Richard Litchfield: Is it time for charity shops to break away from their parent organisations?

Charity shops are re-energising high streets - but many organisations aren't equipped to manage a large-scale retail operation, writes our columnist

Richard Litchfield
Richard Litchfield

I'm always fascinated by parts of the voluntary sector that have been successful at innovating and changing their business model during the economic downturn.

No more obvious case exists than the rise of charity shops. Like pubs and churches, they are ubiquitous in every town - I counted seven in a short walk along my high street. At a time when UK retailing is in decline, charity shops are re-energising high streets - according to a recent report by PwC, they are the fastest-growing part of the retail industry.

So what's behind this success? The downturn has been a boon for the charity shop, which offers a way for families to keep household costs down. One in four families say they now use charity shops more often than they did two years ago.

But demand isn't being fuelled only by the downturn. The popularity of vintage and second-hand designer labels has drawn in customers from a wide range of social groups.

Charity retailers raise a total of nearly £300m each year, according to the Charity Retail Association, and this makes them an important source of voluntary sector funding. For the likes of the British Heart Foundation, the market leader, retail outlets account for up to half of its income and a quarter of unrestricted funds.

However, success brings its own challenges. Managing a large retail operation requires a different approach from running a charity - different skills, people, governance arrangements and finance. Charities that run shops face a dilemma over how to communicate about the impact they are having on communities and the environment without diluting attention from the charitable causes with which they are associated.

After all, charity shops provide more than 200,000 volunteering opportunities a year and benefit the environment hugely by preventing second-hand goods ending up in landfill. A Demos/CRA report published last year claimed that charity shops prevented 3.7 million tonnes of carbon dioxide emissions - or the equivalent of Iceland's carbon footprint.

So should charities separate their core business from their retail operations more clearly? Are they in effect two entities, rather than one with a subsidiary? By separating the parent charity from the retail operation, charity retailers might attract new partnerships and funding to expand their function as forces for economic regeneration in towns. Social franchising and social investment could help.

The first step, however, is clear strategic thinking. Parent charities should acknowledge that the success of their retail operations means their shops are not just a fundraising channel but a charitable end in themselves.

Charity shops are revitalising the face of the high street, they're changing the nature of our charities and, thanks to my other half's eye for a bargain, they are refreshing my wardrobe too.

Richard Litchfield is chief executive of Eastside Primetimers

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