The future for the voluntary and community sector


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Presentation by Cathy Pharoah to the Southwark Forum on 23rd June 2011

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The future for the voluntary and community sector

  1. 1. Future for the voluntary and communitysector –funding trends, challenges, opportunities Cathy Pharoah, Co-Director, ESRC CGAP
  2. 2. At threshold of change in sector environment –economic, political, socialEconomic uncertainty/ weak growthCuts in public expenditureFalls in consumer spendingNew focus on the role of the individual/ community –steppingin to provide public goods where governments failLocalism
  3. 3. Changing definitions/ boundaries of sectorRegistered charity sector has doubled in a decade, £24 billion - £52 billionPlus charitable quangos, major cultural institutions which do not report to Charity Commission, but may be major fundraisers, new local trustsNon-registered voluntary associations/ community groupsSocial enterprise sector (eg CCI, IPS, Credit Unions)Tax-exempt entities (universities, Brownies)Housing associationsIndependent SchoolsBig Society?
  4. 4. Tensions - private action, public benefit?Donor preference - ‘impure altruism’ and crowding out theory (eg Andreoni, 1990)Limited evidence of redistributive effects – US research, Clotfelter (1992) and Reich (2005):UK - recent ‘charity deserts’ work (eg Mohan, CGAP)Disadvantaged groups/ causes most dependent on public fundingVoluntary and community organisations in deprived areas most likely to be dependent onpublic fundingVolunteering levels highest in least deprived areasGiving?Can philanthropy fill gaps – social, economic?
  5. 5. Current funding sources – key determinantsPrivateIndividual/ household giving - trends in economic growth, giving cultureMajor giving/ legacies - corporate trends, market values, culture, taxCorporate community investment – static (cash)Charitable trust funds - investment values, legacies, major givingInvestments (markets)Statutory/ earnedStatutory (policy environment)Trading/ enterprise (nature of social markets, non-profit structures)
  6. 6. An example of funding structure £35.5 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% NCVO: Civil Society Almanac 2010
  7. 7. Which Elderly Benevolentfavourite Chest and Heartcauses get Community devt/ Religious (welfare)the biggest regeneration Cancerslice of the Service/ ex-service Health Inf & Research General soc welfarestatutorycake*? Religious (Internl) Arts and culture Hospices/hospitals Envt/ Conservation Children/ youth/ Educn/ professional leisure Disability, deaf, blind, International mental health*Animal welfare and religious missionary causes have disappearedSource: Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)
  8. 8. What gets the Community devt/ Benevolent Elderly biggest slice regeneration Youth/ leisure of our giving* Service/ex-service Educn/professional cake? Health Inf/ Research Chest and Heart International Arts and culture General soc welfare Cancer Envt/ 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 Pharoah, Charity Market Monitor 2011, CaritasData (forthcoming July 2011)
  9. 9. Current funding trends – the squeezePrivateIndividual/ household giving - contractionMajor giving – poor market information/ market- linked?Legacies – fluctuating in line with marketsCorporate community investment – static (cash)Charitable trust funds – contractionInvestments - contractionStatutory/ earnedStatutory (policy environment) – major public spending cutsTrading/ enterprise – transfers, scale of business operations, fundraising
  10. 10. Cuts, social investment, new marketsStatutory funding cuts - £3 – 4 billion? (over 4 years)Sub-sector diversity - cuts will be highly unevenly experiencedSpecial/ social investment funds - £1 billion (10-year growth,1-2% of sector)Programme Related Investment - £3 million per annum?Current sector borrowing (largely mainstream banks) - £ 3 billion (ish)New markets, opportunity
  11. 11. New (social) finance – some issuesSocial finance space not clearly defined; BSB delaysTransition fund – scale, target?Existing non-profit sector boundaries: private giving and investment voluntary and trading income charitable objectives accounting requirements tax requirements legal requirements legal formsAssessment of capacity - speed, direction, scale of change?
  12. 12. Philanthropy market today (estimated) 1.5 Very wealthy 1.1 Mass affluent* + £1 billion Gift Aid 2.0 Legacies charity tax reclaim 9.9 General public ££ £15.5 billion (ish)*Higher-rate tax-payers onlySources: (McKenzie and Pharoah, Giving 2009 (CAF/NCVO); HMRC Table 10.2, 2009; Legacy Foresight 2009;Sunday Times Rich List, 2008 (what happened to 2009?)
  13. 13. Legacies %43 UK GDP210 2003 2004 2005 2006 2007 2008 2009 2010 2011-1 Charitable legacies-2-3-4-5-6
  14. 14. Philanthropy – some trends, issuesIncreasing dependence on narrower base of donorsIncreasing competition for resourcesLong-term trends?Philanthropic resources – new? redirection of existing?Giving or investing – tensions in culture/ motivationThe new donor – fact or fiction?New technologies/ methods – substitution or new markets?
  15. 15. Innovation, growth – some issuesCharitiesUncertainties and branding challengesLack of market informationInvestment-readiness, speed, feasibilityMarket capacityDistribution - matching the needs and resources of Big SocietyMeasuring impact and returnNew product development – who? where? cost?Who’s shaping the market-place?
  16. 16. Filling funding gaps, shifting direction, reconfiguring?Challenges for existing third sector organisations/ service providersNew entrantsSmall, local and niche providersInfrastructureGrant-makers