1.Introduction
Black-ledcharitiesandsocial enterprises(hereafterBlackCSEs) operateinanenvironmentofstructural inequalities,whichlackanecosystem ofsupportfortheissuestheyseekto solve.TheCOVID19pandemicand subsequenteconomicdownturn presentedtheseBlackCSEswith significantchallengeswhich exacerbatedhistoricalproblems.Our reportonthelivedexperienceof Black-ledorganisationsin2022, highlightedtheseissuesandposited severalrecommendationstohelp mitigatetheimpactofthethencrisis, whichwere:
BlackCSEsbuildingstrong relationshipswithlocalMPsand councillorstogaingreatersupport, financialandnon-financial,intheir localcommunities.
BlackCSEsreviewingtheirlegal structurestodeterminewhether theyarebestsuitedtoestablish trustandcredibilityamongfunders andaidthesustainabilityoftheir organisationsandprogrammes.
BlackCSEsworkingingreater partnershipwithotherorganisations tobuildtheircollaborative advantageandthusincreasetheir accesstoresourcesandreducerisk.
Fundersconsideringtheuseof Black-ledintermediategrantmakers orfunderstoaidtheequitableand rapiddistributionoffundstothese Blackcommunities.
Fundersplacingmorevalueonthe livedexperienceofBlackCSEsfor thedeliveryoflocalprogrammes.
Fundersprovidinggrantapplicants withmoredetailedfeedbackwhen applicationsareunsuccessful.
Funderssettingupmorevisibility aroundtheiroperations.
Fundersusingstaffwithlived experienceintheoutcome-focused areastheyarelookingtoeffect socialchange
Thecurrentcostoflivingcrisishas becomeanotherpressingareaof concernforBlackCSEs.Therising costsofdoingbusiness,combined withstagnantorinsufficientfunding, hasagainpresentedthemwithan arrayofseverechallenges, jeopardisingtheirabilitytoprovide vitalservicesandsupporttoBlack communities
Thisresearchbriefdelvesintothe impactofthecostoflivingcrisis, exploringthechallengesBlackCSEs faceandtheimplicationsfortheir sustainabilityandimpact.Througha snaponlinesurvey,thisresearchbrief aimstoshedlightonthiscritical issueandadvocateforsolutionsto mitigatetheadverseeffectsofthe costoflivingcrisisonBlackCSEs.
Thefollowingareasofexploration formedthebasisoftheresearch:
Impactofthecostoflivingcrisis; Measurestakentoreducethe impactofthecrisis; Theavailabilityofsupport; Viewsonfunders;and Viewsonthefuture.
Werecognisethelimitationsofour methodologysuchasthelimited samplesizeandlimitedtimeframe andhaveconsideredthese limitationswheninterpretingthe results.
2.Characteristics ofrespondents
RespondentsfromacrosstheUnitedKingdomparticipatedinthepoll.Approachingsix inten(58%)operatedinLondon,fourinten(40%)operatedinEnglandoutsideLondon. Atlowerlevels,theyoperateinScotland(10%),Wales(5%),andNorthernIreland(3%) (seeTable1).ItisworthstatingthatthisbreakdownisrepresentativeoftheBlack populationintheUKforallcountriesandareaswiththeexceptionofWales
Table1.LocationofOperation
England(London)
England(notinLondon)
Scotland
NorthernIreland
Wales
Respondentsrepresentedseveraltypesoforganisationssuchascommunityinterest companies(byguarantee)(26%),charities(23%),charitableincorporatedorganisations (16%),orcommunityinterestcompanies(byshares)(15%).
Table2.LegalStatus
Communityinterestcompany(limitedbyguarantee)
Charity
CharitableIncorporatedOrganisation
CommunityinterestCompany(limitedbyshares)
Companylimitedbyguarantee
Companylimitedbyshares
Constitutednot-for-profitgroup
Soletrader
Constitutednot-for-profitgroup
LimitedPartnership
Thesnaponlinesurveywas conductedbetween1April and14April2023.Intotal, 93organisationscompleted thesurvey.
Respondentsalsooperateinawiderangeofsectors,themostmentionedaremental healthandwellbeing(58%),employment,educationandtraining(48%),racialjustice andequity(34%),andarts,culture,sportsandfaith(34%)Onaverage,participating organisationsprovidesupportto677individualsannually.
Table3.Areasofprimaryoperation
Respondentssupportprojectsoroperateacrossawiderangeofdemographicgroups. Theyaremostlikelytomentiongroupssuchaspeopleofglobalmajority/ethnic minority(63%),children(under18s)(51%),youngpeople(18-24yearsold)(51%),and women(48%).
Table4.Demographicprofileofpeopleorganisationsupport
Peopleofglobalmajority/ethnicminoritybackground
Children(under18)
Youngpeople(age18-25)
Women
Refugees,asylumseekersandmigrants
Peoplewithmentalhealthneeds
Peoplewhoareunemployed(morethan3months)
Parents
Peoplewithlong-termhealthconditions
Olderpeople(over65)
Students
Peoplewithanincomeunder£400permonth
Peoplewhoarehomeless
Professionals
Entrepreneurs
Peoplewhoarephysicallydisabled
Men
Victimsofcrime
Peoplewhoareneuro-divergent
LGBTQ+
Ex-offenders
Peoplewithaddictionissues
Mostrespondents(51%)wereinorganisationsthathavebeenoperatingformorethan sixyearsAroundaquarterhavebeeninoperationforbetween6and10years(26%)or 10yearsplus(25%).Approachinghalfofrespondents(47%)havebeeninoperationsfor between1and5years.
Table5.Yearsinoperation
Mostrespondents(70%)representedmicrobusinessesemployingfewerthan10 membersofstaffTheymostlydescribetheirorganisationsasLivedExperienced organisations(97%).Livedexperienceorganisationsrefertoorganisationsthatare foundedandledbyindividualswhohavepersonalexperienceofaparticularissueor challengethattheirorganisationistryingtosolve.
Table6.Sizeoforganisation
Intermsofthedemographicsoftheorganisations’leadership,93%haveleadershipof over50%ofindividualsbeingBlack;45%haveleadershipofover50%ofindividuals beingwomen;and/or33%haveleadershipofover50%individualsbeingglobal majority/ethnicminorities.
Table7.Demographicsoftheleadership
Over50%Black Over50%women
Over50%globalmajority/ethnicminority
Respondentsusemorevolunteersthanfreelancersorcontractorsduringtheyear.Four inten(43%)engagemorethan10volunteersayear(seeTable9)comparedwith13% engagingfreelancersorcontractors(seeTable8).Indeed64%ofrespondentsindicated thattheirorganisationusedfewerthan5freelancers.
Table8.Freelancerorcontractorsengagedintheyear
Table9.Volunteersengagedintheyear
Allrespondentshaveaverageannualturnoversoflessthan£500,000.Theyweremost likelytobeintheirdevelopmentstagereturninganaverageannualturnoverof £50,000to£149,000(39%),orstartupstagewithaturnoverofbetween£10,000and £50,000(34%).Oneinseven(15%)weremicro-businesshavinganaverageannual turnoveroflessthan£10,000.Overoneinten(12%)wereintheirgrowthphaseyielding anaverageannualturnoverofbetween£150K-£500K.
Table10.Annualaverageturnovers
3.Keyfindings
Impactofthecostof livingcrisis
Nineinten(89%)BlackCSEsareconcernedaboutthecostoflivingcrisis,including seveninten(70%)whoareextremelyconcernedaboutit(SeeFigure1).
Figure1.Howconcernedareyouaboutthecurrentcostof livingcrisis?
Increasedoperatingcosts(39%),decreasedrevenue(28%),andstaffretentionand recruitment(12%)arethemostmentionedchallengesofBlackCSEsface.
Figure2.Whathasbeenthebiggestchallengeyourbusiness
Similarly,sixinten(61%)BlackCSEshaveindicatedthatthecurrentcrisishas negativelyaffectedtheirbusinessrevenueinthepastyear.Athird(33%)indicatedthat theirbusinessturnoverintheperiodhasdecreasedsignificantly.Whileoneinseven (15%)indicatedthattheywerenotaffectedbythecostoflivingcrisis,oneinfour(24%) haveseentheirrevenueoverthepastyearincreased.
Figure4.Howhasthecostoflivingcrisisaffectedyour
Specifically,nearlynineinten(88%)BlackCSEsindicatedthatthecurrentcrisisis havingmuchimpactontheirbusinessoperationsincludingaroundhalf(48%) indicatingthattheimpactisverymuchso.
Figure3.Howmuchdoyoufeelthecurrentcostoflivingcrisis
TwothirdsofBlackCSEs(66%)haveindicatedthatthecostoflivingcrisishas negativelyaffectedtheirabilitytoinvestintheirbusinessesandexpandastheyhadto divertfundstocoverrisingcosts.Conversely,nearlyoneinfive(18%)indicatedthatthe crisishashadapositiveimpactontheirabilitytoinvestintheirbusinessesandexpand astheyfoundinnovativewaystocutcostsandimproveefficiency
3.2
Actiontoreduceimpact ofcostoflivingcrisis
BlackCSEsaretakingseveralmeasurestomitigatetheimpactofthecostoflivingcrisis
Theyaremostlikelytoincreasebidwritingactivities(67%),cutbackonimplementing newpiecesofwork(50%),cutbackonexistingprojectsanddirectdeliverytoservice users(45%),orusetheirreservestokeepgoing(40%).Aroundaquarterindicatedthat theyareaskingcorporatepartnersforhelp(24%),leavingstaffvacanciesunfilled(26%)or reducingstaffnumber(28%).
Figure6.Whatactionsareyourorganisationputtinginplace toreducetheimpactofthecostoflivingcrisis?
Increasefundraisingbidwritingactivities
Cutbackonimplementingnewwork
Cutbackonexistingdeliverytoserviceusers
Usereservestokeepgoing
Reducestaffnumbers
Leavestaffvacanciesunfilled
3Availabilityofsupport .3
HalfofBlackCSEs(50%)indicatedthattheyhavenotreceivedanysupporttohelp reducetheimpactofthecostoflivingcrisisontheirbusinessesThisnotwithstanding, threeinten(30%)havereceivedsupportintheformofgrantsandloans,andabout oneinten(9%)receivedbusinessadviceandguidance
Threeinfour(75%)ofBlackCSEsbelievethemosteffectivewayofsupportingtheir businessesduringthecostoflivingcrisiswouldbethroughtheprovisionofgrantsand loans
Figure8.Whatwouldbethemosteffectivewaytosupport yourbusinessesduringthecostoflivingcrisis?
Asanaverageofannualturnover,84%ofBlackCSEsindicatedthattheyneedbetween 10%and75%moremoneythisyearbecauseofthecostoflivingcrisis.Indeed,threein tenindicatedthattheyneedbetween26%and50%(30%),orbetween51%to75% (29%)moremoneyOneinten(10%)needbetween76%and100%moremoneythis year.
Giventhecurrenteconomiccrisisandpressuresonbusinessfinances,fourinten(42%) BlackCSEsindicatedthattheycouldcoverthecostsofrunningtheirbusinessesfora furthersixmonths(23%for6-12months;and19%formorethanayear)Conversely, aboutoneinfour(23%)indicatedthattheycancovertheirbusinessrunningcostfor abouttwomonths,includingoneinten(10%)whocanonlycovertheirbusiness’ runningcostforuptoamonth.ThelargestproportionofBlackCSEsindicatedthat theycancoverthecostsofrunningtheirbusinessesforbetween3to6months(36%).
Figure10.Basedonyourcurrentfinancialstanding,howmuch longercanyoucoverthecostsofrunningyourbusiness?
3Viewsonfunders .4
Inthemidstofthecostoflivingcrisis,BlackCSEsbelievethatfundersshouldprioritise theavailabilityofunrestrictedfunding(84%)tothesector.Atlowerlevels,BlackCSEs indicatedthatfundersshouldalsoprioritiseassistancewithstaffingandoverheads (54%),rentandcapitalcosts(39%),andexistingprojectdelivery(34%).
OnbalanceBlackCSEsdonotfeelthatfundershavetheirbestinterestinmindinthe currentcostoflivingcrisis.Overfourinten(44%)feelthatfundersdonothavetheir bestinterestsinmindcomparedtooneineight(12%)whobelievethattheydoA furtherfourinten(44%)BlackCSEswereambivalentabouttheissue.
Figure11.Foryourorganisationtothriveinthemidstofthe costoflivingcrisis,whatwouldyoulikefunderstoprioritise?3Viewsonthefuture .5
BlackCSEshavealargelynegativeoutlookonthecourseofthecostoflivingcrisisOnein nine(90%)indicatedthatthecostoflivingcrisiswillsomewhatorsignificantlygetworse overthenext6-12months.Lessthanoneinten(9%)indicatedthatthesituationwould somewhatorsignificantlyimprove
Furthermore,nearlynineinten(87%)BlackCSEsindicatedthatthecostoflivingcrisis willhaveanegativeimpactontheirbusinessesoverthenext6-12monthsLessthan oneintenindicatedthatitwillhaveapositiveimpact(7%)ornoimpact(7%)ontheir businesses.
Figure14.Howwillthecostoflivingcrisisimpactyour businessoverthenext6-12months?
Itwillhaveanegativeimpactonmybusiness
Itwillhaveapositiveimpactonmybusiness
Itwillhavenoimpactonmybusiness
4.Conclusionsand recommendations
4.1Conclusions
Inconclusion,thisresearchbriefhas providedagreaterunderstandingofthe impactofthecostoflivingcrisisonBlack CSEs.Itisevidentthat:
LeadersofBlackledCSEsareextremely concernedaboutthecurrentimpactof thecostoflivingcrisisontheir businessesBusinessleadersare adoptingamorecautiousapproachto decision-makingandrisk-taking.They arealreadycuttingbackonnew projectsorexpansionplans,delaying hiringdecisions,andreducingspending onoperationalcosts.Thesewillaffect businessperformanceasitwill undoubtedlylimitgrowthopportunities andhinderinnovation
BlackCSEshaveexperiencedsignificant increasesintheiroperationalcostsas wellasreductioninrevenue,impacting theirfinancialhealthBusinessleaders aretakingmeasurestoraiseand conservecash,optimiseworking capital,andusecashreservesto navigatethroughthecrisis
HalfofBlackCSEshavenotreceived anysupporttohelpmitigatethe impactofthecostoflivingcrisisThis willexacerbatethechallengesBlack CSEsfacesuchascashflow constraints,limitedaccesstocapital, andreducedabilitytomeetfinancial obligations
Thecostoflivingcrisishashada negativeimpactontheabilityof BlackCSEstoinvestintheir businessesandexpand.Inother words,thecrisisisdisruptingtheir strategicplanningprocess.The uncertaintyandvolatilityassociated withthecrisisismakingit challengingforbusinessleadersto accuratelyforecastmarket conditions,revenuestreams,and serviceuserdemand,andother sectordynamics,whichcanimpact performance.
MorethanfourintenBlackCSEs needover50%ofadditionalannual revenuebecauseofthecrisisandone infourareonlyabletocoverthe runningcostoftheirbusinessesfor uptotwomonthsCashflow managementconcernswillpresent severaloperationalchallengessuch astheinabilitytocoverday-to-day expenses.Itcanalsoleadtodelayed ormissedpaymentstosuppliers, employees,andotherstakeholders
Thequalityandtimelinessofservice deliverycouldalsobeadversely impacted,leadingtoserviceuser dissatisfactionandlossofbusiness.
Intermsoftherelationshipbetween BlackCSEsandfundersinthecurrent crisis,onthewhole,theydonotfeel thatfundershavetheirbestinterest inmind.ThiscanleadtoBlack businessleadersbeingcompelledto makesuboptimaldecisions,suchas acceptingfundingonunfavourable terms,higherinterestrates,or onerousconditions,duetoperceived lackofoptionsornegotiatingpower withfundersItcanalsoleadto heightenedstress,frustration,and anxiety,whichmayimpactdecisionmaking,leadershipeffectiveness,and overallbusinessperformance
BlackCSEsseethecostoflivingcrisis gettingworseinthenext6to12 monthswiththathavinganegative impactontheirbusinessesgoing forward.Thispessimisticoutlookmay leadtoafurtherdecreaseinbusiness investmentandexpansion.Leaders couldcontinuetobecautiousand adoptrisk-averseapproachessuchas holdingbackoninvestments,taking onnewstaff,andreducingcapital expenditure
4.2Recommendations
Basedontheconcernsexpressedby leadersofBlack-ledCSEsregardingthe currentcostoflivingcrisisanditsimpact ontheirbusinesses,itiscrucialto acknowledgethecautiousapproachthat businessleadersarecurrentlyadopting. Asthecostoflivingcrisisbecomes worse,itisunderstandablethat businessesaretakingstepstomitigate risksandmanagetheirexpenses
However,itisimportanttoalsoconsider thelong-termimplicationsofthese decisions.Severalrecommendationsare providedbelow
ItiscrucialforBlackbusinessleaders tostrikeabalancebetweenprudent riskmanagementandstrategic growth.Whileitmaybenecessaryto cutbackonnewprojectsor expansionplans,delayhiring decisions,andreducespendingon operationalcostsintheshortterm,it isalsoimportanttoidentify opportunitiesforinnovationand growth.Businessleadersshould activelyseekoutstrategiesthatcan helptheirbusinessesnavigatethe currenteconomicchallenges,suchas diversifyingrevenuestreams, exploringnewbusiness opportunities,leveragingcash reserves,oroptimisingoperational efficiencies.
BlackCSEsshouldconductthorough reviewsofbusinessoperationsto identifyareaswherecost-saving measurescanbeimplemented withoutcompromisingthecore missionandvaluesoftheir businessesThismayinvolvetough decisionssuchascost-cutting, downsizing,orrestructuring.Business leadersshouldcarefullyevaluate variouscostreductionstrategies, consideringbothshort-termand long-termimplications,andprioritise thosethatarealignedwiththeir overallstrategicgoalsCollaboration andpartnershipswithotherCSEsor organisationscanalsoprovide avenuesforsharedresourcesand expertise,leadingtomutualbenefits.
BlackCSEsshouldproactivelyengage withrelevantstakeholders,suchas policymakers,industryassociations, andcommunityorganisations,to advocateforpoliciesandinitiatives thataddressthecostoflivingcrisis andsupportbusinessgrowth.This canincludeadvocatingforaffordable rents,accesstoaffordablecapital, andsupportiveregulatory environments.Engaginginindustry networks,mentorshipprogrammes, andcapacity-buildinginitiativescan alsoprovidevaluablesupportand resourcesforbusinessleadersto navigatethecurrentchallengesand buildresilience
TheseniorleadershipforBlackCSEs shouldcloselymonitorandassessthe evolvingeconomicsituationandits potentialimpactontheirbusinesses. Thisincludesstayinginformedabout thelatesteconomicindicators, trends,andgovernmentpoliciesthat mayaffectthecostoflivingcrisisand itsimplicationsfortheirsector.By stayinginformed,leaderscanmake informeddecisionsandadapttheir businessstrategiesaccordingly
Itiscrucialforleaderstomaintain opencommunicationwiththeir employees,customers,and stakeholdersTransparent communicationcanhelpmanage expectations,buildtrust,and maintainpositiverelationships, whichcanbeinstrumentalin navigatingthroughtheseuncertain times.
Fundersshouldestablishdedicated emergencyfundingprogrammesor initiativesspecificallyaimedat supportingBlackCSEs.Thiscan includegrants,loans,orotherforms ofunrestrictedfinancialsupportthat aretailoredtotheuniqueneedsand challengesfacedbythesebusinesses. Suchfundingprogrammesshouldbe accessible,transparent,anddesigned toprovidetimelyandadequate supporttohelpBlackCSEsaddress theircashflowconstraints,accessto capital,andotherfinancial obligationsItwouldalsobe importanttoensurethatany applicationprocessesarestreamlined andfreefromunnecessarybarriers, andthattheeligibilitycriteriaare inclusiveandconsiderthediverse needsandcircumstancesofBlack CSEs.
Fundersshouldestablishdedicated emergencyfundingprogrammesor initiativesspecificallyaimedat supportingBlackCSEs.Thiscan includegrants,loans,orotherforms ofunrestrictedfinancialsupportthat aretailoredtotheuniqueneedsand challengesfacedbythesebusinesses. Suchfundingprogrammesshouldbe accessible,transparent,anddesigned toprovidetimelyandadequate supporttohelpBlackCSEsaddress theircashflowconstraints,accessto capital,andotherfinancial obligations Itwouldalsobe importanttoensurethatany applicationprocessesarestreamlines andfreefromunnecessarybarriers, andthattheeligibilitycriteriaare inclusiveandconsiderthediverse needsandcircumstancesofBlack CSEs.Furthermore,fundersshould workthroughintermediary organisationsthatalreadyhaveclose relationshipswithBlackCSEstobuild trustandensurethatthisbarrieris quicklyreduced.