Measuring the contribution of the voluntary sector

Whether it’s developing skills and training to enter the workforce, investing in buildings and equipment, or providing services to fill gaps left by the public sector, the voluntary sector plays a significant part in the UK economy. However, measurement of its economic contribution is inherently complex, meaning the role it plays is often undervalued.

Currently, there is no adequate, recognised definition of the contribution to economic activity across the sector, which leads to wide variation in valuations. Core National Accounts can be used to estimate the voluntary sector, through the Non-Profit Institutions Serving Households (NPISH) sector.

However, the UK voluntary sector is much larger than the organisations that are included within NPISH, given the specific definition of this sector. Voluntary organisations are spread across sectors and industries in the National Accounts, so the use of NPISH results in significant undervaluation of the sector’s economic contribution.

A new ESCoE project aims to explore the problems with measuring the voluntary sector. It will answer questions surrounding NPISH and the National Accounts and improve measurement of the sector within the UK National Accounts framework. This builds on previous work in partnership with NIESR.

The project will focus on three elements:

1. Documenting ONS methodology for calculating NPISH
   We will formally document the full methodology used to create the NPISH statistics in the National Accounts. NPISH includes charities, higher education and further education, political parties, and trade unions, and we will highlight what data is used for each of these elements. In particular, we will focus on documenting the data process for charities, at both the NCVO level (who provide charity data to the ONS), and how the ONS then use this data. We will then review these processes and outline recommendations for improvements on how to make NPISH more representative of charities within England and Wales and allow for replication in both regional and devolved National Accounts.
2. Interviewing data providers and users
   We plan to interview key practitioners in the sector about their understanding of the role of data in the development of national accounts. These will include national infrastructure organisations involved in producing the data for the accounts, organisations that might use the accounts for their work understanding and campaigning about the sector, and government officials. We will identify what role they think National Accounts plays in their work and how they think it shapes understanding of the voluntary sector within society.
3. Investigating recommendations for data used in National Accounts
   Following on from our interviews with providers, we will recommend improvements and investments in the data infrastructure for the voluntary sector, ensuring regulators, voluntary sector representative organisations, and statistical producers are focussed on supporting the production of appropriate and accurate statistics about the sector.

The inability to measure the voluntary sector’s contribution to the UK economy limits its comparison to the non-voluntary sector, meaning that it may be undervalued or overlooked.

Accurate measurement would allow for better recognition of the sector’s economic contribution. This could encourage further volunteering and involvement and investment in the sector, along with better use and allocation of resources. Unleashing the potential of the voluntary sector by measuring it more accurately could also allow its inclusion in economic growth strategies to improve both regional and national economic performance.

Crummey, C. ‘Measuring the Voluntary Sector’ FAI blog, 23 May 2024.

Crummey, C. ‘Measuring the Contribution of the UK Voluntary Sector‘ Conference poster, 16 May 2024.

Crummey, C. ‘Measuring the voluntary sector’ ESCoE Blog, 14 May 2024.

Dixon, H. and Whyte, L. ‘The geographic distribution of volunteering across the UK and Northern Ireland‘ ESCoE blog, July 2023.

Dixon, H. and Whyte, L. ‘The geographic distribution of volunteering across the UK and Northern Ireland‘ ESCoE Discussion Paper 2023-14, July 2023.

Dixon, H. and Whyte, K. ‘Developing a systematic framework and method for including voluntary and non-profit organisations in NPISH and National Accounts’ Economic Statistics Centre of Excellence: The Next Five Years, poster exhibition, 12 December 2022, One Birdcage Walk, London.