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New research challenges belief in 'Tescoisation' of sector

Finance | Vibeka Mair | 25 Jun 2010

The Third Sector Research Centre and the Centre for Charitable Giving and Philanthropy have released a new report which suggests that the biggest charities are not becoming increasingly dominant in the voluntary sector.

The paper, which tracks the income growth of charities from 1997-2008, found that in 1995 the largest 1 per cent of charities captured 62.1 per cent of voluntary sector income. In 2007, the largest charities received the same share of income.

It challenges the idea of a ‘Tescoisation’ of the sector – the belief that large charities are taking a larger proportion of the sector income.

The phrase was coined by work and pensions secretary Iain Duncan Smith in 2005. At the time, Smith criticised big charities ‘cosy’ relationship with government and said there seemed to be an established trend towards the concentration of income in the very richest charities:
 
“The voluntary sector appears to be undergoing “Tescoisation” with a small minority of large charities becoming ever more dominant,” he said.

However, new research from the TRSC and Centre for Charitable Giving suggests that the largest charities have not necessarily grown at the highest rate.

Using data from the Charity Commission, it finds that there is some evidence of ‘Tescoisation’ when the growth of all charities is analysed, however, when the analysis is restricted to sub-sectors there is no evidence that larger charities are dominating.

“For social service charities there is no evidence to support the Tescoisation thesis,” the report says, “The median income growth of the initially very large charities is higher than that of the initially small, but similar to those of initially intermediate size (for example, in the neighbourhood of around £500k).

“Overall, it is clear that for this population of social service organisations the initially established organisations in general, but not the very largest in particular, have benefited most from the aggregate increase income.”

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