Changes in income concentration in the charitable sector: considering ‘inequality’, ‘differential growth’ and ‘mobility’
Backus, Peter; Clifford, David (2009)

by Peter Backus and David Clifford

The received wisdom is that the charitable sector is undergoing a process of increasing concentration where the large charities continually crowd out the smaller charities. We examine this issue by looking at three distinct facets of changes to the income distribution of charities:-

1) ‘inequality’: overall trends in income concentration – is there a tendency for the ‘biggest’ charities, as defined in a particular year, to account for a growing share of total charity income over the analysis period?2) ‘differential growth’: do ‘small’ (low-income) charities, defined at the beginning of the analysis period, tend to grow slower or faster than the ‘big’ (high-income) charities?3) ‘mobility’: to what extent is there ‘leapfrogging’ during the analysis period, as initially smaller charities overtake the incomes of those that were initially larger?

Considering only overall ‘inequality’ (1) can mask its constituent dynamics (2 and 3). Instead, all three facets are of substantive interest in their own right and together contribute to a nuanced understanding of changes in relative income.We use data from GuideStar and Charities Aid Foundation. Analysis is based on a large panel of charities for which we have consistent financial information over a number of years.This is work in progress, so results are preliminary, but we would be very interested to hear your feedback.

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