Income growth falters for top 100 charities as pressures bite, report shows
Melanie May | 16 March 2018 | News
The fundraising income of the top 100 fundraising charities reached £5.6bn last year: the highest amount for five years but the lowest annual growth rate.
According to the latest Charity Financials Top 100 Fundraisers Spotlight report, the top 100 generated £9.1bn income overall in 2016-17. This was a real-terms growth margin of 0.7% on the previous year, with the maintenance of income due to a small real growth in fundraising income of 1%.
Nine of the top 10 charities consolidated their positions as leaders in fundraising in the 2016-17 financial year. Cancer Research UK and British Heart Foundation retained their rankings of first and second, while Sightsavers International took third place, up from sixth. According to the report, the increase in the income of Sightsavers International was principally related to an in-kind gift of drugs valued at £39 million to treat trachoma in Sudan from the International Trachoma Initiative. Its cash donations also rose, including from legacies and corporates. However, a number of charities saw little overall increase, including Marie Curie Cancer Care and Cancer Research UK.
The fastest growing charities are Alzheimer’s Society (23rd), which saw income growth in 2016/17 due to an increase in donations including legacies of £1.6 million; Tearfund (34th), which saw its donations increase by £8 million in 2015/16, largely as a result of its toilet-twinning appeal, and its emergency appeals; The International Bible Students Association; The Woodland Trust; and Crisis.
Largest income streams
Overall, legacies were the second largest income stream after donations, at 15.6% of the total income of the top 100 fundraising charities, and following voluntary donations, which continue to provide the largest share of fundraised income at 52%. Statutory funding fell by 1.7% in the last year, but still accounted for £1.04bn of overall income, while income from charitable activity fell by 2% compared to 2015-16 figures, reaching £1.1bn. This is an almost flat growth trend in combined income from statutory sources and charitable activities and a fall back to the level of 2011/12 in their combined real value in 2016/17.
Tough times ahead
According to Charity Financials, a review of the longer-term trends in charities’ income reveals the sector moving into a period of economic constraint. With total income to the top 100 growing by just £63 million (0.7%) between 2015/16 and 2016/17, the sector almost returned to the negative position it held when UK GDP experienced an economic dip between 2011 and 2012. Its figures show that growth rates had been picking up well from that point, and staying at over 4% until 2016/17, which saw a dramatic drop.
The report concludes that there are many positive indicators in the report but overall, it says:
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“The results reinforce the evidence of last year that pressures in the funding environment are having a significant effect on charity growth, at a point where the charity sector is being expected to do more to pick up social needs which the government cannot fully support.”
“With UK economic growth now predicted to slow down over the medium-term, the uncertainties of Brexit and the recent devastating allegations of poor practice in the sector receiving very high profile media attention, the sector may struggle to achieve any measurable growth over the next few years. The reality is that charities may have to work even harder to maintain their financial position and convince donors that they are a priority.”
The report was written by Professor Cathy Pharoah at the Centre for Giving and Philanthropy at the Cass Business School and sponsored by M&G Investments.
About Melanie May
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 thepurplepim.com.