The Cost of Living Impact Model (COLIM)

Sarah Thelwall, Karl Wilding, Emma Carter and David Kane

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We have built a statistical model to estimate the cost of an external market shock such as the on the non-profit sector, its business models and financial resilience.

The Cost of Living Impact Model (COLIM) was developed to help policymakers and funders understand how increases in utility prices and salary costs affect the non-profit sector. We have established benchmarks for spending on utilities and salaries prior to the cost of living crisis. Our benchmarks are based on data for 2018-20, sourced from charities’ annual reports and accounts or regulators’ data feeds.

COLIM estimates that charities with incomes above £25k in England and Wales typically spend 41.8% of their income on salaries (not including on-costs) and 4.1% on utilities. ­There is significant variation from these sector-wide norms. If we compare sub-sectors, median spending on salaries varies between 35-55%. Spending on utilities varies between 4-7% across sub-sectors. Some sub-sectors are more likely to be affected by increases.

Our central scenario assumes a doubling of utilities spending and a 5% increase in salary costs for twelve months. The scenario we use in this paper assumes that charities in England & Wales with a turnover of more than £25k will see an increase of 100% in their utilities costs and 5% in their salaries costs for twelve months. We have included two alternative scenarios in the appendix, providing upper and lower-impact scenarios. The model scenarios are illustrative – they are not predictions.