Economic downturns and the voluntary sector: what can we learn from historical evidence?

Mohan, John and Wilding, Karl (2009) Economic downturns and the voluntary sector: what can we learn from historical evidence? History and Policy, 85.

Abstract

The recent confirmation that the UK economy is now in recession has prompted speculation about the effects of an economic downturn on charitable giving and the voluntary sector with a number of commentators predicting a potential financial crisis.

The evidence cited in the current debate is thin and ahistorical. It is characterised by a lack of hard empirical data (in contrast to discussion about other sectors of the economy) and often measures of perceptions drawn from small-scale surveys.

Under pressure both from sector representative and membership / umbrella bodies, and from frontline charities in areas from advice services to mental health, policymakers are in danger of producing policy that is either badly informed by poor research or uninformed by history.

Historical evidence can offer guidance in relation to the key question of the effects of changes in the real economy on the voluntary sector.

Drawing on British and North American studies, long-run evidence seems to suggest that there is a definite recessionary impact on charities, but although financial donations dip they do recover over time.

In the long term the proportion of income given to charity by individuals remains generally constant and this was so even for the Great Depression of 1929-31 in the USA.

There is also evidence that new voluntary organisations continue to be formed even in recessionary periods and that charities have been creative in terms of developing new sources of income during periods of economic duress.

Finally, we suggest that those voluntary organisations who do request state aid should not be surprised if, as in previous periods, this is associated with demands for greater accountability, partnership and rationalisation.

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