This report was authored by Jon Franklin, Jansev Jemal, Anoushka Kenley, Jack Larkham, and Josh Martin. The team are grateful to the many contributions from across sector stakeholders.
Civil society organisations and the individuals who work and volunteer for them play a critical role in society, fulfilling many functions from service delivery to community building and campaigning. In doing so, they make a significant contribution to the economy.
Yet when it comes to measuring the economic contribution of different sectors in national accounts, the civil society sector is invisible. Its activity is spread across sectors and industries. This means that the scale and nature of civil society’s contribution to the economy is impossible to identify from current government statistics. Perhaps most crucially, one of civil society’s most valuable inputs – the time and talent of millions of volunteers each year – isn’t counted at all.
A satellite account is a set of data tables linked to, but distinct from, the national accounts. They rearrange concepts and provide supplementary information, bringing out information about sectors that are otherwise not identifiable in national account-level data. In the UK, satellite accounts already exist for tourism, household production and environmental topics. This report was commissioned by the Department for Culture, Media and Sport (DCMS) to investigate the feasibility of creating a satellite account for civil society in the UK.
Sector stakeholders want to see the UK follow the lead of other countries like New Zealand, Canada and Mexico and introduce a civil society satellite account. A satellite account would provide robust, timely data about the size and contribution of the civil society sector, sitting alongside other national account statistics. It would allow comparisons across industries (for example, how many people are employed in the civil society sector compared to the hospitality sector) and reveal the contribution civil society makes within industries (for example, what proportion of organisations in the child day-care sector are part of the civil society sector).
While stakeholders are broadly supportive of a satellite account being developed, agreeing which organisations are in or out of scope of ‘civil society’ is less straightforward. To solve this problem, a ‘modular’ approach to building a satellite account should be taken, which would allow the data to be cut to meet the interests and needs of different data users.
Two approaches for building a civil society satellite account in the UK are set out in this report: a ‘Do now’ approach which relies on existing data, and an ‘Intermediate’ approach which we recommend should replace the initial version once further analysis has been completed.
The ‘Do now’ approach is the lighter touch option, using existing identifiers on the Inter-Departmental Business Register, business and employment surveys to find civil society organisations. It would produce data on economic, employment and organisation variables, such as output, pay and organisation numbers, and the data could be cut by Standard Industrial Classification (SIC) code. Annex A of this report sets out initial analysis of the data. This analysis suggests the identifiers would produce a useful first iteration of a civil society satellite account. However, the ’Do now’ approach is likely to underestimate civil society and would only be an initial step.
The ‘Intermediate’ approach is much closer to the approach set out in the UN Handbook ‘Satellite Account on Non-profit and Related Institutions and Volunteer Work’. Using the Handbook as a guide for identifying in-scope organisations, the ‘Intermediate’ approach uses registers (for example, the register of community interest companies) to create a reference list of civil society organisations for inclusion in the satellite account. Annex B provides detailed analysis of how the UN Handbook tests apply in the context of UK charity and company law. The ‘spirit’ rather than the ‘letter’ of the UN Handbook guidance would produce a list of in -scope organisations that better reflects the UK context, meet the needs and interests of data users, and result in a more pragmatic approach to building a satellite account. In the ‘Intermediate’ approach, ‘modules’ could be produced using SIC codes but could also be produced by organisation type, for example, charities or mutuals.
In both approaches to building a satellite account, volunteering should be included in measures of civil society’s economic activity. As volunteering is currently not included in national accounts, this would be a significant step towards recognising the contribution of volunteers to the UK economy. It is recommended that initially formal rather than informal volunteering is captured and that shadow wages are used to estimate the value of volunteers’ time and talent.
Further investment in data for civil society should take place too, to complement the approaches to building a satellite account set out above. Social enterprises span the business (‘profit’) and civil society (‘purpose’) sectors and take a variety of legal forms. Working with the social enterprise sector, including the membership body Social Enterprise UK, will be key to build a specific social enterprise module for inclusion in the satellite account. In addition, the government should consider commissioning a feasibility study exploring the potential to directly measure the volume of output (rather than estimating output by adjusting costs for inflation) of the civil society sector, for those groups of organisations where this is most feasible. This would improve understanding of growth in the sector over time, and changes in productivity.
Building a civil society satellite account in the UK would be a significant step forward. It would both provide robust, timely data about the economic and employment contribution of civil society, and formally recognise civil society’s economic contribution in parity with other industries. The process of building a satellite account is not straightforward, but in this feasibility study, there are two possible routes which would allow a civil society satellite account to be delivered within the next two years, with appropriate funding.
Doing so would not only be a significant step forwards in valuing civil society, but would allow for better policy making, better decisions by funders, and further research into how civil society can be enabled to thrive – having even more of an impact than it already does on the lives of people across the country.
Recommendations for government
1A. Establish a satellite account for civil society in the UK so that its contribution to the economy can be measured and recognised.
1B. Include a measure of the value of volunteering in the satellite account, to ensure more of the economic contribution of the civil society sector is accurately reflected.
2A. Produce the civil society satellite account annually, with a short lag after the end of the reference year, so that data remains up-to-date.
2B. Make the civil society satellite account modular, with the ability for users to identify and include or remove different industries or organisation types, such as social enterprises, in order to increase the usefulness of the satellite account for different data users.
2C. Include a range of economic, employment and organisation statistics in the satellite account. As far as possible, the data should be broken down by geography.
3A. Adopt the ‘Do now’ approach, using existing identifiers on business and employment surveys, to produce a first iteration of a civil society satellite account.
3B. Conduct further research to better understand which organisation types will be caught by these identifiers and which will be missed.
3C. Supplement this approach with additional analysis of social enterprises, working with stakeholders to do so.
3D. Include volunteer time in the ‘Do now’ iteration of the civil society satellite account, using data from the Community Life Survey and shadow wages to estimate the value of volunteer time.
3E. Include a range of variables in the satellite account, including economic variables like GVA and output, labour market variables like employee numbers, volunteer numbers and hours worked; and organisational variables like organisation numbers.
4A. Build on the ‘Do now’ civil society satellite account by creating a reference list of in-scope organisations for a UK civil society satellite account and aggregating data from those organisations. This is the ‘Intermediate’ approach to building a satellite account.
5A. Develop an appropriate deflator for the civil society sector – as a minimum we recommend developing cost-based price indices for different types of civil society output.
5B. Complete a feasibility study to explore measuring volume of outputs for those parts of the civil society sector most amenable to measurement in this way, in line with best practice for public sector outputs.
5C. Consider including additional data in future iterations of the satellite account, particularly more detailed data about volunteering and information about sources of funding.
[1] Recommendations are grouped and numbered according to the chapter in which they appear.