Sector finances finally recover to pre-recession levels but smaller charities still struggling
Melanie May | 9 May 2018 | News
Ten years on and overall, the sector’s finances have finally recovered to pre-recession levels. However, smaller charities have fared less well, according to the NCVO UK Civil Society Almanac 2018.
The NCVO‘s Almanac shows that while the sector seems to have now recovered its finances to pre-2008 levels, smaller charities have not managed to recover the value of their assets to the same extent as the sector on average.
Overall, the charity sector’s total net assets reached £121.3bn in 2015/16, finally surpassing their previous high of £120.5bn in 2007/8,
Total income for the charity sector reached a new high of £47.8bn in 2015/16: a 4% increase on the previous year, with £22.3bn coming from individuals and £15.3bn from government: £186m less (a 1% decline) than the previous year. While income from individuals rose, the data shows that this growth was predominantly in earned income such as membership fees or charity shop sales, rather than donations. Donations from the public however still account for the largest share of income (35%), and showed slight growth of 1%, to £7.8bn, while earned income from the public increased more strongly, by 8% to £11.4bn.
However, despite these figures, four-fifths of income is generated by just 3% of organisations: those with an income of £1m or more. Small charities, those with an annual income of £100,000 or less, make up over four-fifths (82%) of the sector but account for only 5% of the sector’s income.
The Almanac also shows that the sector’s spend nearly equaled its income in 2015/16, reaching £46.5bn. £33.1bn of this went on charitable activities, £6.5bn on grants, £6.4bn on generating funds, and £0.6bn on governance.
Value of sector
To estimate the contribution of the sector to the wider economy, the Almanac looks at the number of people employed and the gross value added (GVA). It estimates the sector’s GVA to be £15.3bn: roughly similar to the GDP of Estonia in 2016, with the voluntary sector employing 880,556 people (3% of the total UK workforce), and the value of formal volunteering estimated at £22.6bn in 2015.
Sir Stuart Etherington, chief executive of NCVO, said:
“We can and should celebrate the fact that the UK voluntary sector continued to grow, doing more than ever for the people and causes it works for. But I know that aggregate numbers can disguise a great deal of variation in experience on the ground.
“While some charities are going from strength to strength, others, smaller charities in particular, are struggling with the ongoing local government spending squeeze, or being pushed out of an increasingly competitive public services market.
“The sector as a whole may have recovered from the impact of the recession, but there is clearly no shortage of risks out there for charities. The solutions, as ever, all come back to ensuring organisations have the strong governance needed to help them manage risks and to ensure they grasp opportunities.”Advertisement
NCVO uses data from a sample of thousands of charities’ annual accounts to produce the almanac. Published every year, it is also used by the Office for National Statistics in their calculations of charities’ contribution to the economy.
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.