Hot Spots, Cold Spots: What’s happening to London’s local charities?

Hot Spots, Cold Spots: What’s happening to London’s local charities?

Hot Spots, Cold Spots: What’s happening to London’s local charities?

London has experienced a strong decade of economic growth. Though the financial crisis emanated from London, it was the first UK region to recover from it, and, in economic terms, has continued to extend its lead over the rest of the country since.

But as London has got richer, wealth inequality in the capital has exacerbated. 1 Poverty remains acute – 27 per cent of Londoners live in poverty after housing costs, compared to 21 per cent nationally. And some forms of poverty – notably working poverty – have worsened. 2 58 per cent of Londoners in poverty live in a working family, a 50 per cent increase over the last decade. The capital’s competitive labour market and fast rising living costs have meant many Londoners have not felt the benefits of increased prosperity.

What about charitable giving? Have London’s charities prospered as the city’s economy has? Have those who have done well from the capital’s success donated time and money to help those who have struggled?  New research by Centre for London, in partnership with the Third Sector Research Centre at the University of Birmingham, suggests a complex picture.

Just as many of London’s economic sectors have ridden recent waves of globalisation and emerged stronger, so has London’s philanthropic sector. According to our analysis of Charity Commission data, the number of charities based in London has risen by seven per cent over the five years to 2015, even as the number of charities not based in London has fallen by one per cent.  Eleven of the country’s 20 largest charities are based in the city – charities like Cancer Research, Save the Children, the Salvation Army and British Heart Foundation. 3. The capital accounts for an impressive 47 per cent of the income of all UK charities and holds 68 per cent of charitable assets. An estimated quarter of the UK’s social enterprises are based here. 4 When considered relative to population size, London has 2.8 charities per 1,000 people, significantly above the England-wide average of 2.4. 5

For these reasons, London has previously been presented as a ‘hotspot’ for charitable activity, in contrast to ‘coldspots’ or ‘charity deserts’ in other parts of the country.  6But while there is some truth in this distinction, it is not sufficiently sensitive to the difference between where charities are based and where they operate. London is home to many large charities that do not confine themselves to capital-based issues and some that direct their charitable efforts entirely outside of it.

In an attempt to distinguish between London-based charities and those that focus on London, we conducted an analysis of Charity Commission data based on charities’ so called ‘area of benefit’ (AOB) (see Table 1). This data is far from perfect – it does not allow us, for example, to distinguish between national charities that work mostly on London, charities that work partly on London and charities that don’t work on London at all. But it does at least allow a more nuanced picture than one that focuses on the total number charities in an area regardless of geographic focus.

The table above confirms that London dominates the rest of England when it comes to charities working nationwide and internationally. Nearly half of charities that work both nationally and internationally are based in the capital. But challenging the picture of London as a charity hotspot, it also shows that London has only 1.4 locally-focused charities per 1000 population, compared to 1.9 per 1000 for England as a whole.

The uneven geographic spread of London-focused charities

London-focused giving is also unevenly spread. The City of London is home to a particularly large number of London-focused charities, but other inner London boroughs are also well-endowed.  Camden, Hackney, Islington and Westminster all have more than two London or locally focused charities per 1000 population. By contrast, Barking and Dagenham, Bexley, Brent, Hounslow and Newham, all have less than one local charity per 1000 residents – way below the national average.

Fig. 2 Charity Commission data based on charities’ so called ‘area of benefit’

We also looked at changes in the number of London focused charities over the five years up to 2015.  We found that while the overall number of charities in London has grown, the number of charities focused on London causes plateaued. Again, the pattern looks very different according to borough.  Hackney and Tower Hamlets have seen a big increase in locally focused charities – no doubt reflecting their relative economic dynamism and thriving ‘start-up scene’. Most other areas have seen a fall. This includes inner London boroughs like Westminster (-4%) and Southwark (-4%), but is particularly notable in outer London ones, including Croydon (-7%), Kingston (-5%), Bromley, Waltham Forest, Hounslow and Hillingdon (all –4%). The decline in outer London charities is particularly concerning given that, as Centre for London has shown, London’s economic geography is changing, with poverty spreading from its heartlands in ‘old London’ to the outer London boroughs. 7

More research needs to be undertaken to understand exactly what is going on here. A decline in the number of London focused charities does not necessarily mean a decline in charitable giving focused on London. It might just be, for instance, that London-focused charities have become larger or more effective. Or that national charities have taken on work previously done by London focused ones. But that seems improbable.  The fall in London-focused charities is more likely to be a result of public funding cuts.  Borough spending per head in the capital (excluding education and public health) fell by a fifth between 2010/11 and 2017/18, and cuts to ‘discretionary’ services, including support for the voluntary sector, has fallen much further. 8 Reductions in borough funding of the voluntary sector might have been compounded by cuts in donations from ordinary Londoners, as disposable income has been squeezed. 9 Government data shows that the proportion of Londoners donating to charity on a regular basis has fallen quite dramatically from 81 per cent in 2013/14 to 74 per cent in 2016/17.  In 2013 (the last year for which there is data) just over half of London charities had seen their funding reduced from the previous year. 14 per cent held no free reserves and a quarter had closed services

It seems likely that, for all London’s economic growth and standing as a capital of charitable activity, London-focused charities, and their beneficiaries, have taken a battering.

  • 1 Bosetti, N., Hanna, K., (2015). Housing and Inequality in London, Centre for London
  • 2 Trust for London, London Poverty Profile
  • 3 The Haysmacintyre / Charity Finance (April 2017). Charity 100 Index
  • 4 Social Enterprise UK (2017) The Future of Business. State of Social Enterprise Survey 2017
  • 5 NCVO (2017). Civil Society Almanac
  • 6 Kruger, D., Centre for Social Justice, (2014). Social Solutions, Enabling Grass Roots Charities to Tackle Poverty
  • 7 Travers, A., Simms, S,. Bosetti, N. (2016) Housing and Inequality in London, Centre for London
  • 8 Youth services, for example, have been among the services hardest-hit, with some boroughs seeing budget cuts of up to 75 per cent. Blazey, L., Barrett, S., Sands, C. & Colthorpe, T. (2017) Young People’s Capital of the World? Understanding and responding to young Londoners’ changing needs, Centre for London and London Youth
  • 9 For the squeeze on London living standards see, Leadbeater, C., Theseira. Wilson, B,. (2014) Hollow Promise, Centre for London