Impact UK: The role for charities

In a briefing from the Thomson Reuters Foundation, I was reminded of a stark and troubling statistic: only 12% of the global population now lives in a liberal democracy. The freedoms that allow truth to be spoken to power, a free press, an independent civil society, and the rule of law, are deteriorating faster than at any point in modern history outside of world wars. A daily scan of the headlines is enough to leave anyone with a sense of dread.

And yet, amid this turbulence, the emergence of a growing and dynamic impact economy stands out as a rare and powerful source of hope.

As Chief Executive of the National Council for Voluntary Organisations, I spend a great deal of my time reflecting on the immense pressures facing our traditional, regulated charity model, and on what the future holds for the 160,000-plus charities registered in England alone. The reality is a sobering one. A framework built in the Victorian era to help philanthropists demonstrate benevolent intent has struggled to remain sustainable, meet escalating demand, or innovate at the pace required; despite remaining uniquely placed to do so because of its deep roots in the communities experiencing the most challenging outcomes of mature capitalism.

In response, new forms of civil society have surged, both formal and informal. Community interest companies, fluid and decentralised online movements, and the rapid rise of socially responsible businesses are transforming the landscape. As these models proliferate, the boundaries of ‘who delivers public good’ and the structures through which they do so have become increasingly blurred. Positive social impact is increasingly everyone’s business (or should be!), and that is unquestionably a step forward.

Charities do, and always will, bring something vital to the impact economy: a moral compass rooted solely in public benefit; the ability to reach the hardest-to-reach communities and causes; and data, passion, knowledge, and experience built up since Victorian times.

But with this progress comes complexity. Measuring impact, and understanding its value to the UK economy, has become more challenging as it is delivered by more actors, at precisely the moment when clarity is essential for unlocking investment, managing costs, and guiding effective regulation. Impact can be understood as a form of ‘non-financial profit’: an advantage or benefit gained from investment that is not measured in sterling or dollars, but in national wellbeing, equality, equity, health, and productivity. The happiness of our children, the treatment of our elderly, reduced pollution in our rivers, and our approach to diversity, rather than material possessions, are what should make life feel safe, and optimistic. They assure us that personal growth is not at the detriment of others, in turn creating a sustainable, stable future.

Yet improvements in these areas have never been delivered by the state alone; increasingly, they cannot be delivered effectively by the traditional charity model in isolation either. Charities always will bring something vital to the impact economy: a moral compass rooted solely in public benefit; the ability to reach the hardest-to-reach communities and causes; and data, passion, knowledge, and experience built up since Victorian times. We play a crucial role in preventing the growth of inequality that an unchecked market will inevitably produce.

This report offers a much-needed contribution to addressing these challenges. It provides an important foundation for understanding the scale, potential, and economic significance of the impact economy; it will also help shape the decisions required to ensure that social good not only survives but thrives in the years ahead.