I think it’s debateable whether or not this does have direct implications for the sector. Its certainly the case that foundations will be impacted: remember they are in effect savers who live off the dividends and interest from their investments. So, an increase in interest rates will (ceteris paribus) increase their income. Which means they have more money to give to the frontline organisations reading this blog.
Balanced against that is the obvious fact that more organisations are borrowing. Loan terms vary and of course the foresightful (again, those reading this blog I hope) will have borrowed at fixed rates. For others, higher interest payments mean less to spend on charitable purpose.
The sector is, overall, a net saver. So, increased interest rates should lead to a direct increase in the sector’s income. However, the donor in the street might have less disposable income if they are paying more out on the mortgage. In other words, increased interest rates should lead to an indirect decrease in the sector’s income. What the Bank of England giveth they taketh away…
By the way, if you want to construct your own trend chart to show changes in the base rate you can copy all the figures from the BofE’s stats page
Karl
Third Sector ForesightI think it’s debateable whether or not this does have direct implications for the sector. Its certainly the case that foundations will be impacted: remember they are in effect savers who live off the dividends and interest from their investments. So, an increase in interest rates will (ceteris paribus) increase their income. Which means they have more money to give to the frontline organisations reading this blog.
Balanced against that is the obvious fact that more organisations are borrowing. Loan terms vary and of course the foresightful (again, those reading this blog I hope) will have borrowed at fixed rates. For others, higher interest payments mean less to spend on charitable purpose.
The sector is, overall, a net saver. So, increased interest rates should lead to a direct increase in the sector’s income. However, the donor in the street might have less disposable income if they are paying more out on the mortgage. In other words, increased interest rates should lead to an indirect decrease in the sector’s income. What the Bank of England giveth they taketh away…
By the way, if you want to construct your own trend chart to show changes in the base rate you can copy all the figures from the BofE’s stats page