Cost of Living Crisis: How It's Reshaping UK Grant Funding
The cost of living crisis is fundamentally changing what funders prioritize, what services charities provide, and what gets funded. Here's the new landscape.
The Funding Landscape Shift
📉 Declining Funding
- • Arts & culture: -18% average
- • Sports & recreation: -12%
- • Environmental education: -8%
- • Generic community projects: -15%
📈 Growing Funding
- • Food poverty: +240%
- • Energy/fuel poverty: +180%
- • Debt advice: +95%
- • Mental health crisis: +75%
Emergency Funds Created
New crisis-specific funding launched 2023-2024:
National Lottery: Cost of Living Fund (£50M)
Grants £10K-£100K for organizations providing practical cost of living support. Fast-track 6-week decisions.
Community Resilience Fund (£35M)
Local authority distributed. Warm spaces, community pantries, advice services.
Financial Resilience Programme (£28M)
Debt advice, budgeting support, benefits maximization services.
What Funders Now Want to See
1. Direct Practical Support
Move away from awareness/education toward tangible help:
- ✓ Good: "Providing £50 supermarket vouchers + debt advice to 200 families"
- ✗ Less compelling: "Raising awareness of cost of living challenges through workshops"
2. Multi-Problem Approaches
Crisis doesn't come in silos. Funders favor integrated support:
Example Strong Approach:
"Food bank + energy advice + benefits check + mental health support + debt counseling referrals—all co-located at single access point"
3. Partnership and Collaboration
No single organization solves cost of living crisis. Collaborative bids favored:
- Food charity + advice service + housing support
- Community center + local authority + health service
- Faith group + secular charity + volunteer bureau
Strategic Pivots Required
For Arts Organizations:
Frame programmes in wellbeing/mental health terms. "Free creative workshops combating isolation and supporting mental health during cost of living crisis" stronger than "community arts programme."
For Environmental Organizations:
Connect climate work to cost of living. "Community energy schemes reducing fuel poverty" wins where "climate education" doesn't.
For Sports/Recreation:
Emphasize free/subsidized access, food provision alongside activities, mental health benefits. "Free meals + sports" more fundable than "sports coaching."
The Dual Challenge
Charities face simultaneous pressures:
| Pressure | Impact |
|---|---|
| Demand surge | Service users increased 40-200% across sectors |
| Operational costs | Energy +80%, staff costs +12%, general inflation +15-20% |
| Income pressure | Individual donations -15%, corporate giving -8% |
| Staff wellbeing | Burnout, retention challenges, recruitment difficulties |
Opportunities Created
While challenging, crisis opens doors:
New Funding Streams:
- ✓ Emergency/rapid response funds: Faster decisions, less bureaucracy
- ✓ Corporate ESG budgets: Companies funding practical community support
- ✓ Local authority partnerships: Councils outsourcing crisis support
- ✓ Crowdfunding success: Public responds to tangible crisis support
Long-Term Implications
This isn't temporary—expect lasting changes:
- Practical support normalized: Funders now expect tangible help, not just services
- Lower application barriers: Crisis funds simplified processes—trend continues
- Multi-agency standard: Collaboration becoming baseline expectation
- Measurement shifts: Immediate impact valued over long-term outcomes
Key Takeaways
- ✓ Cost of living crisis redirected £200M+ toward emergency support
- ✓ Food poverty funding up 240%, arts funding down 18%
- ✓ Funders prioritize direct practical help over awareness/education
- ✓ Collaborative/partnership applications strongly favored
- ✓ New emergency funds offer faster decisions, simpler processes
- ✓ All sectors must frame work in crisis-response terms to compete
- ✓ Changes likely permanent—adapt strategy accordingly