Reflections on the charity sector: The right number of charities?
Kirsty McEwen TEP
Partner and Head of the Charity & Not for Profit Team Passionate advocate for the Third Sector Charity Trustee and School Governor
The Charity and Not-for-Profit team at Higgs LLP introduced discussions last week on the seven points Helen Stephenson CBE raised in her recent speech at the Treasury Exchange, reflecting on her time as CEO of the Charity Commission as she prepares to hand over the baton this summer.
Her second point sought to address the question are there ‘too many charities’.? It is a well debated question and so let us consider for a minute, is there or is there not a “right number of charities”?
Context is important here.
Recently the Charity Commission published its quarterly statistics for the period October 2023 to December 2023, which showed that during that period, there were 1,342 new charities registered (as against 2,141 registration applications received); and during the same period, around 940 charities were removed from the register.
It is estimated that there are around 165,000 charities registered with the Charity Commission in England and Wales.? There is a separate system of regulation in Scotland, where the regulator is the Office of the Scottish Charity Regulator (OSCR) and in Northern Ireland, where registrations are dealt with by the Charity Commission of Northern Ireland.
That said, the number of registered charities is not reflective of the complete position.
Small charities (those which are not charitable incorporated organisations and whose income is less than ￡5,000 per annum) are estimated to number 100,000.? Exempt charities (those registered with another regulator as their principal regulator but still subject to charity law) are estimated to number 80,000; and excepted charities 100,000.?
And so the number of charities in England and Wales could be closer to 445,000 (and in Scotland and in Northern Ireland, the numbers are estimated to be around 45,000 and around 8,000 respectfully).
By comparison, the UK has nearly 30 times as many companies (although arguably that is not a useful comparator).
In the diverse landscape of charities in England and Wales, a fundamental principle emerges that there is and can never be a “right” number of charities.? Instead, the vibrancy and richness of the sector lies in its diversity, reflecting the myriad of causes, perspectives, and approaches to addressing social changes.? The evolving nature of society demands a dynamic and adaptive response, where new charities emerge to address emerging issues or fill gaps in existing services.?
And so for example, if you fall off your boat in the Severn Estuary, with luck the Severn Area Rescue Association (registered charity number 505504) will rescue you.? Now it was founded because the Royal National Lifeboat Institution only operates at sea (it doesn’t cover rivers except the tidal part of the River Thames) and the Severn estuary is a river.? And so if you ever have cause to call on SARA you will no doubt be glad that charity rose to meet that need.
The UK boasts a vast array of charities, spanning various sectors. From large well-established organisations to small grass roots initiatives, each charity brings it unique mission, vision, and methods to the table, contributing to the collective effort of making a positive difference in society.
Arguably, the presence of a diverse array of charities fosters healthy competition, innovation, and collaboration within the sector. Rather than viewing other charities as competitors, organisations often collaborate and share resources to maximise their collective impact. This spirit of collaboration enables charities to leverage their respective strengths, pool their expertise and amplify their reach, ultimately benefitting the communities they serve.
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That said, while diversity within the sector is celebrated, it also presents challenges such as duplication of efforts, fragmentation of resources and potential inefficiencies.? There is an argument that consolidation of charities or a more coordinated approach to service delivery, could lead to greater efficiency and impact.
Any such efforts must be balanced with the pluralistic nature of society and the need to preserve the autonomy, diversity, and grassroots nature of charitable organisations.
It is the role of government, policy makers and regulatory bodies such as the Charity Commission in ensuring the effectiveness, accountability, and transparency of the sector. By providing support, guidance and oversight they can help charities navigate the complex regulatory requirements, maximise their impact and meet the high standards of governance expected of them.
It is for one of these reasons, that the Commission’s approach to registration is evermore stringent than before and why generally, the success of registrations is around 50-60% of those applications received (at Higgs LLP we are proud to have a 100% success rate on registration applications).?
Whilst the Commission can, as Helen Stephenson pointed out, prompt charities to consider whether what they are doing is the best way of achieving their stated aims, their role is to assess whether a charity meets the test in law to qualify for registration, and it cannot and must not have any role in rationing the number of charities.? To do so would, as she pointed out, be “setting a cap on good will”.
That said, all charities and their trustees should consider whether the needs of their beneficiaries could be better served by collaborating with other charitable organisations.? Merger is but one way of doing so, but other innovative ways of collaborating should be considered, including joint service delivery, joint project delivery and joint funding applications.? This is key, not least because whilst demand for service is rising, the available funding is falling and so charities risk operating in a marketplace which is crowded at best and saturated at worst, particularly from a fundraising point of view.
Interestingly, there are around 620 cancer charities in the UK and more than 200 charities working with homeless people just in London. Arguments against having an open sector, is that the public is confused by the sheer number of charities and where there is confusion, mistrust is bred, and the sector can only function because of trust (and confidence).?
Undoubtedly, the Commission’s approach to registering charities (as a gateway as opposed to a rubber stamp) has reduced the number of successful applications to around 50-60% from around 90% a couple of years ago.? And in a crowded not for profit space, establishing a distinct position is essential for charities to succeed. Trustees must therefore embrace brand messaging, harness technology, and embrace innovation, to meet some of the immense challenges over the past few years, including dealing with financial uncertainty.
However, to limit or cap the number of charities is to approach this in the wrong way.? The question is and always has been one of need and for so long as there is a need, charity will adapt and evolve to make a meaningful difference, And that can only be a good thing.?
As a Team, we regularly provide support and guidance to those organisations wishing to register as a charity with the Charity Commission or other regulators.
We also work with our clients to consider innovative ways of working, from informal collaborations, to joint service or project delivery, partnership and joint venture arrangements, and ultimately mergers and we are always happy to act as a sounding board if you want to discuss how you can best evolve and adapt to meet the needs of your beneficiaries and society.
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Charity Founder at The GAP Christian Family Centre
1 个月Cont'd Instead of asking is there too many charities, and should we merge. We should be asking what is the function of that charity and how can we best support. Do larger charities have a role to play in supporting and sharing resources with grassroots groups, who often as already mentioned often feed into their continued success. This doesnt have to be financial.. can they offer training, mentoring, etc, of course financially contributions would always be welcomed. But just having that meaningful recognition and appreciation goes a long way. Is there a role for funding bodies to put the dots together with charities they are funding that could work together and be of mutual benefit to each other, instead of creating the competition for funding. One organisation might be brilliant at employability skills but find childcare for their clients might because issue, and there might be a childcare provision who have parents who need training and access to employment opportunities both funded as seperate projects by the same funder. it's not about too many charities, or merging charities alone, we need to look at the function and role each contributor to the sector has and how we connect better to enhance our communities
Charity Founder at The GAP Christian Family Centre
1 个月I think it's a interesting debate, and similar to one I have just commented on re national v local charities. My point there was is both serve different functions... national charities carry, in general much more clout in policy change etc, but grass root charity's are much better at doing the ground work and connection with local communities. ( often that connection is not always recognised and appreciated by the larger charities and smaller charities are often found struggling to secure funding for their vital role. When I think of our borough of Sandwell, ranks high in deprivation.... split into 6 towns and each town into neighbours and neighbours into natural communities boundaries and with those communities boundaries are sub communities. And each group presents their own needs, aspirations etc.... we tend to understand how we get so many smaller grassroots charities/groups emerging. I know from our locality residents are very territorial and unique and the approach/ sub cultures across mains roads can be very different. One of the issues with mergers and charity growth is that local interest, knowledge and priority is often left behind, and so the needs again become unmet creating a gap for a new group to form.
Principal Associate in the Charity & Not for Profit Team, Higgs LLP
5 个月Kirsty McEwen TEP Thanks so much for your interesting thoughts on this. I guess that the individuality of charities, and the personal and specific reasons for which they’re established, is always going to lead to some duplication on paper (at least). That’s bound to lead to financial inefficiency, but perhaps the smaller sizes gives some flexibility too? Tricky to know what’s best.
Senior Lecturer at Birmingham Newman University. NSPCC West Midlands Business Board member & Trustee Bham Dogs Home.
6 个月I think that ‘yes’ there are too many charities albeit they will undoubtedly have best intentions. Collaboration is key long term but that first step for charities to even consider working with others will always be a difficult one to take for a number of reasons. As you have said, the more charities supporting the same or a similar cause, it lessens the potential positive impact overall. Tis a tricky one indeed, more discussion like this needed at a natiional level or a review of the charity commissions role before potential fundraisers scratch their heads and walk away.