In 20 years, the proportion of all household spending that goes to good causes has stayed flat and the proportion of households that donate has fallen. Sophie Hudson asks how worried charities should be
In 1988, hardly anyone had heard of mobile phones, Gift Aid had not been introduced and Margaret Thatcher was Prime Minister. The world has changed a lot since then, but one thing has remained remarkably consistent: the proportion of household spending that goes to charities.
According to a report published last month by Cass Business School and the University of Bristol, the proportion of the expenditure of all UK households that was given to charity was the same in 2008 as in 1988 - 0.4 per cent.
The New State of Donations: three decades of household giving, was compiled using the Office for National Statistics' annual Living Costs and Food survey, which gathered data on expenditure from 205,925 nationally representative households between 1978 and 2008.
The report also found that among those households that gave to charity, donations rose from 0.9 per cent of their expenditure in 1978-82 to 1.6 per cent in 2003-08. Meanwhile, the growth in household giving broadly stayed in line with the growth in national wealth.
What this means, in effect, is giving has been sustained by virtue of fewer households giving greater amounts. As one commentator puts it: "Giving is becoming a minority sport."
How worried should charities be about these findings, considering the Gift Aid tax reliefs introduced during the period surveyed, efforts that have been put into recruiting donors by individual organisations and joint initiatives such as the Giving Campaign? And what can be done to make donating more widespread?
The report itself concludes that tax relief, changes in the way people give and the professionalisation of fundraising "may have prevented giving from falling, but there is little evidence that they have affected how much people give".
It says: "The relative stability is both good and bad news for the sector. It means charities can rely on donors, even in times of recession, but it also indicates the huge scale of the challenge in raising levels of charitable giving."
Martin Brookes, chief executive of the think tank New Philanthropy Capital, says charities should be concerned about the findings and try to work out why the proportion of spending donated is static.
"As we've got richer, we have not become more generous," says Brookes. "We need to recognise that there's a problem here."
Richard Harrison, director of research at the Charities Aid Foundation, takes a more optimistic view. He says the consistency in giving is good news and there is no need for charities to rethink their fundraising strategies by targeting other types of giving as a result of the research. "Broadly speaking, we see individual voluntary income as the cornerstone of the British charitable landscape and it will remain so," he says.
Harrison says embracing technology might help to increase the proportion of expenditure that goes on giving. "It's about making giving seamless and engaging - technology can make life simple," he says.
But Karl Wilding, head of research at the National Council for Voluntary Organisations, is sceptical about the potential of technology. "We need to understand its impact on the donor psyche," he says. "Does it create the feeling that they've discharged their giving responsibility?
"We also have to check whether new channels are increasing the overall take or hollowing out other approaches."
Sarah Smith, professor of economics at the University of Bristol and one of the report's authors, says this is an important point. "What a lot of tools do is shift giving around," she says. "Government and charities should focus on what will increase the total amount of giving."
Another key finding from the report, says Smith, is that giving has increased for short periods, such as the 'Millennium effect' in 2000, but that it is harder to create a long-term shift. "If those messages aren't sustained, those levels aren't sustained," she says.
This is a timely message for the government, which issued the Giving Green Paper at the end of last year and is now working on ideas for creating a 'culture of giving' in the UK.
The paper has been largely welcomed, but some omissions have been pointed out. At a debate marking the launch of the Cass/University of Bristol report, Lord Janvrin, deputy chairman of HSBC, said the government should introduce more financial incentives to encourage giving. It is a popular argument, but one that meets considerable resistance from within the sector.
"There are already very generous tax incentives," Mark Astarita, director of fundraising at the British Red Cross, argues. He says he has never come across a major donor who talks about tax incentives, adding that they give to charity because they care about the cause.
Instead, he argues that Gift Aid for higher-rate taxpayers should be paid directly to the charity instead of being given back to the donor. "If you want more giving, you need more asking. All of the Gift Aid should go to the charities because we need to incentivise charities to fundraise more," he says.
Louise Richards, director of policy and campaigns at the Institute of Fundraising, also thinks there should be more emphasis on asking for donations. Richards says the green paper has provided a stimulus for new ways of harnessing people's generosity and she is convinced that fundraising among individual givers remains as important as ever. "History has shown that those charities that invest in fundraising are the ones that survive recessions," she says.
MAIN POINTS OF THE REPORT
- The percentage of households giving to charity fell from 32 per cent in 1978 to 25 per cent in 1999. In 2000-08, it has averaged more than 28 per cent;
- Giving has generally increased in line with the economy during times of growth, but has not fallen as quickly as economic activity during recessions;
- The proportion of total donations that come from the richest 10 per cent of households increased from 16 per cent in 1978-82 to 22 per cent in 2003-08;
- The average weekly donation among all households rose from £0.98 in 1978 to £2.34 in 2008. For donor households alone, it rose from £3.05 to £8.66;
- As a share of total spending, households gave 0.4 per cent in 2008, the same as in 1988. Among households that give, it rose from 1.5 per cent in 1988 to 1.7 per cent 20 years later.
OVER-65S - THE 'GENEROUS GENERATION'
The research by Cass Business School and the University of Bristol discovered a 'generous generation' of givers that has consistently given more than other age groups.
"If you look at people who are in their 60s and 70s now, they were also giving quite a lot 20 years ago," says Sarah Smith, professor of economics at the University of Bristol and co-author of the report. The over-65s accounted for 35 per cent of all donations in 2008, it found, up from 25 per cent in 1978.
Richard Harrison, director of research at the Charities Aid Foundation, says: "The baby boomer generation is a landmark generation in terms of generosity." Many over-65s have free time, he says, and charities should think of ways of involving them in giving time as well as money.
Age UK has a predominantly older supporter base, but Paul Farthing, its director of fundraising, acknowledges the dangers of relying on this generation as it gets older.
"We do need to think how we can bring in a new generation of people," he says.
More encouragingly, the report also found the steep downward trend in giving in the 20-25 age group has shown signs of reversal over the past decade.