Charities must keep a tight relationship with their shops

Richard Litchfield got it wrong - instead of loosening ties, charities should keep retail close to their heart, writes Ally Paget

Ally Paget says the link between charity retail and primary activity is essential in an atmosphere of growing hostility
Ally Paget says the link between charity retail and primary activity is essential in an atmosphere of growing hostility

In his recent article for Third Sector, Richard Litchfield asks whether it's time for charity shops to break away from their parent organisations. In so doing, he references Demos research – published last November and sponsored by the Charity Retail Association – about the significant social value benefits that charity shops provide.

Litchfield suggests that the ties between a charity’s retail operations and its core business might act as a barrier to their success – potentially inhibiting growth and revenue, their capacity to create social value and their ability to trumpet it. Scratch the surface of that same Demos research, though, and you’ll find that the answer is exactly the opposite.

Whether we’re talking about the public at large, occasional or hardened charity shoppers, donors or volunteers, support for charity shops is founded on their being – and being seen to be – in aid of a good cause. Seventy-four per cent of respondents to our public survey were supportive of the business rates discount that charity shops receive – a statistic that might come as a surprise, given much of the media coverage of the topic.

Among volunteers, the most common primary motivations for giving one’s time were the desire to make a contribution either to charity generally or to a specific charity (20.4 per cent and 15.5 per cent of volunteers respectively). This ranked far above other reasons such as gaining work experience, being active in the community and the opportunity to socialise.

That said, charity retail’s real battle for hearts and minds is not with the public but with central and local government, chambers of commerce and business. Our research with small and medium-sized businesses identified some ‘tipping points’ among their broad support for charity retailers. Where charity shops were perceived as charging high prices, selling a lot of new goods or ‘specialist’ (eg vintage) goods, or where there was any doubt about the veracity of their advertised cause, support was less forthcoming.

A common source of contention was that charity shops were becoming "less like charity shops" or moving away from their primary purpose. The same reasoning presumably underlies the Business, Innovation and Skills Committee’s recent call for government to tighten the definition of charity shops. A clear link between retail and primary activity is therefore an important way charities can ensure support – financial and ideological, public and political – in an atmosphere of growing hostility.

In fact, many of the charity retailers we spoke to were in the process of introducing closer working between their retail and service delivery arms. This shift can be seen right at the top, too; for instance, Sue Ryder’s new chief executive, Heidi Travis, moved to the role after more than three years as the charity’s director of retail. Charities themselves seem increasingly happy to see retail as an integral part of their mission rather than a sideline – but why is this?

Charity shops are (and need to be) more than a source of revenue. This is something the public already easily recognises; 59 per cent believe that the mere existence of charity shops makes people more likely to donate or behave charitably, and those of us who have donated or shopped in a charity shop during the past year are on average 20 per cent more likely than non-donors or shoppers to believe that the shops raise awareness of an important cause or social issue.

Our research also revealed several innovative examples of shops being used to showcase, promote and even host charities’ primary purpose activities. The Mind shop staffed entirely by women with personal experience of having mental health needs and the hospice shop that staged a pop-up sale in a local care home represent social value at its fullest and most effective; combining their expertise and local knowledge to serve cause, community and business at the same time. In just the same way, parts of the sector are beginning to lead the way in the transformation of the high street from a space for selling goods to a space for providing services – with the charity Shelter, for example, providing housing advice through two of its London stores.

Last but by no means least, there are some practical implications of Litchfield’s proposed separation of powers that warrant further investigation. Public support and social value aside, a large part of the charity retail success story rests on a unique business model. Business rate relief undoubtedly plays an important part in this, as do donated stock, a large volunteer workforce and the more recent advent of Gift Aid. Were charities to run their shops as separate entities, it is not clear which, if any, of these advantages could be retained in light of the implications for charitable and tax status, minimum wage legislation and so on. 

For all sorts of reasons – providing, promoting and funding their primary purpose, fostering support, maximising their social value and securing their continued place on the high street of the future – charities are absolutely right to keep retail close to their heart.

Ally Paget is a researcher at the think tank Demos

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