Energy Guide for Charities and Not-for-Profit Organisations

For charities and not-for-profit organisations, every pound saved on energy is a pound that can go towards your mission. Yet many charities are paying more than they need to for energy — often because energy procurement falls outside the expertise of trustees and staff.

This guide explains the key opportunities available to charities and how to take advantage of them.

One of the most significant energy cost advantages available to charities is reduced VAT. While commercial businesses pay 20% VAT on energy, charities that use energy for non-business purposes can qualify for the reduced rate of 5%.

To qualify, the energy must be used for:

• Charitable non-business activities (e.g., providing services to beneficiaries)
• Residential accommodation (e.g., care homes, hostels)
• Small-scale use (below 1,000 kWh per month for electricity or 4,397 kWh per month for gas)

To claim the reduced rate, you'll need to complete a VAT declaration with your energy supplier. Many charities don't realise they're entitled to this relief and are paying the full 20% rate unnecessarily.

Charities may also be exempt from the Climate Change Levy (CCL), a government tax on energy used by businesses. The exemption applies to energy used for charitable non-business purposes.

Combined with the VAT reduction, these two reliefs can reduce a charity's energy costs by 15–20% compared to a commercial business using the same amount of energy.

Despite these reliefs, the biggest saving opportunity for most charities is simply getting a better energy contract. Charities access the same commercial energy market as businesses, and the same principles apply:

If your energy contract has expired, you're almost certainly on deemed rates — the most expensive way to buy energy. Switching to a fixed-term contract can save 40–60% immediately.

Going direct to your current supplier means you only see one set of rates. An independent broker compares 20+ suppliers and can often find significantly better rates.

Energy prices are volatile. A broker can explain the current market outlook and help you decide whether a 1, 2, or 3-year contract makes sense for your organisation.

Many charity buildings are older properties that haven't been optimised for energy efficiency. Common opportunities include:

Switching from fluorescent or halogen lighting to LED can cut lighting costs by 60–80%. LED bulbs also last significantly longer, reducing maintenance costs.

For community halls and meeting rooms, occupancy sensors ensure lights aren't left on in empty spaces.

Heating is typically the largest energy cost for charity buildings. Key improvements include:

• Ensuring boilers are serviced annually and operating efficiently
• Installing programmable thermostats and setting them to match actual usage patterns
• Improving insulation (loft, cavity wall, draught-proofing)
• Considering heat pumps for buildings due for boiler replacement

Simple behavioural changes can reduce energy use by 10–15%:

• Switching off lights and equipment when not in use
• Turning off computers rather than leaving on standby
• Reporting dripping taps and leaking pipes promptly

Several funding streams are available to help charities improve their energy efficiency:

• UK Shared Prosperity Fund — Local authority grants for community buildings
• Community Energy Fund — Support for community-owned renewable energy projects
• Energy Company Obligation (ECO4) — Insulation and heating improvements for eligible properties
• Salix Finance — Interest-free loans for public sector and charity energy efficiency projects

Your local council and the Energy Saving Trust can advise on what's available in your area.

Larger charities with multiple sites — offices, shops, community centres — can benefit from portfolio energy management. A broker can compare rates across all your meters simultaneously and potentially negotiate volume discounts.

Our team works with charities and not-for-profit organisations across the UK. We understand the specific requirements around VAT relief and CCL exemption, and we'll make sure your contract is structured correctly.

Get a free quote for your charity or call 01256 844048.