The U.S. inflation rate is the highest it’s been in forty years. The increase in prices of goods and services concerns nonprofit organizations.
The Bureau of Labor Statistics’s (BLS) April news release showed that the Consumer Price Index (CPI) rose 8.3% over the past 12 months. CPI measures inflation by tracking the average change over time in the prices paid by consumers for goods and services. As inflation reduces consumers’ spending power, nonprofits must spend more to accomplish their goals.
Take Habitat for Humanity Philadelphia, for example. The organization works to build or improve homes for disadvantaged families, said the cost of replacing a roof on a house increased from $5,000 to $8,500 this past year, according to a story published in U.S. News on May 8.
Prices increase while demand and budgets remain consistent. As a result, organizations like Habitat for Humanity cannot carry out the same number of services they could in prior years, leaving more families in need.
Increased gas prices also threaten the productivity of nonprofits. With gas prices up more than 50% compared with last year, organizations that rely on transportation to ship goods must account for the extra cost.
As consumers’ spending power continues to decrease, more individuals are left lacking necessities of food and shelter. The BLS April news release stated that increases in the indexes for food and shelter were the most significant contributors to inflation growth: in April alone, the food index increased .9 percent, and the shelter index increased .5 percent.
Service organizations that provide these necessities are experiencing a sharp increase in demand. Increasing demand coupled with skyrocketing prices produces a never-ending cycle where demand remains unsatisfied.
Increases in price index also impact the donors who keep nonprofits operating. Philanthropy Roundtable’s assessment of charitable donations states that most donations come from moderate-income citizens. But inflationary pressures impact the overall income of middle-class earners more than high-net-worth individuals, which threatens their ability to contribute.
Nonprofit organizations are already suffering from direct consequences of the increased price index, and if inflation patterns continue, the future looks equally dim. But generosity can persist regardless of the economy’s state: no donation is too small, and so long as people earn money, there is money to give.
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