Giving standstill could change the shape of the charity sector
The latest report by the Institute of Fundraising finds that people who donate to charity then go on to other good deeds. If donations have reached a ‘hard ceiling’ what will the effect be on the charity landscape and wider society?
Nobody would deny that there have been some big changes in the UK recently. An unexpected Brexit vote and snap election have divided society, much in the same way as the BBC’s revelation of the huge gender pay gap and the next Doctor Who being a woman. But how has charitable giving been affected?
A YouGov survey commissioned by the Institute of Fundraising[1] recently found that 63% of people who give to charity have taken additional positive actions as a result of that donation. This included nearly a quarter (24%) of those who have donated becoming regular givers to charity and 16% who subsequently gave time as a volunteer.
In a sense this is not a new finding. Research by CAF in 2013 found that, by and large, it is the same group of people doing the giving and the volunteering and many of the other good things in our society. And, importantly, that there are very few of them. CAF called them “the civic core” of society – just 9% of people who account for 66% of all the time and money donated to British charities. What’s new is the alleged causal link between giving first and then going on to do other charity-related activities. Meaning that giving is a very important barometer of civil society.
The problem here is that giving levels are stagnating in the UK. All the usual indicators are showing no growth in donations, even while the wider economy is recovering after the global recession. The latest UK Giving report shows zero growth on last year, while the NCVO warns that donations are unlikely to grow as the challenging conditions currently facing British society continue. Research published in 2011 by Cass Business School found that the level of giving has remained remarkably stable over the last thirty years at 0.4% of household expenditure[2]. In general, giving has only risen in line with economic growth, indicating that habits of giving may be fairly fixed.
There are also indications, in both the CAF UK Giving and Community Life Survey reports, of a decrease, albeit small[3], in the proportion of people giving. Hand-in-hand with this are reports of falling volunteering levels over the last three years.
Some commentators even suggest that a hard ceiling in public giving has been reached. This could mean that charity giving has now reached a stalemate where increased giving to one charity or cause means decreased giving to another, intensifying the competition between charities.
There is a widespread belief that one of the chief causes of the stagnating donations is the decline in public trust and confidence in charities following a series of scandals and bad publicity. And indeed recent surveys show that charities are less trusted than hairdressers, scientists and TV newsreaders. While this may be a slightly frivolous example (given that fewer than 1 in 10 of those interviewed said that they trusted pollsters!) other, more long-term, surveys such as that by the Charity Commission shows that charities are slightly less trusted than the food and drink industry[4]. Did someone say horsemeat?
As a result of such scandals there have been wholesale changes to fundraising regulations. A new fundraising regulatory regime was introduced in 2015- the Public Fundraising Regulatory Association (PFRA) – which introduced stricter data protection (General Data Protection Regulation (GDPR)), controls regarding how charities can approach donors and over sharing donor data with others. In addition, the new Charities Act, which received Royal Assent on 16th March 2016 and came into force by degrees during 2016, gives wide-ranging powers to the Charity Commission, including the power to remove Trustees and others following an inquiry, the power to direct winding up, the power to direct property to be applied to another charity and reserve powers to control fundraising. All these are aimed at increasing public trust and consequently public donations.
But what if we have already hit the brick wall as far as charitable giving is concerned? Will running around like headless chickens trying to comply with all the new regulations bring in more money? Is it even possible to achieve a step change in individual giving in the UK? Evidence suggests that previous attempts have been largely unsuccessful, while step changes have been achieved by random events such as the millennium and large disaster appeals.
While the answers are uncertain it is surely true that building a better, safer, more trustworthy charity sector can never be a bad thing, so long as that doesn’t get in the way of providing the best service to users by becoming an end in itself. And it will be even more important to be up to speed in a world where donors are potentially going to move their finite donations away from charities which don’t apply the best practice standards and donor experience to those which do. Competition between charities looks set to become more fierce.
We can see already how the sector is changing, with more resources concentrated in a small number of super-charities who are better at competing for funds. This is certainly an environment in which smaller charities will find it harder to compete. And this could have far-reaching consequences for the UK charity landscape in the long-term. So are we all doomed? Not quite.
The upside is that charity giving and volunteering levels have proved remarkably resilient over time and that small civic core have continued to do their bit through thick and thin. So the third sector is unlikely to suffer dramatic diminution, but, like Doctor Who, it may go through some shape-shifting in its regeneration.
[1] The total sample size was 2,006 adults weighted to be representative of all UK adults.
[2] Centre for Giving and Philanthropy & Centre for Market and Public Organisation (2011). The new state of donation: Three decades of household giving to charity 1978 – 2008. Cass Business School.
[3] CAF reports the decrease as being “within the margin of error”, meaning that we won’t know for sure until we have more long-term trend data.
[4] Even if the levels of trust have risen in the last year.