Charity income stays steady

There are better times ahead for charities but they may have to negotiate a “bumpy road” first, the chief executive of a leading sector organisation has warned.

Sir Stuart Etherington was speaking on 8 June as the National Council for Voluntary Organisations (NCVO) published its annual UK Civil Society Almanac, drawn from data contained in around 6,000 charities’ annual accounts as submitted to the Charity Commission. It reports on the 2012-13 financial year, the most recent year for which data is available.

The almanac revealed that charity sector income and expenditure remained virtually static in 2012-13. Figures showed that:

  • the sector’s total income fell by 0.2 per cent on the previous year to £40.5 billion
  • total expenditure – regarded as the most reliable measure of activity – rose by 0.1 per cent to £39.3 billion
  • income from government, in the form of contracts and grants, fell by 3.4 per cent to £13.3 billion
  • income from individuals – including donations, legacies, sales of merchandise and fees for events or services – totalled £18.8 billion
  • total earned income rose slightly, by 0.4 per cent, to £22.7 billion
  • income from investments rose 0.6 per cent to £2.9 billion while the value of investment assets rose slightly, from £73.5 billion to £76.6 billion.

Sir Stuart said: “These figures suggest that the sector has been running to stand still in recent years. The sector saw a rapid expansion in its scale in the years following the turn of the century, but has not managed to grow meaningfully since 2007-8.

“I believe charities and volunteering can and should continue to play a bigger role in society and we will be doing all we can to make sure that becomes a reality. The government must play its part by radically rethinking public service commissioning to ensure it works for charities of all sizes.

“I do not think we have yet seen the long-term peak in the voluntary sector’s scale – there is better still to come, though we may face a bumpy road before we get there.’

David Kane, senior research officer at NCVO, added: “Inevitably, the aggregate numbers in the almanac disguise the changes experienced by individual organisations, some in real danger, others expanding rapidly.

“This year’s almanac shows the sector was keeping its head above water in 2012-13, but its overall financial position remains challenging. There was some let up in the form of growing asset values, but the majority of assets cannot be readily realised by charities faced with reduced income. The trend of earned income taking the place of voluntary income continues, possibly a sign of a more transactional approach to fundraising.”

The Conservative government’s general election manifesto suggests that there may be new opportunities to come for charities. It highlighted charity involvement in the government’s Work Programme and said the party wanted to “build on this type of innovative approach in the future” as well as developing the use of social impact bonds and payment by results approach, focusing on youth unemployment, mental health and homelessness.

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