Charitable giving is big business, with many organisations handling millions in revenue. But big charities have come under fire for issues from bad accounting to actually doing more harm than good. In the second of our short series on The Problem with Big Charity, Cathy Pharoah looks at the big UK players.
Charities are an increasingly established part of the institutional landscape. They have strong brands and millions of people invest their hopes of a cure for cancer in donations to Cancer Research UK or the preservation of Britain’s valued landscape through the National Trust. Most of us will be familiar with the many charities in the frontline of care for the most disadvantaged at home and abroad, such as the NSPCC, OXFAM, Leonard Cheshire Disability and Shelter. And many UK national artistic and cultural institutions are likely to be charities, too, such as the Royal Opera House and the Tate Gallery.
The total income of registered charities in the UK is now £71 billion, and over the last five years has grown by 37% as more services are provided by the sector. But are we beginning to expect too much from our major charities, putting both public willingness to give and needed services at risk?
The go-to solution
Governments seeking to reduce the state’s role in public service delivery find charities a highly attractive alternative. Charities are independent, relatively free from bureaucracy, and can raise funds from multiple sources including voluntary donations and their own trading activities, as well as from statutory contracts. In addition, the sector has an enviable historic asset base worth £190 billion today. This includes investments in funds and fixed assets such as property, which also generates income. That’s not to mention voluntary donated labour, with a value estimated at £50 billion a year.
Charities are increasingly expected to step in where statutory funding cuts bite into welfare, and are often the go-to solution for flexible, value-driven and cost-effective services whether in social care, education, culture or leisure. As prime minister David Cameron said: “We are injecting competition, saying to the private sector … and to charities: come in and deliver great public services.”
But despite the big rhetoric, the voluntary sector is estimated to contribute a tiny 1% of GDP. An analysis of income change in some of the UK’s largest service-providing charities, which raise funds from a mix of donations, trading and statutory sources, shows that their combined income has barely changed over the last few years, increasing at an average of less than 1% a year after adjusting for inflation (see chart below).
The figures reveal harsh realities around charitable funding for different causes. The incidence of cancer is projected almost to double by 2030, to affect around 4m people in the UK. Cancer research and care are hugely important to the public, but while remaining our largest charity, Cancer Research UK’s growth has been modest. Public concern may be shifting more to cancer care, as shown in the growing support for Macmillan, whose income has increased significantly on the back of successful public fundraising. Although a great performance, the real challenge facing the need for cancer care and treatment over the next decades is enormous. Costs of cancer care and treatments are projected to rise from £9.4 billion to over £15.3 billion, and it is difficult to see how charities can meet any gaps in NHS provision at this level of need.
The figures for charitable provision of children’s care raise concerns, too. While Barnardo’s has shown a modest growth over the period, both Action for Children and NSPCC have taken a large hit to their income. Children and young people’s care is another area of growing need in our society, with numbers in foster or residential care increasing since 2008 (until then, they had been falling) – there are now 70,000 18-year-olds needing care, the highest number since 1985. At a total cost of £2.5 billion, such services are vulnerable to statutory spending cuts. Again, it is difficult to see how charities could meet any further gaps, given that care of children and young people is a cause finding it difficult to increase public support. It may be that the public fundamentally believes that children at risk in our society are a government responsibility.
Support for animal welfare and conservation, which are totally dependent on the donating public, appears to have fallen, too. It is possible that in a time of global crisis and austerity the public is giving higher priority to international causes which attract around £1 billion in private giving per year, equivalent to just under 9% of the Department for International Development’s £11 billion aid budget.
Well over one quarter of the income shown above (28%) derives from the government itself, meaning that these charities are vulnerable to the very spending reductions which the government hopes they will help redress. Charities such as Mencap receive around nine tenths of their income from the public sector, and disability is not a popular cause with the donating public.
How far can charities’ financial viability be based on a public willingness to support growing service needs when evidence strongly suggests giving has flatlined for the last few decades? Charities are being expected to do more with less, and to make savings in providing services to the poorest and neediest in society which the government itself finds too expensive. All the evidence suggests that we are not funding charities sufficiently to do the job.