Chris Harris: a return to the upward trend

Our online finance commentator reviews the latest Charity Commission statistics

Chris Harris
Chris Harris

The Charity Commission figures from the most recent quarter show a return to the upward trend in income and expenditure by charities that had been occurring for a number of years, with the previous quarter now seemingly an aberration. Although these results are often up to a year old, depending on how promptly the charities are filing their results with the commission, the picture would appear to be more positive than expected given the struggles of the wider economy.

Overall income and expenditure

The graph below shows the total income and expenditure reported in each of the last five quarters, and it can be seen that both income and expenditure have grown. Total sector income has reached £59.9bn, a rise of £2.5bn (4.4 per cent) over the same quarter last year. Total expenditure has risen by £2.6bn (4.7 per cent) against the same quarter.

 Reported totals Mar 12 - Mar 13

The reserves picture

The net income figure before investment gains kept pace with the growth at a steady 3.8 per cent. This remains a remarkably consistent record. The level of investment gains recovered in the quarter, leading to contributions to reserves rising by a reported £5.5bn on the same quarter last year. Overall reserves are reported as £154.5bn, although there do appear to be some inconsistencies in the data because the rises do not necessarily match net reported income and expenditure.

 

Net income £000

% surplus

Net investment gains £000

Total balance sheet change £000

March 2013

2,284

3.8

3,258

5,543

December 2012

2,233

3.8

2,301

4,534

September 2012

2,198

3.7

3,561

5,759

June 2012

2,289

3.9

3,796

6,085

March 2012

2,350

4.1

4,144

6,494

Sources of income

Over the year the sector has seen an increase in income of £2.5bn. The following table shows how that increase is made up. The recovery of voluntary income and the continued growth of trading income mean a lower share for charitable activity and investment income.  

 

Share of sector change year to March 2013

%

Share of sector change year to Dec 2012

%

Increase or decrease

 

Charitable activity

24

38

-14

Voluntary income

36

19

+17

Investment income

15

21

-6

Trading income

18

13

5

Other income

7

9

-2

 

Indications of change

The table below shows how the income is broken down across the main Statement of Recommended Practice headings, the change over the past quarter and the annual comparisons for the sector and large charities (>£5m).

 

Reported at Mar 2013, £000

Change over past quarter, £000

% of increase, year to Mar 2013

Large charities,
% increase year to
Mar 2013

Charitable activity

31,470

229

1.9

3.0

Voluntary income

18,885

691

5.0

7.5

Investment income

3,322

13

13.0

28.2

Trading income

4,637

202

10.5

14.3

Other income

1,599

41

17.1

19.8

Totals

59,913 

1,176 

4.4

6.4

Charitable activity, where charities are being paid to provide services, is the largest activity by value and has recovered after a decline over the past quarter. However, this is outpaced by the growth in voluntary income, which achieved 5 per cent over the year. Investment and trading income also continue to grow at above-inflation levels. Large charities have seen better than average growth in every category, but charities in the £500k to £5m group have been hit particularly hard, with overall income falling by £220m despite a net additional 49 charities joining this group. The majority of the reduction was in the charitable activity heading (£216m).

Conclusion

The results from the register look like a return to overall trend after some hesitation in the past quarter. The sector is receiving more income, spending more on charitable activities and yet still managing to maintain a steady increase in reserves. How long will it continue to buck the wider economic trend?

Chris Harris is principal at the chartered accountancy firm MHA MacIntyre Hudson

Topics:
Governance

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