Charity closures have jumped 27% in a year, to 666 in 2018 from 526 in 2017 as pressures on the charity sector take their toll, according to charity law firm Wilsons.
The figures are taken from the ONS’s UK Labour Market: February 2019 report, and Wilsons attributes the rise to tougher regulations around fundraising, as well as declining levels of public trust and confidence in charities. At the same time, it observes, some charities have seen their income from donations fall driven by a number of high profile scandals in the sector and their press coverage, while there have also been long-term cuts to public sector grants over the last decade.
Wilsons also highlights financial pressures leading to charities merging with, or transferring their charitable activities to, other charitable organisations, and a preference by the Charity Commission to see trustees wind down their charities voluntarily once their missions have been completed, rather than to carry on raising money for unclear purposes, which it believes may also have contributed to the number of charity closures.
Stephen Oxley, Partner at Wilsons, commented:
“The financial climate for charities has been getting tougher for a long time, and the last year has seen more of them pass the tipping point into no longer being viable.”
“First Government grants were cut, increasing reliance on donations. Donations then started to fall for some charities, in part due to some charities taking reputational hits. That has made it difficult for some charities to carry on.”
“For some charities, the answer will be merging with a bigger organisation with a similar mission, but more will simply be wound up. This is often the case for charities started in the wake of a specific event, such as those set up in memory of an individual.”
“We are also seeing more charities choose to wind up voluntarily as they have completed their missions. There can be some reluctance to do this, but it is often a good thing. A charity that is no longer needed because its purposes have been achieved is a charity that has been successful.”
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