Charities crowded in affluent areas instead of where they are needed, says thinktank

Charitable wealth and resources – from volunteers to philanthropic donations and council grants – is disproportionately concentrated in England’s most affluent areas at the expense of the country’s most deprived communities, a report claims.

The thinktank New Philanthropy Capital (NPC) calls for a rebalancing of public funding and philanthropy to rebuild civil society – broadly defined as local charities, clubs and community and voluntary groups – in the “left behind” areas of the north and Midlands.

It said that government promises to boost funding in the physical infrastructure of northern and Midland towns must be accompanied by investment in their voluntary sector and local authorities to help renew communities after years of austerity-driven cuts.

“These areas do need shiny new train lines and decent roads, but you do not make a successful community without a rich tapestry of vibrant community organisations,” said Dan Corry, chief executive of NPC.

The report locates charities using their charity commission registered address, together with their stated geographical area of operations. The report focuses on local charities rather than national or international ones, and while this approach could miss some larger national charities registered in London that work in a number of geographical areas, NPC considers it to be the most accurate index of charity density by area.

The north-south charity deficit was highlighted by figures showing that the affluent Cotswolds had nine times as many charities per 1,000 population as Blackpool – England’s most deprived local authority – which had just 0.6 charities per 1,000 population.

Other deprived local authority areas with relatively low levels of charities included Stoke-on-Trent (0.8 per 1,000 population), and Middlesborough (1.1). These compared with leafy South Northamptonshire – the sixth least deprived council in England – which had 3.2 charities per 1,000 population. The English average was 1.8.

Similarly, volunteering was less prevalent in deprived neighbourhoods, where just 15% of residents volunteered formally once a month compared to 29% in the wealthiest areas. Data showed that major philanthropic funders did not direct as many grants to areas of high social need as might be expected, the report said.

Proportionately fewer charities were established in poorer areas, where they were also less likely to survive beyond the short term. A third of charities in deprived areas went bust 10 years after being established, compared to 18% in the least deprived local authorities.

Corry said the charity deficit in the poorest areas did not indicate that they lacked community spirit. Volunteering in deprived areas was often informal, rather than done through charities, and so went unrecognised in official surveys.

However, unlike affluent areas, poorer areas could lack the money, skills, time and volunteers needed to harness community spirit into “social capital” – networks of trust, social relationships and mutual help that helped create happier, more resilient, socially cohesive and economically successful neighbourhoods.

Related: The Guardian view on fewer people giving to charity: generosity is good | Editorial

The report says the dearth of charities in deprived areas has been compounded by economic decline and public funding cuts that fell hardest on local authorities in the north and Midlands. Charity income in deprived areas fell 14% between 2008 and 2015, compared to 9% in the most affluent.

Cuts to council budgets not only resulted in reductions in direct grants to local charities, but saw the closure of services such as Sure Start, community centres and youth clubs which could be instrumental in attracting volunteers and maintaining an area’s social fabric, especially in poorer areas.

Local voluntary groups in deprived areas – especially those dealing with poverty, mental health and social care – have reported that reductions in their grant funding meant they struggle to keep pace with spiralling demand from residents caused directly by cuts to benefits and local health and care services.

The NPC report calls for a review of gift aid – a government tax break worth £1.5bn a year designed to encourage charitable giving – which it says disproportionately benefits charities in more affluent areas as they are more likely to have an established network of donors willing to fill in the forms rather than relying on ad hoc fundraising. The report says gift aid “is likely to be of more value to an arts charity in the south than a domestic violence charity in a deprived area”.

It argues that the government should consider redesigning gift aid to make it more generous when it is claimed by charities that operate in deprived areas. Alternatively it could be scrapped completely, with the money saved given as long-term grants to charities operating in poor neighbourhoods.

Sally Young, a community activist in the north-east of England, said many poorer areas had a great character and energy but becoming socially active could be harder for individuals in poverty. “If you are on universal credit and have everything else going on, it is going to be hard to be a volunteer as well.”