Economic worth of the sector 'chronically undervalued', report concludes

(Photograph: Matthew Horwood/Getty Images)
(Photograph: Matthew Horwood/Getty Images)

The UK charity sector contributes a mammoth £200bn in economic value each year, almost 12 times the official estimate, new figures show.

A report from the charity Pro Bono Economics shows a “chronic undervaluation” of the economic contribution of the UK charity sector, which is officially valued at £17bn a year. 

The report, Undervalued and Overlooked? The Need for Better Understanding of Civil Society’s Contribution to the UK Economy, says the sector contributes a “gross value added” of £200bn a year, equal to about 10 per cent of the UK’s annual economic output. 

It says the undervaluation of the sector has led to “policy neglect and a dramatic underestimation of its true economic contribution” and resulted in the government offering “insufficient support” in the form of its £750m emergency funding package. 

According to the report, the undervaluation of the sector reflects a failure on the part of the government and others to collect the right sort of date.

It says, for example, that the official valuation figure takes no account of the contribution of the UK’s 11.9 million formal volunteers and the many more who provide informal volunteering support, which, combined with Office for National Statistics data, could add another £44bn a year to the UK economy. 

The value of the sector is also inflated once the “spillover” benefits associated with charitable and voluntary activity are taken into account. 

For example, helping ex-prisoners into stable accommodation and work can help reduce crime and generate savings for the public purse, it says. 

Matt Whittaker, chief executive of Pro Bono Economics and co-author of the report, said the government needed to revisit its rescue package as a matter of urgency because it fell “well short” of the level of need in the sector. 

“This under-resourcing is in large part a product of the chronic undervaluation of the contribution made by civil society to the UK economy, an undervaluation that has resulted in policy neglect over a number of years,” he said. 

“Vital activity has already been scaled back, and there is the very real danger that some services and support will be withdrawn altogether over the coming months.

“Alongside rising to today’s very visible funding challenges, it’s important that we do more to better understand the all-too-often invisible value of civil society.

"It is only by doing so that we can ensure that the sector gets the recognition – and therefore the policy attention – that it deserves.”

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