00Executive Summary

The 2022 Levelling Up White Paper briefly mentions the work of the voluntary sector as an element of ‘social capital’, one of drivers of regional inequalities in the UK. But discourse on levelling up the national economy mainly focuses on investment in other ‘capitals’ (e.g., physical capital, human capital) through private sector initiatives or public sector interventions. Meanwhile the role of the third sector, and the charitable giving that supports it, is often not considered when talking about local economic regeneration.

Identifying charitable giving’s potential role in tackling regional inequalities requires an understanding of the geography of charitable giving in the UK. This report brings together multiple data sources to answer, first, how does charitable giving vary at a sub-national level and relate to local economic performance? And second, how do the causes donated to and the geography of charitable organisations respond to the geography of need?

Above all, the economy drives the ability to give. This means that volumes of charitable giving are limited where local need is highest. The question for levelling up is then how giving – which amounted to £12.7 billion was donated to charity in the UK in 2022, equivalent to roughly a fifth of annual local government financing – could be both maximised and channelled to places with the greatest need.

In addition it finds that:

  1. Higher rates of charitable giving could be ‘unlocked’ in better off places with the most potential to give.
    • There is untapped capacity when it comes to the geography of giving in the UK. A higher proportion of people give to charity in places with higher incomes. But it seems there is capacity for more people to give in southern places, where people are up to 15 per cent less likely to give compared to places of similar incomes in the rest of the UK. This is particularly true in the capital: Birkenhead residents are as likely to give as Londoners, despite a gulf in economic performance.
    • There is also missing generosity in some richer places. Amounts donated per donor do not track affluence levels, meaning that donors in many Southern places are less ‘generous’, donating a smaller share of their income than the rest of the UK. This includes many parts of London, where high average donations per donor are down to a small pool of large donors, rather than being broad-based.
  2. The geography of charitable activity does not meet the geography of need.
    • This is evident from the geography of local giving in the UK, which comes in two varieties within high need regions. The North East and North West have relatively strong preferences for local giving, but their high deprivation means that overall donation rates are limited. Meanwhile, Yorkshire, West Midlands, and Wales have fewer and smaller donations to local causes than richer southern areas. But in all high need regions, the types of local causes given to do not reflect local need. Donations are therefore constrained in their impact on local economic outcomes.
    • And it’s the same story with the geography of charitable organisations. There are fewer charities per head in more deprived areas outside the Greater South East. This is even the case when considering charities with causes specifically focused on local economic need.

Together, these findings mean that actions must be taken by national and local government, as well as in the voluntary sector, if charitable giving is to play the supporting role in levelling up the UK as hinted at in the White Paper.

Personal finances are the greatest constraint to giving, particularly in places with high need. Therefore raising rates of giving in the long term involves raising disposable incomes, requiring national government to get the economy firing again all across the UK. This can be achieved through supporting the economies of UK cities (particularly outside the Greater South East) as the centres of productive capacity in the UK.

In the meantime, more can be done to incentivise the level and flow of existing donations to better align with need across the country:

  • National government can pursue policies to target more affluent areas that have potential to unlock higher rates of charitable giving, incentivising the diversion of these donations toward places in need. For example, donations targeted to high-need areas could receive match funding from government, as suggested in Onward’s policy proposal of ‘Charitable Action Zones’. Above all this, government should set a strategy on the role of charitable giving within the continuation of the levelling up agenda.
  • Local government can help to target local giving toward local need in more deprived areas, working with charities on the ground. In policy terms, this could involve local funds, diverting donations to local charities under the umbrella of a wider cause. There is precedent: the Greater Manchester Mayor’s Fund is already active and successful in the city region. But local authorities may need to tailor their approach due to existing variation in preferences for local giving across the country.
  • Large national charities are best placed in the voluntary sector to ensure donations flow to areas with the greatest need. ‘Levelling Up Charity Partnerships’ are schemes which could see national charities working alongside local charities with similar causes in high need areas, sharing knowledge and diverting funds to overcome local economic constraints. National organisations should also increase transparency and share data on where their donations are spent in order to fill in evidence gaps on the role national giving plays in tackling regional inequalities.