No budget cheer for the not-for-profit sector

The impact of the Autumn Budget on the not-for-profit sector was mixed at best. While there were announcements of public sector funding increases in specific areas, such as social care, children’s services, and SEND, these increases are broad and won’t be available to ‘bank’ for many in the third sector just yet.

The bad news from the budget is more real and imminent - for larger charities and not-for-profits in particular. These organisations will have to find room in their budgets for the Employer National Insurance increases announced for April 2025, on top of the greater-than-expected minimum wage increases. And for Private Schools, there are the well-publicised VAT issues on fees to contend with as well.

For charities funded by local authorities, there is a potential double whammy. While local councils will receive an increased funding allocation from central government and specific other pockets of funding, they will also have to absorb the additional employment costs announced. The extent of this impact remains to be quantified, but those additional employment costs could significantly diminish the benefit of the funding increases announced, thereby maintaining the current funding pressure that local authorities are facing when awarding contracts to charities for vital services.

Further details about the changes to Employer National Insurance and increases to the National Minimum Wage can be found here.