Britain’s voluntary sector has an annual income of around £17 billion, dwarfing some other sectors of the economy. Larger than agriculture, yet without a government minister to champion the cause, let alone a whole ministry to protect it, the voluntary sector’s profile in national life is low. The image of sponsored walks and collecting tins prevails.
The contribution of companies to the mosaic that is the voluntary sector is equally obscure. Government statistics can tell us every detail about imports and exports, growth and inflation, etc, but is the full extent of company support for the voluntary sector monitored? Occasional snapshots yield a glimpse.
213 of the larger companies told the Charities Aid Foundation (1) that they gave £190 million in cash and in-kind support in 1990/91. By comparison the top 200 grant making charitable trusts gave £320 million, not dramatically more. Some estimates put total corporate support at between £1 billion and £2 billion each year.
Recent data on companies
CAF conducts an annual survey, Charity Trends, which is now in its 14th edition. Published last November, with research undertaken between May and September 1991, it covers the year to April 1991.
Charity Trends provides one of the few sources of information about company giving, but there are limitations. There is inevitably a delay in gathering the information. Only 213 companies out of the top 400 responded to the survey (53%). Many of these were different from those who responded the previous year, so a matched sample of only 100 was possible. While that is enough to be able to draw some conclusions about trends, it cannot claim to be comprehensive.
Trends from matched sample of 100 leading companies:
Total corporate support £m 119.2 136.2 145.8
% change in money terms – +14% +7%
% change in real terms – +6% -3%
Total profit before tax £m 18,307 25,053 24,083
% of profit before tax 0.65 0.54% 0.61%
Number of employees 2.28m 2.25m 2.04m
per employee 52.17 60.57 71.57
Source: Charity Trends 1991
CAF asked companies about how they give support and who the beneficiaries are. Among the detailed findings are:
– around 40% of the total cost is in donations and 7% in secondment
– half encourage their employees to volunteer and just under a third run matched giving schemes
– education, medicine and health, general welfare and the arts were the biggest beneficiaries
– 14% made contributions to voluntary bodies outside Britain, either directly or through subsidiaries
Voluntary sector data
Charity Trends also surveyed the top 400 charities. Among the key findings were:
– excluding the effects of inflation and a rise in legacies, in total general income fell
– education received the biggest increase, although it is one of the smallest categories
– the medicine and health category remains the biggest, with cancer charities dominating
– the top three charities remain unchanged from last year – National Trust, Royal National Lifeboat Institution and Oxfam
– the top 400 grant making trusts gave £349 million, while local authorities gave £766 million to the 400 biggest charities.
Effects of recession
Properly researched data on the effects of the recession on company contributions is not available. Charity Trends 1991 provides a pointer with the drop in total giving in real terms, although the data is now a year old. A recent informal survey by Community Affairs Briefing shows:
– most companies are holding their programme constant in cash terms
– some of the hardest hit, particularly in financial services, simply maintain present commitments but do not undertake new activities – so over time their programme is being cut
– a small number of increasing, mainly newly privatised companies.
The overall effect is therefore that the volume of activity is holding up very well, considering the depth of the economic problems and the pressure on profits. The implication is that senior management has truly understood that a community affairs programme can yield business benefits in the long term and is not simply `charity’ to be undertaken when profits allow.
However the facts remain that the collection of data is so poor that no one really knows. Michael Fogarty of the Policy Studies Institute recently completed a study for CAF (2) into measuring companies’ contributions. He concluded better data is required for three reasons:
– for efficient management by companies themselves and in presenting their public image
– for applicants to companies for support
– for policy makers in government and the voluntary sector.
Presently there are four main sources of information about companies:
1) the Companies Acts require annual reports to give the total for donations over £200 that are exclusively charitable;
2) the Charities Aid Foundation collects annual data on the top 400 companies, as discussed above;
3) the Directory of Social Change surveys the top 400 in detail and summaries the giving of another 1000 smaller companies;
4) individual `intermediary’ agencies like ABSA for the arts, ARC for secondments, CAF on payroll giving and the Volunteer Centre for volunteering collect information and conduct period surveys about company practices.
However only a limited proportion of companies submit information to the two main voluntary surveys (CAF and DSC), there is no agreed basis for valuing in-kind support, and even the charitable donations figure, required by law, is often faulty, since auditors rarely pay much attention.
The way forward
In the medium term it will take an amendment to the Companies Act to require all companies to record all community support. Before then, clear guidelines will need to be established on measurement techniques. In theory this should not be too difficult.
First, the main voluntary agencies should get together including Directory of Social Change, CAF, BITC/Per Cent Club, ABSA (for the arts), ARC (for secondment) and Action Match (for in-kind and sponsorship). Among the keys issues to resolve are how to value staff time and other in-kind resources, whether to include the administrative costs of the community affairs department, and how to draw the line between commercial marketing and social sponsorship.
Then, having agreed the main issues and identified difficulties, they should meet with (say) the CBI and the main accounting bodies. There exists a formal system for setting voluntary accounting standards, indeed one already exists for the preparation of charity accounts. So an agreed standard on valuing cash and in-kind support could be prepared.
Finally the new agreed standards should be circulated to as many companies as possible, used for a year and then revised in the light of experience. By that stage, Parliament might have found time to debate what would, after all, only be a modest increase in companies’ reporting requirements.
Of course some problems would remain. Most of the professions and many small businesses are not incorporated and so do not prepare accounts under Companies Act requirements. International comparisons would remain difficult.
The continuing depth of recession is undoubtedly having an effect on company involvement and the wider voluntary sector. It is too early for the existing surveys to reveal what is happening. Improvements in the collection and analysis of data is urgently required. Ultimately a change in the Companies Act is needed, but in the short term there is much the main voluntary sector intermediary agencies can do, working with companies.
(1) Charity Trends 1991 (14th Edition) price £29.95 from Charities Aid Foundation 0732 771333
(2) Better Statistics on Companies’ Contributions to the Community by Michael Fogarty price £3.95 from CAF Research and Statistics Unit 071-831 7798 £3.95.
Mike Tuffrey is the founding editor of Corporate Citizenship Briefing and director of The Corporate Citizenship Company