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Analysis: Charities Aid Foundation report details the decline in giving by the young

John Low of CAF warns of a 'donation deficit,' but Cathy Pharoah of Cass Business School says there's 'no cause for concern'

CAF chief executive John Low and Cathy Pharoah, professor of charity funding at Cass Business School
CAF chief executive John Low and Cathy Pharoah, professor of charity funding at Cass Business School

Last week, the Charities Aid Foundation released a report that it says illustrates a "long-term crisis" in giving.

The report, written by Sarah Smith, professor of economics at Bristol University, is chiefly based on research carried out jointly by her and several other academics, first published last year.

The research shows that more than half of all donations to charities now come from the over-60s, compared with just over a third 30 years ago. And the over-60s are now more than twice as likely to give to charity as the under-30s.

The report draws few conclusions about what these changes will mean for charities. But CAF says that data showing low levels of giving by the under-30s demonstrates the need for urgent action. In his foreword to the report, CAF chief executive John Low says radical changes are needed to increase engagement with young people and tackle what he calls a long-term "donation deficit" facing charities.

Low proposes changes including payroll giving reform, the introduction of a universal Gift Aid declaration and the introduction of ‘lifetime legacies’, which allow people to make legacy-style donations to charities while still alive. The report has also prompted suggestions from fundraising agencies that charities should do more to engage with young people through digital media.

Cathy Pharoah, professor of charity funding at Cass Business School, takes issue with CAF’s interpretation. She says the study relies mainly on data first published in a report called New State of Donations: three decades of household giving to charity 1978-2008, written by Pharoah, Smith and other academics and published in February last year.

Pharoah says that report showed "no cause for concern" and contained little evidence to suggest that today’s young people would be less generous as they got older than previous generations. It showed that, while giving by older people had increased, total giving had remained virtually unchanged for 30 years, staying "remarkably stable" at about 0.4 per cent of household income, she says.

She says that changing trends can be explained by changes in wealth and demographics, rather than in attitudes. Much of the difference can be explained by the fact that the data is based on households, not individuals, says Pharoah, and by the fact that young people are starting work later.

"A young household is more likely to be a single person, and that person is likely to have stayed in education for more years," she says. "Someone living alone and in their first year of work is less likely to give than a couple who have both been in employment for several years."

Similarly, Pharoah says, donations by older people have gone up largely because there are many more older people – life expectancy has increased from about 72 to 80 in the past 30 years – and because those people tend to have higher incomes than 30 years previously, thanks to more savings, more generous pensions and more wealth from house ownership.

Pharoah says that people tend to campaign when they’re young and give when they’re old. "Every generation sees a rise in giving as it gets older, followed by a tail-off at the end of their lives," she says. "There’s nothing to suggest young people aren’t interested in charity."

Smith says: "Cathy Pharoah’s points are interesting, but I think they are speculative. In fact, we considered the points she has raised and tested them as part of the analysis to see if they could explain what was going on."

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