Charities' struggles 'are now reflected in the bottom line'

Income is static and spending has dropped, according to the UK Civil Society Almanac 2013 from the National Council for Voluntary Organisations

UK Civil Society Almanac 2013
UK Civil Society Almanac 2013

The total income of the voluntary sector remained static at £38.3bn in real terms in the year to March 2011, according to the UK Civil Society Almanac 2013, published today.

But charity spending dropped for the first time in real terms during the year, from £37.6bn to £36.8bn, according to the almanac, which is produced by the National Council for Voluntary Organisations.

Sector income remained lower than what the NCVO calls the "peak funding" point for the sector in 2007/08, when annual income reached £39.5bn. Even though the sector has not grown in the past three years, its annual income still increased in real terms by almost £10bn – or 35 per cent – over the past decade.

The sector saw a 5.4 per cent increase in income over the year in cash terms, but a higher than normal rate of inflation meant there was no increase in real terms, the almanac says.

Sector income from statutory sources remained almost constant over the year in real terms at £14.2bn. Charities received £11.2bn in contract income from public sector sources, compared with £11.3bn in the previous year. Grant income remained static at £3bn. Over the decade, voluntary sector income from statutory sources rose to £14.2bn from £9.1bn, up by 56 per cent.

But the new almanac covers only the period up to the start of government cuts: the first round of local authority budgets after the cuts were announced in March and April 2011, so it is likely that future years will reflect bigger falls in income.

The almanac shows that the sector workforce rose from 721,000 at the start of 2010 to 765,000 at the end, but then fell to 732,000 by December 2011.

The sector had £101bn of assets in March 2011, compared with £95bn in the previous year. The list of registered charities also included just under 84,000 micro-organisations with incomes of less than £10,000. This does not include organisations too small to be registered as charities.

Sir Stuart Etherington, chief executive of the NCVO, said: "This was the year we started to see charities’ struggles reflected in the bottom line. While many charities continued to spend during the recession, perhaps to meet growing demand, it seems that some were running out of steam by this point.

"Since the financial crash of 2008, the economic environment has remained fragile and fractious. I see much inspirational work being carried out despite these difficulties – but it would be a brave person who wasn’t planning for these troubles to continue for some time to come."

The almanac is based primarily on a sample of 10,000 annual accounts collected from the Charity Commission register. The data excludes organisations such as non-departmental government bodies, independent schools and housing associations that do not fall into the NCVO definition of "general charities".

For the first time, the NCVO will not publish a hard copy version of the almanac this year – it will only be available online.

David Ainsworth

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