‘Undervalued’ charity sector could be worth as much as a tenth of UK GDP

The charity sector’s value to the UK economy is being dramatically under estimated by policy-makers, research has warned.

Official estimates place the value of charities at 1% of the UK’s gross domestic product (GDP).

But latest research suggests the true value is closer to 10% of GDP, meaning the value of the charity sector is being underestimated by £160bn.

The findings have emerged in the first report produced by Pro Bono Economics’ Law Family Commission on Civil Society, which is investigating the potential of civil society in the UK.

The report called, Civil Action: exploring civil society’s potential in the 2020s, says that policy makers are not counting the value of volunteers in particular to the UK economy.

“An undervaluation of civil society isn’t just a question of accuracy – it risks driving a misallocation of resources within the country,” says the report.

This “collective failure to properly measure or value what civil society delivers” is leading to “policy neglect”, it adds.

The report says that while officially the charity sector employs around 900,000 people, this official tally does not take into account the 19.4m people who volunteer.

When volunteers are factored in, the UK’s charity and community group workforce is 2.2m people. This is just below construction’s 2.4m and more than the hotel and food sector’s figure of 1.8m.

The Law Family Commission on Civil Society is chaired by former cabinet secretary Gus O’Donnell. It involves 17 commissioners including chief executive of Barnardo’s Dr Javed Khan and NCVO chief executive Karl Wilding.

Its report also laments a “failiure on the part of the private and public sectors to treat the social sector as an equal partner, to the detriment of all three”.

It is particularly critical of politicians' neglect of the sector. The Conservative and Labour parties’ 2019 general election manifestos “dedicated just 0.4 words for every 1,000 published to terms connected to civil society; business terms featured around five times as much”, found the Commission.

This neglect of charities is at odds with the sector’s role in supporting pandemic impacted communities amid the Covid-19 crisis, the Commission adds.