Cost of Living - a crisis or the new normal?
In January 2023, Foundation Scotland published a report which explored the impacts of the rise in the cost of living on organisations funded through Foundation Scotland. The findings of a survey of 246 grant holders were presented in the report.
This work was carried out in response to the steep rise in the cost of living since late 2021, with the prices for many essential goods in the UK increasing faster than household incomes, resulting in a fall, in real terms, in incomes. This has had, and continues to have, major impacts on individuals, households, communities, businesses, the public sector, and the third sector throughout Scotland .
The results of this study were used to develop two subsequent surveys for funded organisations and individuals to understand the ongoing and longer-term impacts of the continued rise in the cost of living on people supported by and through Foundation Scotland. The findings of these surveys have been presented in a new report, which you can read here.
The purpose of this research was to gain deeper insights into how the persisting cost of living crisis affects the organisations, individuals, and communities supported by Foundation Scotland, and in what ways, and gather views about how funders, including Foundation Scotland, can help mitigate negative impacts through their work.
PROCESS
To better understand the ongoing impact of the cost of living crisis on the organisations and individuals that Foundation Scotland supports, we invited grantees to share their experiences in August 2024. Respondents provided detailed insights into how the rising cost of living continues to affect them, as well as the role funders can play in helping to mitigate these impacts.
FINDINGS
Findings showed that:
- Organisations still face mounting financial pressures from increased operational costs, particularly energy and premises costs. Reduced income streams and donations compound these challenges. Many reported difficulties maintaining service levels while facing higher expenses across utilities, staffing, and supplies.
- Organisations reported unprecedented demand for services, especially among vulnerable populations, while simultaneously struggling with reduced capacity. Staff and volunteer shortages have become critical, with many experiencing burnout and reduced volunteer availability.
- The crisis has created cascading effects on beneficiaries, primarily through increased household costs and deteriorating mental health. Rising social isolation and reduced service access due to cost barriers were prevalent.
- Organisations anticipated continued challenges around financial sustainability, highlighting funding shortages as a critical concern. The impact on beneficiaries was expected to create lasting effects, particularly regarding mental health, social isolation, and entrenched poverty cycles.
Respondents comments included:
"Our families are struggling financially, choosing between paying their bills or buying winter jackets and boots for their children."
"The need is relentless. There are daily queues for help outside our office. Our service users beg us for help and describe their hardships."
"The cost of living crisis will increase children's likelihood of not escaping poverty and the knock-on impacts on education, employment, and well-being into adulthood."
"There is a proven link between poverty, inequality, and poor mental health, so as poverty increases, people’s welfare decreases."
Communities are very clearly, and very significantly still feeling the negative impacts of the cost of living crisis, compounded by a cumulative effect over the last few years. The findings from this study will be used by Foundation Scotland to continue to review its processes as a funding administrator in the context of the increased cost of living.