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Money from dormant assets could boost charities, says NCVO

Money from dormant assets could boost charities, says NCVO

Charities can expect to see little rise in income from donations or government, so local charities should be helped with money from dormant assets, has said.

NCVO’s UK Civil Society Almanac, released today, suggests that earned income is the best prospect for the future growth of charities with income from government at best flat-lining for most of the sector.

The data shows that the charity sector overall saw modest growth, with total income rising to £45.5bn in 2014/15, the year for which the data is newly available, from £44.3bn in 2013/14 (in 14/15 terms).

Income from government increased around 1% overall, to £15.3bn in 2014/15, while income from local government, both in contracts and grants, continued to decline from its 2010 level, as local authorities tightened their spending. Income from central government has grown in total but according to NCVO’s figures, the rise has been mainly driven by a relatively small number of grants and contracts going to the largest charities.

Earned income biggest growth area

According to NCVO in the 16th edition of its Almanac, the main growth area for charities in recent years has been in earned income. While donations from the public grew only 6% between 2007/08 and 2014/15 (£7.19bn to £7.65bn), earned income from the public grew 35% over the same period (£7.74bn to £10.45bn). Charities’ earned income includes fees for their services and also income from selling goods or services to raise money.

NCVO is therefore calling for small charities to be helped with dormant assets cash. It suggests the money should be used to create endowment funds that would support local charities into the future, and to help charities and community groups buy community assets such as sports pitches, parks, historic buildings or pubs. It believes these could help them develop sources of ongoing income while retaining the assets for the benefit of their communities.

Sir Stuart Etherington, chief executive of NCVO, said:

“Charities have been becoming increasingly entrepreneurial in recent times. With no realistic prospect of an overall increase in government spending and what look to be tough public fundraising conditions, this is a trend that will have to continue if the sector is to see growth in the next few years.

“While some charities will doubtless buck these trends, the picture for small and medium charities in particular looks challenging.

“The next government could boost local charities and community groups for a generation by using the money from dormant assets to endow community foundations with investment that can generate returns to support charities for a generation to come. They could also help communities buy assets that are important to them, putting them under the control of local people through charities and community groups.”

More key UK stats

Charity income:

  • £20.6bn from individuals
  • £15.3bn from government
  • £4bn from voluntary sector
  • £3.3bn from investments
  • £1.9bn from private sector
  • £0.5bn from National Lottery

Charity spending:

  • £43.3bn total spending
  • £30.2bn charitable activities
  • £6.4bn grants
  • £5.9bn cost of generating funding
  • £0.9bn governance
  • £2.2bn retained income and capital expenditure

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Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via www.thepurplepim.com.

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