This blog is based upon David Clifford’s article for the Journal of Social Policy which is an open access paper and can be accessed without charge in perpetuity here.

What have been the implications of the Great Recession, and the subsequent period of public spending austerity, for social welfare and social wellbeing?  In some ways we have a strong evidence base to help answer this question.  For example important research has summarised recent trends in the living standards of individuals and households – in terms of, for example, poverty, inequality and unemployment.

However in some areas the evidence base has been weaker.  For example, very little research has examined the impact of the recession and the ‘age of austerity’ on the income of voluntary organisations – despite considerable public concern about the potential impact on the voluntary sector.

In part these differences in the evidence base stem from differences in the availability of data: while there is a long tradition of social science research on individuals and households, based on the analysis of established nationally representative surveys, administrative data on voluntary organisations has been less readily available for research purposes.

Therefore, to help fill this gap, a newly published article in the Journal of Social Policy uses administrative data from the Charity Commission to describe trends in the income of registered charities in England and Wales.  The National Council of Voluntary Organisations and the Third Sector Research Centre have been influential in pioneering the use of these administrative data.

The article assesses the importance of recession and austerity for charities by placing their recent changes in income within the context of longer-term income trends since 1999.  It examines annual changes in income before and after adjusting for inflation using the Retail Price Index (Jevons).  It describes, for each year since 1999, the median relative change in income experienced by charities in a particular year. 

The results reveal the scale of the impact on charities’ income for the first time.  For the population of charities as a whole, recession and austerity has been marked by consecutive annual periods where the median charity experienced a sizeable decline in real income from year to year.

The results also show that the impact of the challenging economic conditions has been different for different kinds of charities.  Compared to larger charities, small and medium sized charities have experienced larger declines in income in relative terms.  Compared to charities in less deprived local authorities, charities in more deprived local authorities have experienced more sizeable income declines.  There are also important differences in the impact for charities in different ‘fields’ of activity.

Overall the results resonate with concern about the combination of circumstances that the voluntary sector has been facing: the potential for reduced income from charitable giving, and significant cuts in funding of charitable organisations from central and local government, at the very time of increased social need.

The results also illustrate the value of widening our perspective when considering the implications of recession and austerity for social welfare and wellbeing – by using newly available data sources to describe important changes not captured by data on individuals and households.

– David Clifford, from the University of Southampton and an Associate of the Third Sector Research Centre.