Top 2% of charities taking 65% of sector's income

The average UK charity had an income of just over £155,500 in 2003/04, according to new research by Baring Asset Management.

The survey, based on Baring's analysis of the NCVO's UK Voluntary Sector Almanac, shows that charities had a collective income of £26.3bn, but it was distributed unevenly.

More than 65 per cent of the total was generated by the top 2 per cent of voluntary organsations, without which the average income would drop to £50,000.

The wealth of charities also varied dramatically across the UK. The highest average was in London, at £444,510, the lowest in the east midlands, at £83,300. The average income in Scotland, at £94,680, was lower than that in Northern Ireland, which was £116,890.

"The growing number of demands and pressures on charities mean their resources continue to be stretched," said James Codrington, head of charities at Baring. "Many rely on their investments to generate significant levels of income so they need to ensure that their investment portfolios are performing well and in line with their risk profiles."

Baring suggested that, to make the most of their investments, charities should put traditional benchmarks to one side and focus on identifying a target return, which is achieved through active asset allocation.

"We believe active asset allocation is crucial for maximising growth in a charity portfolio, as it is a key determinant of a portfolio's returns," Codrington said.

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