How charities can navigate risk and reward in investment
How you balance risk and reward is a question that all investors, including cash investors, should ask themselves on a regular basis.
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Find out more about CAFWith many charities advocating for their causes through campaigning and engagement with Westminster, there is also a link between charitable activities, civic and wider political engagement. Despite this interplay, however, our latest data for 2021 shows a noteworthy trend: that political engagement appears to be falling.
We collected survey data on two interlinked but also very different behaviours. Firstly, those who said they took part in a public demonstration or protest fell from 8% in 2019 and 7% in 2020, to just 4% in 2021. This trend has continued into 2022. One obvious explanation could be the impact of Covid and lockdowns. But we also saw prominent spikes in protests during the pandemic, for instance over racial justice in the wake of George Floyd’s murder. And over the last few months, protests over climate change and the war in Ukraine have still made headlines but this has not been reflected in political engagement in our research.
Secondly, as in-person events mostly stalled due to Covid-19 measures you could expect that online activism would increase – however, this does not seem to be the case. Our research shows a decrease in the proportion who signed a petition in the last year, including online petitions unaffected by Covid-19 (54% in 2019 and 2020; 49% in 2021; and 46% between January and April 2022). The pattern holds up when asking people if they signed a petition in the past four weeks: 27% did so in 2020, dropping to 22% in 2021 – remaining at a low level into 2022. This trend is consistent across gender, age bands, and region.
It is worth noting this is from self-reported data. Individuals might consider themselves more politically active in a big election year like 2019, but do not actually change their behaviour in subsequent years. What changes is that they ‘self-report’ on it less. Political engagement could be higher than it appears in reported figures. While the presence of large protests and impactful campaigners grabbed our attention (and achieved real change) – such as footballer Marcus Rashford or climate activist Greta Thunberg – below the surface, mass political engagement decreased. Participation in general elections has decreased slightly recently but remains relatively robust, for the UK (67% in 2019).
Other factors might include ‘campaigning fatigue’; individuals having less personal capacity to get engaged; or even a cynical perspective towards change, and a belief that it cannot be attained. In the UK, the years prior to the pandemic were dominated by heavy political battles around Brexit. Covid-19 took a wider toll on all of society, while political scandals dominated the headlines. This turmoil is now followed by a cost-of-living crisis which might limit people’s overall capacity to engage with politics.
There is also concern among some charity campaigners that engagement is also affected by an increasingly constrained civic space. This can be defined as the ‘bedrock of any open and democratic society. When civic space is open, citizens and civil society organisations are able to organise, participate and communicate without hindrance’. Civicus – a think tank that monitors civic space across the globe – has given the UK a ‘narrowed’ rating, and the Sheila McKechnie Foundation, recently found in its Campaigner Survey 2021 that 96% of respondents thought that there are formal or informal threats to civic space.
Looking at charitable and civic activities in particular, younger people appeared to partake less in 2021 according to UK Giving data. Those aged 16 to 24 seemed to have bucked the wider trend (85% in 2020, compared to 83% in 2019) but in 2021 this figure also declined to 79%. Participation similarly declined among those aged 25 to 34 (85% in 2019, 84% in 2020, and 80% in 2021).
Then there is the question around boundaries within wider civic society. While there is strong crossover, a distinction can be made between formal and informal structures, to consider established charities and more fledgling social movements separately. But for social movements in particular, in-person protests and petitions seem to be important tools for engagement and signal the vibrance of these movements and their public and political presence. Equally, activity could have also shifted towards online debates with the rise of social media. Individuals still engage but they could express and understand this engagement differently.
We can also look at what individuals care about in terms of donating to particular causes. Overall, donations to more politically salient causes have not dramatically shifted. For example, the proportion supporting conservation, environment and heritage stood at 16% in 2021 compared to 15% in 2019; homelessness at 18%, down slightly from 20% in 2019; and overseas aid and disaster relief at 17%, up slightly from 15% in 2019. Although we wait to see how next year’s data might reflect the mass mobilisation around the war in Ukraine and a record-breaking fundraising effort led by the Disasters and Emergency Committee.
The UK still has a vibrant culture of civic and political engagement. Charities play a central role in the public debate and enable supporters to advocate for wider policy change. But looking at the behaviours of their donors and society at large, political engagement seems to have suffered in the recent past, and not only because of the pandemic. It will remain an area to watch going forward.
How you balance risk and reward is a question that all investors, including cash investors, should ask themselves on a regular basis.
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