by Nicole Sykes, Director of External Affairs

From inequalities in life expectancy to incidence of crime, the aims the government has set for its levelling up agenda are broad and ambitious – and charities offer part of the solution to each and every one. Yet in the areas of the country which most need the services a thriving charity sector can provide, there are fewer charities and voluntary organisations per capita available to do that vital work.

A look at the sources of funding available to charities helps to tell us why. Almost every source of financing reinforces this disadvantage in some way. Looking at grants from charitable foundations during the pandemic, for example, shows that the most deprived areas received approximately half the number of Covid-specific charitable grants than those in less deprived areas. Local authority funding is also lower: the average charity in the most deprived decile of local authorities has suffered a 20% decline in local government financing in recent years, while the average charity in the least deprived decile has experienced little change. And donations from the public are also lower, with more deprived areas likely to have fewer people with the financial capacity to donate.

The latest data from HMRC puts this in stark relief: looking at the tax records of people completing tax self-assessments - an admittedly limited group - those in the country's wealthiest areas declare more than seven times the value of donations to charity as those in the most deprived areas (excluding London). This reflects both the incomes of those who donate (and how much they tend to give), and the proportion of people completing tax self-assessments who declare donations.

Many of the most deprived areas in England are home to much lower levels of private philanthropy, in terms of where donors live

Total value of donations declared by individuals completing Self Assessments, grouped by Index of Multiple Deprivation rank 2019 (England only, excluding London)

Sources: PBE analysis of HMRC, Table 7 - donations declared by individuals by geographic area, English Indices of Multiple Deprivation 2019

But this doesn’t mean that people in the most deprived areas of the country don’t have some very generous people living in them. Indeed, the data suggests that generosity isn’t tied to deprivation level in the same way.

Of those people who do declare donations on their tax returns, the proportion of income people typically give shows that 13 of the top 20 of the most generous constituencies in the UK are in Northern Ireland, where average incomes are notably lower than in the UK overall. Meanwhile, some of the most generous people in England live in Bolton South East – which is also one of the most deprived areas of the country. Typically, people here who declare donations give around 1.9% of their incomes, equivalent to £650a year. And in Scotland, residents of the Highlands and Islands are the most generous on average, with the typical person in the Western Isles declaring donations worth 2.6% of their income to charity – almost four times the UK average of 0.7%.

Map of parliamentary constituencies by median level of proportion of income given

This map shows the median donation to charity via gift-aid as proportion of income for individuals completing Self Assessments by parliamentary constituency.

Sources: HMRC, Table 7 - donations declared by individuals by geographic area

This data suggests that in many parts of the country there is significant capacity for people to be giving more to charity than they currently do: the difference between the typical donor in North Antrim declaring donations worth 2.9% of their income and the typical donor in Windsor or Barnsley East declaring donations of 0.5% of their income is quite stark. But to seize that opportunity, it’s important that efforts are targeted in the areas which need it the most.

There are highly effective, well evidenced and rigorously tested ways to incentivise philanthropy in places where donations are lower and need is higher. Localised match-giving schemes have major potential to drive additional funds into charities, with studies suggesting that matched donations are, on average, 2.5 times higher than unmatched donations.

The leadership of local philanthropists among their peers can also be harnessed to great effect, with one-third of wealthy donors reporting donating after being encouraged by friends or family. Metro Mayors and other local leaders could play a key role here, appointing Philanthropy Champions to work with local Community Foundations and encourage giving by each region’s wealthiest, particularly in those areas where charitable services can make the biggest difference. And with only one in five wealth advisors raising the topic of philanthropic giving with their clients, targeted education campaigns among these groups can also have substantial payoff.

With the charity sector, philanthropists, businesses and local and national government all having a role to play in boosting giving where charities can make the most difference, coordination is clearly crucial. That’s why the Law Family Commission on Civil Society is also backing the Beacon Collaborative’s call for a Philanthropy Commissioner to operate out of the Cabinet Office. Alongside a new lead for philanthropy in HM Treasury, the government should seize the moment presented by levelling up to ensure the £20 billion the public donates each year both grows and achieves even more than it’s doing today.

Read full report here