Public donations drop to just 25% of income for small charities as sector remains under strain
Melanie May | 20 November 2024 | News
With the voluntary sector under increasing strain, small charities continue to be hardest hit, according to the latest UK Civil Society Almanac, with public donations falling from 54% to 25% of their income between 2020/21 and 2021/22.
This decline left 73% of small organisations operating without a primary income source, increasing their reliance on limited grants, local support, and government funding.
At the same time, NCVO’s UK Civil Society Almanac, which is an analysis of the sector’s financial health, workforce trends, and volunteer engagement shows that Government funding has decreased as a proportion of sector income. It fell to 26% in 2021/22 (from 30% the previous year), with small charities receiving just 4%.
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NCVO notes that grants are increasingly being replaced by contracts, meaning that smaller charities, which are often unable to meet contract requirements, face heightened sustainability challenges as they try to secure alternative income, and risks them having to scale back essential services.
An analysis of the sector’s financial health, workforce trends, and volunteer engagement, the Almanac also reveals that the voluntary sector employs 3% of the UK workforce (nearly 1mn people). Women make up 68% of this – the highest across all sectors.
Diversity rising but still a challenge
Diversity has risen, with workers from Global Majority backgrounds increasing from 9% in 2022 to 13% in 2023. However, this remains lower than the UK workforce average of 18% and slightly behind the public (15%) and private (16%) sectors. The proportion of disabled people within the workforce is rising, up from 19% in 2016 to 28% in December 2023.
The sector also faces an ageing demographic, with 28% of employees over 55 and only 6% under 25. NCVO notes that these trends highlight succession and diversity challenges, with the need for strategies that attract a broader and more inclusive talent pool.
Saskia Konynenburg, NCVO Executive Director, commented:
“Our 2024 UK Civil Society Almanac data paints a challenging picture for the voluntary sector. As the sector adapts to a changing environment and mounting economic pressures, it’s no secret that charities across the country are having to make difficult choices – scaling back, reducing services, or even closing their doors.
“New challenges are emerging all time, which means the role NCVO plays is more important than ever. Our practical support team helps thousands of small charities every year, and our help and guidance is used by organisations of all sizes day in day out. We are committed to learning from this data to ensure our services react to the needs of the sector, so we can help build a more sustainable future for charities and the communities they serve.”
More insights
- In 2021/22, there were approximately 166,000 voluntary organisations in the UK – a ‘small, but important’ 0.5% increase from 2020/21.
- In the same year, the voluntary sector’s total income increased by 9% compared to the previous year, reaching £69.1bn – largely due to a recovery in public donations and earned income.
- Public contributions made up 48% of total sector income, similar to the level in the previous year.
- 2021/22 saw the voluntary sector spend £65.8bn, mostly on charitable activities, followed by grants and activities to generate funds. This is a 2% increase on the previous year.
- Spending on activities for generating funds dropped to £6.3bn (10%) from £7.5bn (12%).
- Save the Children was the top voluntary organisation by income in 2021/22 with £988mn, followed by Cancer Research UK (582mn) and the National Trust (£508mn).
- Fourth for income (£410mn), The Wellcome Trust was highest spending, at £1.365mn.
- The voluntary sector contributed 7.5% of overall UK income in 2021/22.
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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.