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April 8, 2024
Restating the case
Back in 2007, the jury was still very much out as to whether communities should be encouraged to take on responsibility for assets that were publicly owned. The landmark Quirk Review came down firmly in favour, citing several reasons why it was in the public interest for the transfer of public assets to be encouraged widely and at scale. One of the most compelling reasons cited back then was that when communities own land or buildings their financial resilience is markedly improved. Just to serve as a reminder, lest anyone needs one, a comprehensive piece of research restates the argument.
Now is the moment for Local Authorities to invest in a mass divestment of their assets into community ownership. In deprived areas, local community groups provide crucial services. Our research shows that those groups depend on owning or leasing buildings. Without them, they find it much harder to survive. A concerted effort to transfer large numbers of buildings could secure community organisations for years to come.
Up and down the country councils are under pressure to sell off their assets to make ends meet. Community asset transfers and council leases are central to local community organisations, and quick sales aren’t likely to favour the sector. As we contemplate a worrying fire sale of local buildings, we took a closer look to see how important assets are to charities.
The Social Investment Business data team dug into the Charity Commission data of over 146,000 charities held in the open-access dataset and compared this with the Index of Multiple Deprivation (IMD) deciles. The data shows whether a charity owns or leases any land or buildings, and the IMD deciles rank areas by deprivation from 1 (most deprived) to 10 (least deprived). Taken together, the data shows just how much buildings matter. And the poorer the place, the more they matter.
Our research found a clear picture. In more deprived areas of the country a higher proportion of charities own land. The important additional piece of context here is that the proportion of ownership is higher, but the number of charities formed in each decile is roughly the same. That means the same number of charities are founded, but the survivors in poorer areas are much more likely to own a building or land. That is, we found that owning land is correlated strongly with charity survival, and this holds particularly true when deprivation levels increase.
Our findings:
* 41% of charities in IMD 1 (the most deprived areas of England) own land, compared to 28% in IMD 10 (The least deprived areas of the England). As deprivation falls, the percentage of charities owning land also falls. indicating the importance of asset ownership in marginalised communities.
* The number of charities formed in each IMD band is roughly equal across England, regardless of the IMD rating.
* Only 8,000 charities exist in the most deprived parts of England, but an average of 16,000 exist in the least deprived areas. The wealthier the area, the easier it is for charities to persist without assets on their balance sheet.
There is a strong correlation between land ownership, and charity survival rates. From our data charities that have registered have done so in equal numbers and with equal likelihood of owning land regardless of deprivation. However, as charities age, those that survive are more likely to have assets or operate in more affluent areas. This means that owning an asset is much more important for survival in more deprived areas.
Our findings mirror research that we completed on Futurebuilders England, that demonstrated that asset ownership improves the resilience of charitable organisations.
The factors underpinning this are complex and require additional research. It’s likely that owning land leads to greater financial stability for charities through revenue generation in the form of rent and room hire, partnership opportunities with local businesses and the Local Authority, and greater capacity for public sector contracting. In addition, they can secure loans against their assets, providing additional flexibility and scope for investment and forward planning. Owning assets also cuts costs, saving on rent, which can increase stability.
Asset ownership might not be right for every charity but for many it is the foundation of long-term stability. The best thing that struggling Local Authorities could do with their land, would be to divest it into community hands. This would safeguard important local services in the communities that need them most and would provide a longer term saving to the state through crucial youth work, childcare, healthcare, mental health support, employability support and civic power.
You can find more information about our research in the dashboard below, including a step-by-step guide of how we found this data.