Daniel Ferrell-Schweppenstedde

Former Policy and Public Affairs Manager

Charities Aid Foundation

How charities and civil society can contribute to the UK’s recovery

7 February 2023

The Law Family Commission on Civil Society’s final report Unleashing the power of civil society has proposed a range of policy recommendations and initiatives aimed at unleashing the full potential of the charity sector over the next decade. Chaired by former Cabinet Secretary Lord Gus O’Donnell, the Commission calls for greater collaboration between the public, charity and private sector to help the UK’s economy is to recover and grow from crises.

Over the course of the past two years, the Commission aided by Pro Bono Economics has done a tremendous amount of work on topics ranging from philanthropy, devolution and levelling up, the impact of the pandemic, productivity and gender pay gaps, the cost of grant-making and the sector’s relationship with public services and political decision-makers.

Some of the highlights include ‘Mind the Giving Gap’ which highlighted a generosity gap with most high earners not giving close to the levels of their generous peers. A typical top earner gives less than 0.2% but if all top earners gave at least 1%, charities would receive up to £1.4 billion in additional income.

Seizing the philanthropic prize’ put forward a set of actions for the Government to drive philanthropy and ‘Solve for S’ set out how partnerships between corporates and civil society can promote ESG principles, enhance a company’s mission and drive financial materiality.

The recommendations

The final report builds on the previous research with 26 recommendations for policymakers, charities and those who fund and work with them, including businesses. The charitable sector’s productivity and organisational effectiveness needs be improved, including the provision of data on its structure, activities and impact.

Further philanthropic funding can be unlocked through policy change, and the report calls for improvements to the relationships between charities and policymakers, as well increased collaboration with businesses who share a common purpose. There is also the potential to foster more strategic relationships between local decision-makers (especially local authorities) and civil society.

The full set of recommendations are well worth reading, but we have picked some of the asks that are particularly relevant to building better charitable giving:

  • Putting philanthropy at the heart of government, including a full-time public official as its “Philanthropy Champion” that can start a “’leveraging philanthropy’ drive” across Whitehall. We have echoed this recommendation in the past. The position could also help and remove barriers to cross- border giving and be a focal point for global philanthropists.
  • Embedding philanthropy more into the advisor industry, including the Financial Conduct Authority (FCA) requiring financial advisors to receive training on philanthropy and impact investing, as part of its ESG and Consumer Duty responsibilities.
  • Fostering greater collaboration between business and the charity sector, calling on business and charity membership bodies to form a partnership focused on raising awareness of the benefits of those links. CAF has a track record of supporting businesses with their giving programmes and we understand the power of leveraging purpose-driven partnerships between charities and businesses.
  • Setting up strategic relationships between decision-makers and the charity sector on the local level, including local authorities providing capacity internally (dedicated staff time and resources) to create and sustain relationships with civil society. This is to be welcomed and could also elevate the topic of local giving. For instance, local decision-makers could champion philanthropy, create Local Philanthropy Partnerships and help set up or enhance place-based giving schemes – all with the underlying aim to serve community renewal and regeneration.
  • Improving data and evidence on the sector’s structure and impact, including the Office for National Statistics (ONS) delivering on the Civil Society Satellite Account pledged in the Levelling Up White Paper. We think this will be a pivotal step because it will help making the sector and its economic footprint (and potentially even its impact) more visible and trackable in its entirety. It will also provide a new evidence base to help policymakers understand the structure of the charity sector and what it does for society.

Putting civil society more front and centre of growth and recovery

Underpinning all the work is the push for wider recognition of the value of civil society and its importance for the health and growth of communities across the UK. There is potential to massively increase not only charitable giving, but also the impact that charities can have if all three sectors – public, private and charitable – align better and work towards common goals. The Commission has done an excellent job of highlighting the added value of civil society underpinned by strong evidence, while also asking charities to improve their own way of operating. There is also the need for the Government to recognise the potential of civil society more and bring its representatives into the policy cycle.

As Lord Gus O'Donnell, Chair of the Law Family Commission on Civil Society (LFCCS) put it: "Successive governments have neglected charities for too long, and our country is the worse for it. That must change in order to achieve the national renewal and better future that the UK desperately needs, because charities are a key part of the solution to every challenge we face. Whether it is making our communities safer, greener, healthier, more prosperous or more equal, charities must be at the decision-making table and operating at their optimum level if we are truly to achieve the change we need.”

The final report concludes that if the “UK’s economy is to grow, if it is to make meaningful social progress, and establish a new sustainable way of life, then all three of its sectors – public, private and social – must be firing on all cylinders and working effectively together.

Where to go from here

At CAF, we have watched the work of the Commission closely and welcomed the timely release of the report, when decision-makers in Government and across sectors are looking ahead with a view on how to increase the impact of the organisations they lead.

Neil Heslop OBE, Chief Executive of the Charities Aid Foundation, said about the report: “Just like businesses and public services, charities require long-term stability. They are under severe financial strain given the onset of the cost-of -living crisis so soon after the pandemic, so we support the Commission’s proposals to boost economic recovery by strengthening civil society.

"We strongly advocate for unrestricted funding, especially to build organisational resilience, since charities are best placed to decide how to use funding. After three years of very high demand, many also need to invest in their people, processes and systems but lack the funds to do so. Government, charities and business all have a role to play in promoting social progress and growth across the country.”

The outputs of the Commission will have a long shelf-life as go-to resources for those interested in how civil society operates and how it can be used to improve people’s lives in these trying times. We are looking forward to supporting Pro Bono Economics and the other contributors to further many of the useful recommendations.

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