The Circular Economy Squeeze on Charity

As society seeks to live more sustainably in the face of the climate crisis, concepts like the circular economy are gaining traction, with consumers increasingly encouraged to ‘repair, reuse and recycle’ used or unwanted items and to eschew fast-fashion and throwaway culture.

This shift has created a significant opportunity for second-hand markets, with consumers increasingly reticent to simply throw away their used goods, with consumers increasingly donating or re-selling used possessions so that they are not simply thrown away or destroyed.

This is a good thing. Consumers are increasingly conscious about the impact of their behaviour and increasingly aware of the downsides of fast-fashion. It is a small shift in the grand scheme of things, but one which shows that environmentally-driven behavioural change is indeed possible.

The Squeeze

When it comes to disposing of used or unwanted possessions, consumers have had a broad range of options – familiar to anyone who has done a spring clean – for decades. You can donate things to charity shops, sell them to someone else through classified advertisements or car boot sales, offer them around to friends or family, put them into storage or throw them away.

Charity shops remain the default option for getting rid of unwanted items that may remain useful or desirable to others. For 48% of consumers, donation to charity shops is the default course of action here, with 30% stating they would sell them either online or to someone they know, and 15% stating they would offer items to friends and family for free. Just 4% of consumers would throw items that may still have life in them away with 3% stating that they would put them into storage.

However, as consumer appetite for both second-hand goods and re-selling has grown, driven by a desire to live more sustainably, innovation in the re-selling market and the proliferation of services from eBay and Gumtree to Facebook Marketplace and Depop has the potential to drastically alter the second-hand market and the balance of charitable donation to re-sale. 

The Demographic Driver

We can begin to see the impact of this shift by looking at generational attitudes to charitable donation and re-selling. As we move through the generational cohorts from oldest to youngest, we see that propensity to donate goods to charity declines, while propensity to sell items – either to someone you know or online – grows. The culmination of this shift comes with Gen Z, the first generational cohort for whom re-selling is more popular than charitable donation.

For the charity sector there is no need to panic…yet.

Donating to charity remains an incredibly popular way of engaging with the circular economy; at every age group above the age of 24, donation remains the default with re-selling the next best option.

However, this does indicate that in time, charities such as Oxfam, the British Heart Foundation or Sue Ryder might find it increasingly difficult to generate income from their bricks and mortar retail spaces.

In January and February 2020, 92% of sales in charity shops were generated by donated goods, and as subsequent generations grow up both wanting to live more sustainably, and maximising the economic value of their used goods, charity shops may find it increasingly difficult to find used goods in condition suitable for resale.

Should this trend continue, charities look set to be increasingly squeezed out of the circular economy, with consumers cutting out the charitable middle-man and selling direct to friends, family or strangers online.

A New Hope: Charity-run Reselling Platforms

 Consumers want to have the best of all possible worlds. They want to live more sustainably, they want to protect their income and their assets, and they want to contribute to charity, but as things stand, when they can’t have all three charities look set to draw the short straw.

There remains a gap in the market then, for a service which allows consumers to achieve everything they want to while participating in the circular economy; for a service which allows individuals to recycle unwanted goods, to recoup some of their investment and to make a charitable contribution.

As the medium of recycling and reselling shifts digitally, charities must do so too. Charities are being squeezed out of the circular economy, but there is an opportunity to reinsert themselves as platform-based middle-men, bringing with them an aspect of doing good that cannot be rivalled by Facebook or Depop.

 

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