Mind the Giving Gap
Unleashing the potential of UK philanthropyDownloadTechnical report
Each year, members of the UK public voluntarily donate nearly £20 billion of their own funds to help make possible the work of tens of thousands of charities, employing hundreds of thousands of people and providing services, opportunities and communities to millions across the country. This generosity has long been a part of British culture, and that has never been more evident than it was during the pandemic.
Yet there is a growing threat that such generosity of spirit is fading in Britain. Data from a range of surveys suggests that the proportion of people giving to charity has been shrinking for a number of years, with one ONS source suggesting that the proportion of households donating regularly to charity fell from 32% in 2000 to just 26% in 2018.
The decline in philanthropy among those with the greatest resources is of particular concern. Even after adjusting for inflation, incomes of the top 1% of earners in the UK have grown significantly since 2011. The typical income of someone in the top 1% of earners grew by 10% in real terms between 2011-12 and 2018-19, from £247,000 to £271,000. Yet over the same period, the typical donation to charity made by top earners fell by over 20% and now sits at just £48 a month.
Meanwhile, the process by which the tax system encourages philanthropy is not working hard enough. Gift Aid is claimed by charities on just over half of donations in the UK, but a further 25% of the total value of donations may be eligible for it.
The falling participation in philanthropy, the decline in average giving by the wealthiest, and persistently unclaimed Gift Aid have combined to create a three-fold ‘giving gap’: one which could be worth close to £3 billion a year for the country’s charities. We estimate that:
The scale of this opportunity is too large to ignore. And many of the ideas for closing these giving gaps not only exist, but have already been tried and tested for their effectiveness.
There is evidently a role for philanthropists themselves in how they share and help proliferate philanthropy among their peers. And there is an adjacent role for wealth managers and advisers in how they understand and advocate for tax-efficient giving. There is a role too for the charity sector in how it fundraises, targets its action and communicates and measures its impact. And there is a role for the UK government, in how it encourages innovation in fundraising, how it coordinates policy on philanthropy and how it approaches Gift Aid.
Of particular interest to the Commission is the potential for growing place-based giving as a means of combatting the significant regional variation in the strength and funding of civil society which currently exists. Among those people completing tax self-assessments, our analysis shows that those in the country’s wealthiest areas declare seven times as many donations to charity as those in the most deprived areas (excluding London). The potential for targeted action to drive up donations in the parts of the country which need it the most, for example, through targeted match giving schemes or through leadership at the local level, is an exciting one.
To date, the combined effect of the trends identified in this report have been at least partially masked by the growing generosity of an ever-narrowing pool of committed donors. But that does not put public giving on a sustainable footing. Tackling the UK’s three-fold ‘giving gap’ must now be a priority for all those concerned about the sustainability of the charity sector.
It is a priority for the Law Family Commission on Civil Society too. We have detailed a range of potential policy options in this paper – not designed, at this stage, to serve as recommendations, but rather as jumping off points for further discussion. To that end, across the coming weeks we will be working closely with policymakers, sector representatives, academics, economists and businesses to identify the most effective policy proposals for narrowing the giving gap, and to pursue making them a reality.