Charities are a critical part of our nation’s infrastructure. There can be no stronger demonstration of that than the role they played in the recent pandemic, and now the role that they are playing in responding to the current economic crisis. From providing food aid to delivering training that helps low-paid workers into better paying jobs, and from advice on managing debt to counselling for those with mental illness – charities tackle both economic and social needs.

Yet the charity sector itself is struggling to adapt to the rise in energy bills. Over the last year, over four in ten charities which pay for their energy bills directly have experienced a rise in energy costs. And of those, over half report that their energy bills have increased by 50% or more.

Some of the charities which are most critical to the response to the current economic crisis are those which are struggling the most with energy costs. Nearly one in ten charities spend more than a fifth of their overall annual budget on energy. Energy intensive charities, like care homes, leisure centres, day centres for the elderly and disabled, and poorly-insulated community centres, are likely to find it particularly difficult to manage energy costs.

The charity sector’s ability to manage these costs is also diminished because financial resilience has taken a hit in the wake of the pandemic. This has left 55% of charities having to resort to their reserves to meet their operating costs.

Charities have been working to reduce their energy consumption, but some of the steps that they are taking to do so are debilitating. One in five charities report that they have reduced their use of premises as a result of energy costs, and just under one in ten have reduced their hours of operation. One charity has even reported that its staff are working with the lights turned off. Such conditions will clearly lead to reductions in service levels and performance.

The support government has been providing to charities to help them manage their energy costs is due to come to an end in April, with a review into any continuation scheduled to be published early next year.

There is a strong argument that charities wrestling with energy bills should continue to receive some support to manage elevated energy costs beyond April – given the essential function they are fulfilling. And while the drivers behind elevated demand for charities’ services may change as temperatures rise in the spring, the current recession is expected to last until 2024. As a result, increased levels of demand in the sector are highly likely to persist, and its financial position is likely to struggle to recover.

Many charities back the temporary continuation of the Energy Bill Relief Scheme for registered charities. One way of achieving something equivalent to the scheme, while lessening the burden on the taxpayer, would be to create a non-domestic social energy tariff. Such a tariff could be applied by energy providers to registered charities, to ensure that organisations achieving social good are on the lowest feasible payment scheme, with a discount made possible by income from other commercial customers. Ministers should convene charity representatives and energy suppliers to discuss how to make such a tariff possible.

But government should also consider targeted grants – particularly if there is an opportunity for match-funded grants which support charities with retro-fitting insulation or installing micro-generation facilities like solar panels. There is a strong appetite for such energy saving and green energy measures in the charity sector should the resources be made available. Not only would such a scheme help make charities more resilient, it would also benefit the planet in the long-term.

Read the full report here