We are sitting in purgatory between knowing the Iran war will affect living costs and not knowing the intensity of the impact. While there is uncertainty around what is to come, we have the past to call back on. nfpResearch has been tracking donation trends in the UK for decades, meaning we have seen the impact of war-driven inflation costs on charitable giving intentions. Most recently, we monitored the impact of the Russia-Ukraine war.

In February 2022, Russia invaded Ukraine. This increased the cost of crude oil and the international gas market. These inflationary pressures happened at a time when inflation was already at a 30-year high of 5.5% in January 2022. Inflation subsequently rose to 11.1% in October 2022.

Our nfpIntelligence UK data showed that in April 2022, a high proportion of the public intended to cut back spending across all areas (considerably more compared to December 2021). In December 2021, 40% of the public said they were planning to cut back on giving to charity over the next 12 months; in April 2022, this rose to 54%. The proportion of the public intending to cut back on charitable giving was consistent for the remainder of 2022 – 55% on average for the year.

However, while over half the public intended to cut back on donating, actual donation levels told a different story. When asked, “Have you donated to any charities in the last 3 months?” the proportion of the public saying yes was steady throughout 2022. 60% of the public donated to charity in December 2021 and the same level was seen in 2022. The average amounts people donated in 2021 and 2022 were also similar.

While inflation leads to a spending-cautious public, charitable giving is not where we tend to see actual cutbacks. The proportion of those who give and the amount they give holds steady, but this covers less because of rising costs. Inflation drives up expenses for charities while income from donations remains the same. In recent years we have seen many charities cut costs because their income has not kept up with inflation. For the charity sector, this often means reducing staff numbers.

It is reassuring to know that donors are reliable. However, the public mood across Canada, Ireland, the UK and the US gives reason for pause. Public pessimism about the direction their country is heading is very high. We ask the public, “In general do you think things in Canada / Ireland / the UK / the US are headed in the right or wrong direction?” In the latest wave of research, we found that 41% of Canadians think their country is headed in the wrong direction, 52% of the Irish, 64% of those in the UK and 45% of Americans. In every country we track, pessimists outnumber optimists. The last time war drove inflation, the public absorbed the cost without cutting charitable giving – but they weren't starting from this level of pessimism.

With the public feeling more pessimistic, resilience is low for yet another recession or cost-of-living crisis. We now find ourselves in a period of uncertainty waiting to see what the effects of the Iran War are and the impact beyond living costs.

If you want to be one of the first to see how giving responds, get in touch with us at publicuk@nfpresearch.com to participate in our nfpIntelligence research, part of the nfpPublic research stream and see the results.

Source of inflation data

https://commonslibrary.parliament.uk/economic-update-ukraine-crisis-adds-to-inflationary-pressures/