monies will be spent and the impact you’ll achieve.
So, what about charities directly feeling extra demand for services?
We’re hearing more and more about charities experiencing a surge in demand for their services, as the cost-of-living pressures continues to soar.
As families and workers turn to charities for assistance like food relief and housing support, some groups are finding that funding simply isn’t meeting growing needs.
Here’s Simon’s top tips:
- If possible, look at alternative, more cost-efficient ways to deliver services
- Save on costs by sharing resources with other organisations
- Is a merger or partnership appropriate?
- Look for alternate funding sources – leverage your corporate networks
- Can you utilise volunteers?
In a nutshell….
As far as possible, consider the current inflation rate and incorporate potential further rises when budgeting your project for a grant request. Whether it’s by phone or in your application (or both!), remember to highlight the areas of your costs where inflation is having a significant impact. Finally, remember that transparency will only serve to improve your funder relationships!