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The future for the voluntary and community sector
1. Future for the voluntary and community
sector âfunding trends, challenges, opportunities
Cathy Pharoah, Co-Director, ESRC CGAP
2. At threshold of change in sector environment â
economic, political, social
ďŽEconomic uncertainty/ weak growth
ďŽCuts in public expenditure
ďŽFalls in consumer spending
ďŽNew focus on the role of the individual/ community âstepping
in to provide public goods where governments fail
ďŽLocalism
www.shaw-trust.org.uk
3. Changing definitions/ boundaries of sector
ďŽRegistered charity sector has doubled in a decade, ÂŁ24 billion - ÂŁ52 billion
ďŽPlus charitable quangos, major cultural institutions which do not report to Charity
Commission, but may be major fundraisers, new local trusts
ďŽNon-registered voluntary associations/ community groups
ďŽSocial enterprise sector (eg CCI, IPS, Credit Unions)
ďŽTax-exempt entities (universities, Brownies)
ďŽHousing associations
ďŽIndependent Schools
ďŽBig Society?
www.shaw-trust.org.uk
4. Tensions - private action, public benefit?
ďŽDonor preference - âimpure altruismâ and crowding out theory (eg Andreoni, 1990)
ďŽLimited evidence of redistributive effects â US research, Clotfelter (1992) and Reich (2005):
ďŽUK - recent âcharity desertsâ work (eg Mohan, CGAP)
ďŽDisadvantaged groups/ causes most dependent on public funding
ďŽVoluntary and community organisations in deprived areas most likely to be dependent on
public funding
ďŽVolunteering levels highest in least deprived areas
ďŽGiving?
ďŽCan philanthropy fill gaps â social, economic?
www.shaw-trust.org.uk
5. Current funding sources â key determinants
Private
ďŽIndividual/ household giving - trends in economic growth, giving culture
ďŽMajor giving/ legacies - corporate trends, market values, culture, tax
ďŽCorporate community investment â static (cash)
ďŽCharitable trust funds - investment values, legacies, major giving
ďŽInvestments (markets)
Statutory/ earned
ďŽStatutory (policy environment)
ďŽTrading/ enterprise (nature of social markets, non-profit structures)
www.shaw-trust.org.uk
6. An example of funding structure
ÂŁ35.5 bn - 63% of registered charities
National
Trading lottery Corporate
subsidiaries 1% giving
3% 6% Legacies
Statutory
6%
grants and
fees Fundraising
36% 6%
Voluntary
sector
8%
Investments
9% Individual fees Individual
9% donations
16%
www.shaw-trust.org.uk
NCVO: Civil Society Almanac 2010
7. Which Elderly
Benevolent
favourite Chest and Heart
causes get Community devt/
Religious (welfare)
the biggest regeneration Cancer
slice of the Service/ ex-service
Health Inf & Research
General soc welfare
statutory
cake*? Religious (Intern'l)
Arts and culture Hospices/hospitals
Env't/ Conservation
Children/ youth/ Educ'n/ professional
leisure
Disability, deaf, blind,
International mental health
*Animal welfare and religious missionary causes have disappeared
Source: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011) www.shaw-trust.org.uk
8. What gets the Community devt/
Benevolent
Elderly
biggest slice regeneration
Youth/ leisure
of our giving* Service/ex-service
Educ'n/professional
cake? Health Inf/ Research
Chest and Heart
International
Arts and culture
General soc welfare
Cancer
Env't/ Conservation
Religious (welfare) Children
Animal welfare Disability, deaf,
blind, mental health
Religious
(International) Religious (mission)
Hospices/ hospitals
*Includes individual, corporate, private trust and legacy giving
www.shaw-trust.org.uk
Source: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)
9. Current funding trends â the squeeze
Private
ďŽIndividual/ household giving - contraction
ďŽMajor giving â poor market information/ market- linked?
ďŽLegacies â fluctuating in line with markets
ďŽCorporate community investment â static (cash)
ďŽCharitable trust funds â contraction
ďŽInvestments - contraction
ďŽStatutory/ earned
ďŽStatutory (policy environment) â major public spending cuts
ďŽTrading/ enterprise â transfers, scale of business operations, fundraising
www.shaw-trust.org.uk
10. Cuts, social investment, new markets
Statutory funding cuts - ÂŁ3 â 4 billion? (over 4 years)
Sub-sector diversity - cuts will be highly unevenly experienced
Special/ social investment funds - ÂŁ1 billion (10-year growth,1-2% of sector)
Programme Related Investment - ÂŁ3 million per annum?
Current sector borrowing (largely mainstream banks) - ÂŁ 3 billion (ish)
New markets, opportunity
www.shaw-trust.org.uk
11. New (social) finance â some issues
ďŽSocial finance space not clearly defined; BSB delays
ďŽTransition fund â scale, target?
ďŽExisting non-profit sector boundaries:
private giving and investment
voluntary and trading income
charitable objectives
accounting requirements
tax requirements
legal requirements
legal forms
ďŽAssessment of capacity - speed, direction, scale of change?
www.shaw-trust.org.uk
12. Philanthropy market today (estimated)
1.5 Very wealthy
1.1 Mass affluent*
+ ÂŁ1 billion
Gift Aid
2.0 Legacies
charity tax reclaim 9.9 General public
ÂŁÂŁ
ÂŁ15.5 billion (ish)
*Higher-rate tax-payers only
Sources: (McKenzie and Pharoah, www.cgap.org.uk/uploads/TaxAndGiving.pdf
UK Giving 2009 (CAF/NCVO); HMRC Table 10.2, 2009; Legacy Foresight 2009;
Sunday Times Rich List, 2008 (what happened to 2009?) www.shaw-trust.org.uk
14. Philanthropy â some trends, issues
ďŽIncreasing dependence on narrower base of donors
ďŽIncreasing competition for resources
ďŽLong-term trends?
ďŽPhilanthropic resources â new? redirection of existing?
ďŽGiving or investing â tensions in culture/ motivation
ďŽThe new donor â fact or fiction?
ďŽNew technologies/ methods â substitution or new markets?
www.shaw-trust.org.uk
15. Innovation, growth â some issues
Charities
ďŽUncertainties and branding challenges
ďŽLack of market information
ďŽInvestment-readiness, speed, feasibility
Market capacity
ďŽDistribution - matching the needs and resources of Big Society
ďŽMeasuring impact and return
ďŽNew product development â who? where? cost?
ďŽWhoâs shaping the market-place?
www.shaw-trust.org.uk
16. Filling funding gaps, shifting direction, reconfiguring?
ďŽChallenges for existing third sector organisations/ service providers
ďŽNew entrants
ďŽSmall, local and niche providers
ďŽInfrastructure
ďŽGrant-makers
www.shaw-trust.org.uk