The figures, from the umbrella organisation's 2007 UK Voluntary Sector Almanac, show that the state is responsible for 38.5 per cent of sector income, making it the largest single source of revenue.
But state funding of the sector has remained relatively static, despite concerted efforts by ministers to encourage charities to deliver public services.
"This research pours water over claims that charities are becoming semi-state bodies due to a massive influxes of state funding," said Stuart Etherington, chief executive of the NCVO.
"It does, however, show that government is moving away from grant funding towards awarding contracts to charities for delivering public services."
Contracts accounted for 48 per cent of government funding in 2001/02 but 62 per cent in 2004/05. Grants, by contrast, have fallen to 38 per cent of state funding of the sector. Charities with incomes over £10m receive 37 per cent of state funding.