Steps to becoming a Living Wage Funder

The Association of Charitable Foundations' (ACF) head of policy Francesca de Munnich reflects on a Living Wage Funders event held in June.

Amidst the cost of living crisis, foundations are seeking ways to effectively support charities and the communities they serve. Even before the recent inflation surge, significant numbers of third sector workers were struggling with in-work poverty and rising living costs have only exacerbated existing inequalities. Therefore, the Association of Charitable Foundations' event with the Living Wage Foundation in June provided a timely opportunity to discuss the role foundations can play in helping charities pay the real Living Wage and address low pay in the sector.  

Why is paying the real Living Wage so crucial?  

At the event we delved into the issue of chronic low pay across the third sector and the consistent evidence that marginalised groups are disproportionately affected. The Living Wage Foundation’s All Work, Low Pay report, outlines how women, racialised groups, disabled workers, part-time workers, and young workers are at higher risk of low pay.  

The real Living Wage serves as a lifeline for these low-paid workers who face immense pressures. It is an independently calculated rate covering life’s necessities and enables individuals to have a decent standard of living.  

Workers paid the real Living Wage report a positive impact on their physical and mental health and are able to perform better in their jobs due to reduced financial worries. From an employer’s perspective, paying the Living Wage enhances employee retention and improves overall reputation.

Moreover, increasing the number of people earning a real Living Wage stimulates local economies through a “multiplier effect” as the money circulates back into the economy through higher spending and productivity.  

What is the Living Wage Funders scheme?  

The Living Wage Funders scheme supports charities in paying the real Living Wage through their grant-making activities. By joining this scheme, funders encourage their grantees to pay salaries at the real Living Wage, thereby enabling their staff to maintain a decent standard of living. Accreditation signifies that organisations publicly commit to being part of the movement and gain access to guidance, resources and use of the Living Wage Funder Mark. 

We have observed that foundations are motivated by various reasons to fund the Living Wage – a poll of event attendees showed that 44% saw delivering on their mission and values as the biggest benefit, whilst 38% highlighted the importance of tackling low pay in the third sector. 

Becoming a Living Wage Funder involves three elements:  

  1. Become an accredited Living Wage Employer 
  2. Support grantees to become Living Wage Employers 
  3. Funding grant-funded posts at the Living Wage rate 

Funders have a genuine opportunity – both individually and collectively – to contribute to the Living Wage movement. Currently, there are 83 Living Wage Funders, with grant-making capacity exceeding £1.9bn and they distribute 37,000 grants per year. We encourage trusts and foundations to consider joining this community of funders and playing their part in eradicating low pay in the sector.  

Simple next steps for foundations  

To conclude the event, we discussed actionable steps that a foundation could take on their journey to becoming a Living Wage Funder. There were a wide range of ideas including:  

  • Check to see if your foundation is already a Living Wage Employer 
  • Connect with Living Wage Funders to hear about their experiences and how they overcame any challenges 
  • Engage in internal conversations with staff and trustees about the importance of being a Living Wage Funder  
  • Align the Living Wage Funder concept with your foundation’s mission and create a paper to gain internal support 
  • Review a sample of grants awarded in the last year to identify the number of grantees who are Living Wage Employers 
  • Avoid favouring grant applications as ‘better value for money’ because staff costs are below the real Living Wage   

Further resources and support 

For further information and sign up to be a Living Wage Funder, please click here

The event recording is available to catch up – please get in touch with if you’d like access. There are also a number of Living Wage Funders who would be happy to speak to other funders – again please get in touch to connect you.  

A version of this blog was originally posted on the ACF website.