It’s a well-worn warning, but social investment and ethical consumerism are entering a new era of strength in which charities will have to start compete for the ethical pound, rather than the charitable pound. Celina Ribeiro says the battle lines aren’t clear, but traditional charities need to pay attention.

The rise and domination of social investment and ethical consumerism over traditional charities and giving is the Chicken Little warning which has been squawking around civil society for a long time now.

The failure of social investment and ethical consumerism to actually make a serious impact on the traditional charity sector however has, somewhat, undermined the warnings of the good Chicken.

But do not dismiss the chicken. Not anymore, anyway.

We may not have reached tipping point, but recent developments suggest that social investment, social enterprise and ethical consumerism are getting stronger, and stronger. Whether this presents a greater danger to charities, or a danger to traditional business, is not yet clear.

What is clear, though is this. Listen to any minister in the new government talk about civil society, and listen carefully when they break down what civil society is. Nigh on always, ‘social enterprise’ precedes ‘charity’ in the semantic hierarchy. Social enterprise is at the heart of this government, it makes sense to them.

At the end of last year, the value of ethical investment hit a record £9.5bn representing nearly a four-fold increase over a decade (1999 saw £2.4bn invested in ethical funds). A recent survey by F&C Investments found that three quarters of investors would consider an ethical investment trust if one was available to them.

And in the last couple of months M&S has introduced an ethical pricing scheme for its dairy farmers, designed to improve animal welfare and farm sustainability.

Will M&S milk pose a greater threat to PETA membership or Waitrose dairy products? Will people who turn to ethical investments out of horror that their pension funds have been tied up with the BP Horizon disaster start thinking their investment in a solar energy company negates their need to donate to Greenpeace?

If we accept, as Professor Adrian Sargeant accepts, that giving to charity is closely linked to our sense of identity, what danger to giving is posed when individuals can so easily build their sense of ethical identity elsewhere?

This is not a new challenge for charity. Nor are traditional charities destined for the dust bin of history. But consumers are less and less able to divide their spending between ‘things I buy’ and ‘things that do good’. Charities no longer have to compete for the charitable pound, they are now in the ring with a host of others for the ethical pound.

It could be that the real battle will be between ‘good’ and ‘old’ business, with charities witnessing the carnage on the sidelines. It’s likely, even.

But, nevertheless, charities will need to engage with this trend, while reminding supporters/consumers/the public that it is still better to give than receive.