Which of Porters five forces are creating problems for the United Kingdoms charity sector?

50 CHAPTER 2 THE ENVIRONMENT ILLUSTRATION 2.4 Chugging and the structure of the charity sector Industry structure contributes to inefficiency and aggression in the United Kingdom's charity sector. ILLUSTRATION The charity sector has become controversial in the be had from showing collaborative, as opposed to United Kingdom. The aggressive fund-raising of some over-competitive, instincts. charities is epitomised by workers soliciting donations Local authorities in particular were frustrated by from shoppers on a commission basis. Such is their duplication and waste, as they increasingly commis- perceived aggression that these charity workers are sion local charities to deliver services. With respect known as 'chuggers', compared with the violent to small charities, local authority budgets are street-crime of 'muggers'. relatively large. One charity sector chief executive, In 2008, there were 189,000 charities registered Caroline Shaw, told Charity Times as she pursued in England and Wales, 95 per cent having annual more cooperation between local charities: incomes of less than 500,000. However, about 80 per cent of all charity income is raised by the 'Without a doubt there is increased competition largest 20 charities, headed by Cancer Research UK when it comes to [local authority) commission- (2008 income, 355 m (-390 m; -$532 m)). ing ... Our driving force has really been to try According to Charity Market Monitor, in 2008, the top to create a more effective service for front line 300 charities averaged a 0.9 per cent increase in organisations; to offer more projects, more diverse income, but the largest 10 managed income growth services, more effective services. There's a huge of 2.3 per cent (excluding impact of mergers). amount [of charities] all fighting for funding. I The United Kingdom government introduced the really think that people should be looking at 2006 Charities Act with the specific intention of working more closely together.' assisting mergers between independent charities. During 2008, more than 230 charity mergers were This had followed a report of the Charity Commission, registered with the Charity Commission. As the reces- the regulator for charities in England and Wales, sion began to put pressure on charitable donations which had commented on the charity sector thus: throughout the sector, early 2009 saw the merger of two well-established charities helping the elderly in "Some people believe that there are too many the United Kingdom, Help the Aged and Age Concern. charities competing for too few funds and that The new charity, Age UK, has a combined income of a significant amount of charitable resource could around 160 million, including 47 million a year raised be saved if more charities pooled their resources through fund-raising, and over 520 charity shops. and worked together ... The majority of charities Sources: 'RS 4a - Collaborative working and mergers: Summary'. are relatively small, local organisations that rely http://www.charity-commission.gov.uk/publications/rs4a.asp; Charity entirely on the unpaid help of their trustees and Times, 'Strength in Numbers'. August 2007; Charity Market Monitor, 2009 other volunteers. They may have similar purposes to many other charities but they are all serving dif- ferent communities. The nature of these charities suggests that there are less likely to be significant Questions areas of overlap... It is the much larger, profes- 1 Which of Porter's five forces are creating sionally run, charities which, because of their size, problems for the United Kingdom's charity tend to face charges of duplication, waste and sector? over-aggressive fund-raising. While there are some 2 What type of industry structure might the clear advantages to be had from a healthy plurality charity industry be moving towards? What of charities, which are constantly refreshed by new would be the benefits and disadvantages of charities pursuing new activities, there are also that structure? big benefits of public confidence and support to