This article originally appeared in The Times's Red Box on January 17, 2022.

By Lord Gus O’Donnell, Chair of The Law Family Commission on Civil Society and Pro Bono Economics

Every year, £20 billion of the public’s money is spent generating public good. It funds tutors in schools in disadvantaged areas and hospice care for the sick. It helps to preserve the country’s heritage and our planet’s environment. It makes possible the work of tens of thousands of organisations which employ hundreds of thousands of people. Yet no one in government is thinking about how this money can make more of a difference in the places where it’s most needed.

That £20bn, of course, isn’t tax take. It’s the money the public voluntarily donates to charities.

There are plenty of reasons why government involvement in the charitable sector should be treated with care. But there are far greater reasons why it is in the government’s interest to act as an enabler, a champion and sometimes even a steward of charitable giving.

The first is simply the scale of it. With almost one million employees and 24 times that volunteering, the value generated by the charitable sector is equivalent to 10% of GDP according to Andy Haldane and Pro Bono Economics. The £20bn from public philanthropy alone is roughly equivalent to the day-to-day spending of the Ministry for Housing, Communities and Levelling Up – which you’d certainly expect the Treasury to take an interest in.

The second is how much money charitable giving saves the Exchequer each year. From rehabilitation programmes cutting re-offending by 7% to the non-profit services supporting rough sleepers into work and housing, charities’ interventions won’t show up on the Budget scorecard but the Treasury would certainly notice if they disappeared.

However, the most important reason decision makers in government should pay more attention to philanthropy is its potential. The public already give away 0.54% of GDP each year to great effect. What more could the charitable sector achieve if we raised giving to the level that exists in New Zealand or Canada? That alone would generate another £5bn a year.

The ambition to level up the UK makes this conversation ever more pertinent. Charitable giving is, predictably, lower in areas of disadvantage. Looking at the tax records of people completing self-assessments, the Law Family Commission on Civil Society has found that those in the wealthiest areas of the country declare seven times as many donations to charity as those in the most deprived areas (excluding London). Combined with the fact that local authority grants to charities have declined by 20% in these areas, and that volunteering levels are lower, the result is that the places which might most benefit from charitable activity are the ones that host the fewest such organisations.

Yet here the government could act. There are incredibly powerful ways in which it could drive greater philanthropy in the areas which need it. The Commission is proposing three things. First, the creation of a Philanthropy Commissioner to champion and drive cross-departmental action on charitable giving – providing the leadership and coordination Whitehall needs, alongside the appointment of a Treasury lead civil servant. Second, a new wave of innovation in giving, helping small organisations raise more. And finally, the use of the financial power of government to get people to give more in the places where it’s needed, matching philanthropists pound for pound if they’re going to give in the country’s most deprived areas.

Of course, central government can’t operate alone here. Much of the power to improve philanthropy lies with the richest and those who work with them, with the charitable sector and indeed in local government. But Whitehall can certainly do more to grow that £20bn and ensure it has even greater impact than it does today.