The Decline in Charitable Donations: A Concern for British Philanthropy
In recent years, the landscape of charitable giving in the UK has undergone significant changes, with a notable decline in donations raising important questions about the future of philanthropy in Britain. This trend is evident not only among individual donors but also among some of the country’s largest corporations.
Corporate Giving: A Declining Trend
A recent report by the Charities Aid Foundation (CAF) highlights a worrying trend among FTSE 100 companies. Over the past decade, charitable donations from these firms have fallen by 34% in real terms, even as their combined profits have increased by 49% in the same period.
In 2014, FTSE 100 companies reported a combined pre-tax profit of £130 billion, with donations amounting to £2.1 billion. By 2023, profits had risen to £194 billion, yet charitable contributions dropped to a mere £1.82 billion. After adjusting for inflation, this represents an 8.3% decline, translating into approximately £164 million of lost donations.
The healthcare sector stood out as the most charitable, contributing 22.9% of total corporate donations despite representing only 6.3% of the FTSE 100 by pre-tax profit. However, the broader trend remains discouraging, as most FTSE 100 firms have no plans to increase their charitable giving in the near future.
Public Donations: A Mixed Picture
While corporate donations are on the decline, the picture for public donations is more nuanced. According to the 20th annual UK Giving Report from the CAF, members of the UK public donated an estimated £13.9 billion to charities in 2023. This represents a significant increase of nearly 10% compared to the previous year.
However, long-term trends reveal concerns. The percentage of people giving to charity has dropped steadily, from 69% in 2016 to 58% in 2023. Although average donations have grown, with individuals giving about 40% more in 2023 compared to 2019, charities are increasingly dependent on a shrinking pool of regular donors. This reliance on fewer contributors threatens the sustainability of charitable funding in the long run.
Economic Pressures and Their Impact
The decline in charitable donations is partly driven by economic pressures. As reported by the Benefact Group, charitable giving contributed £23 billion to the UK economy in 2022. However, the value of donations fell sharply from £9.3 billion in 2021 to £4.3 billion in 2022. This drop has been attributed to rising living costs and soaring utility bills, limiting the disposable income available for philanthropy.
Volunteering: A Silver Lining
Despite the decline in monetary contributions, volunteering has experienced a resurgence following the pandemic. The value of volunteering in the UK reached £18.7 billion in 2022, with the proportion of adults volunteering their time rising from 17.9% in 2018/19 to 29.7% in 2022.
Although the average hours spent volunteering have halved since 2020, the overall increase in participation suggests a resilient spirit of community engagement. Volunteering offers a critical lifeline to charities, helping to offset the pressures caused by reduced donations.
The Need for a National Strategy
The challenges surrounding charitable donations highlight the need for a robust approach to fostering a culture of philanthropy across the UK. Neil Heslop, Chief Executive of the CAF, has called for the government to develop a national strategy for philanthropy and charitable giving. Such a strategy could form part of a broader framework for strengthening civil society throughout the country.
Government Support and Funding
While government grants and contracts serve as another key funding stream for charities, they remain insufficient. A survey by the National Council for Voluntary Organisations (NCVO) revealed that 87% of nonprofits face underfunding in their government contracts and grants. To compensate, many charities are forced to draw on alternative revenue sources, a practice that is unsustainable and risks severe consequences such as service cuts and closures.
Conclusion
The decline in charitable donations presents a complex challenge requiring coordinated action from corporations, individuals, and the government. While public giving and volunteering have shown resilience in some areas, the overall decline in donations is cause for concern.
Collaboration is essential to creating a sustainable culture of philanthropy. Corporations can play a significant role, not only through monetary contributions but also by encouraging employee volunteering. Meanwhile, government action is necessary to address underfunded grants and support charities facing financial strain.
At Cutts & Co Accountancy, we recognise the vital role philanthropy plays in building stronger communities and fostering positive societal change. We encourage our clients and the wider business community to consider their contribution to the charitable sector, whether through financial donations or voluntary efforts. By working together to support this critical sector, we can ensure that charities continue to deliver their valuable services and create a lasting impact.
