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The financial impact of lockdown on charities

As a consultant for charities, I spend a lot of time on their side of the fence. I see the pressures many of these organisations are under, particularly when it comes to funding.

Money into charities often ebbs and flows. It only takes a nationwide issue or disaster to see donations surge to one cause or another, whilst other external influences can have a negative effect on similar charitable organisations.

The pandemic has been a mixed bag, overall. Prevented from holding their typical fundraising events in lockdown, some of the bigger charities saw their income drop significantly—yet the crisis was the impetus for Captain Tom Moore to raise millions for specific NHS charities. Just as with every other kind of organisation, charities were forced to adapt. Online fundraising events became a thing, and the crisis saw a much younger demographic become frequent donors to their chosen causes.

Charity shops, being classed as non-essential retail outlets, were closed much of the time, which had a knock-on effect on the income of their organisations. However, given the upcoming rise in National Insurance contributions and price increases relating to petrol, food and utilities, it’s fair to say that there will be plenty of households across the land who will find their pockets much emptier than they were before the pandemic. When money is tight, people look at ways to cut their outgoings. They may opt for second-hand clothing, rather than buying new, to save money. I really do think charity shops will therefore come into their own over the next year or so, perhaps raising even more money than they lost through the lockdown closures.

Over the last decade, the increase in charity shops has been synonymous with dying high streets, with many outlets being the last man standing amongst boarded up retail spaces. However, consumer experts believe charity shops may prove the key to building our lost town centres.

Online shopping is now ingrained in our lives, and it’s often cited as the reason high streets have emptied of both retailers and consumers. However, given the projected limited budgets of a significant portion of the population, buying new may be out of reach for some people, and whilst the likes of eBay also offer second-hand goods, the quality of their items can often be dubious and seemingly different to the image uploaded. Seeing the product first-hand, being able to touch it and try it on, may trump our love for digital shopping.

It’s much easier (and more exciting) to browse when physically in a charity shop, than wading through numerous irrelevant listings on digital marketplaces. Charity shops provide a shopping experience, which is heightened when you land on a real bargain. It’s not much fun window shopping in stores that carry products you know you can’t afford—the novelty tends to wear off very quickly; in a charity shop, you’ll be more able to afford to treat yourself. The fact that you’re helping a good cause in the process, rather than profit-hungry shareholders and greedy oligarchs, is simply the cherry on top.

There’s also a growing drive amongst the public to reduce waste, as the effects of climate change continue to cause devastation across the globe. Fast fashion is turning a lot of consumers into environmentally friendly shoppers, who are finding the reusing, repurposing and redeployment of preloved clothing better for their conscience as well as their budgets. Elle reports that, ‘If everyone in the UK didn't buy new clothes for one day, the emissions saved would be equivalent to driving a car around the world 8,640 times.’

Despite what I predict will be an outpouring of love for charity shops in the months to come, I have read on a couple of forums recently that some people feel the pricing of items in such retail outlets have gone up much more than they would have expected. Maybe this is to recoup the loss the pandemic imposed upon them, but when a charity shop is selling a second-hand item for the same price as it costs to buy new, they may fail to encourage shoppers into their spaces. Though a lot of people choose to purchase from charity shops because of the cause it supports, most still expect to come away with a product of value. If an item in there is the same price as the RRP, who wouldn’t go and but it from the ‘proper shop’, with the added bonus that they can take the item back if they change their mind or if it’s faulty; such consumer protection doesn’t carry over to second or third owners of an item.

Charity shops could risk pricing out the people they fundamentally seek to help, i.e. those in need/people struggling financially. And, given the state of the economy, this pool of people may become exponentially larger.

Of course charity shops exist to provide good causes with an extra income stream. Whilst these organisations’ incomes will be down following the pandemic, there’s only so much that savvy or ‘in need’ shoppers can/will pay for second-hand items.


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