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How Inflation Affects Not-for-Profits

Plus, savvy ways to stave off the effects of inflation on your most beloved charitable causes!

The high inflation rate hit us all hard in 2022. From prices at the gas pump to everyday food items like eggs in the grocery store, inflation has wreaked havoc on our communities. The current inflation rates stem from the intersection of Covid-19 inflation, government stimulation money, a tight labor market driving up wages, clogged supply chains, and imports just offshore. And more recently, the Russia-Ukraine conflict has increased global gas and wheat prices. Inflation has a significant impact on everyone. However, not-for-profits, in particular, are subject to more collateral damage than most.

Photo of two women walking down an aisle in a food market.
Photo of two women walking down an aisle in a food market.

Many corperations in America can pass rising supply chain costs onto consumers. Not-for-profits are more vulnerable to inflation. Their only way to deal with it is to absorb it. This, of course, has severe ramifications for not-for-profits and their services. It often means an organization may have to scale back or cancel programming altogether.

Boys and girls clubs of Atlanta have been struck hard. They serve predominantly lower-income communities and pride themselves on making their services affordable. They charge $100 a year for a membership which includes access to programming that they would otherwise not have access to programs like book clubs, math clubs, soccer teams, and leadership groups. The organization must keep its costs affordable as parents face inflation in their grocery bills and other life essentials; they cannot afford any additional costs. This means that the organization must take on the cost of inflation.

Interestingly enough, as inflation climbs and not-for-profits are affected negatively, the need of the people they serve also increases. For instance, as more people cannot afford after-school care or groceries, they will turn to not-for-profits like the Boys and Girls Club or food banks to fill in the gaps. However, these organizations and many more like them will be unable to handle that volume because they have had to take on the costs of inflation.

Photo of a young girl checking the inside of a freezer.
Photo of a young girl checking the inside of a freezer.

What You Can Do About It

Inflation can make us all feel small. However, a seemingly insurmountable force can be mitigated for not-for-profit organizations by donors. You can help charitable organizations endure economic hardship by adjusting your giving strategy.

  1. Adjust Your Contribution to Include Inflation Rates - This is the most straightforward solution: Give more for each dollar you donate, including the inflation rate. Currently, that means adding approximately 8.3%.

  2. Unrestricted Donation - Give your contribution to an organization's general fund. This allows organizations to maneuver around the costs of goods and labor, which enables them to use their funding more wisely. Flexibility is always appreciated, especially now when funds are limited.

  3. Prioritize Organizations Without Other Funding Bodies - Many charities rely solely on donor contributions to survive. Any charity that operates in this way may be more susceptible to the effects of inflation as they have fewer revenue streams and less support. Big or small, any organization without an exterior funding body will feel the effects of inflation more intensely.

  4. Give to Charities in the Human Service Sector - Not-for-profits that serve human needs, particularly essential food items, clothing, and life necessities, will feel the brunt of inflation as these kinds of goods often cost the most. These organizations will require more support during this time. Consider supporting them more than you normally would.

  5. Spread the Word - If you cannot afford to give more but would like to, share the causes close to your heart and the organizations that support them with the people around you. Encourage your people to give, explain the effects of inflation, and how their donation will help organizations to continue their vital work.

  6. Give Your Time - Another way to support your charitable organization is to volunteer. Sharing your skills or set of hands can make a huge difference when resources are strapped. This will offset labor costs and help organizations use their limited funds where it is needed most.

Photo of people working at a food bank.
Photo of people working at a food bank.

Charitable organizations must make their donors aware of their declining purchasing power and encourage their donors to give their support. No not-for-profit is immune to inflation. That said, if we work together and take the necessary steps to counter it, we will protect essential programming and, as a result, our communities overall health and longevity.



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