Largest and smallest charities 'becoming more polarised', report finds

The latest Charity Income Spotlight report says that while total sector income continues to grow, this has been concentrated in the hands of the biggest UK charities

The gap between the biggest and smallest organisations in the sector is becoming more polarised, with the largest charities growing while their smaller counterparts struggle, a new report says. 

Figures in the latest Charity Income Spotlight report, produced annually by the charity data website Charity Financials, show that total revenue generated by UK charities has grown from £57.5bn in 2012/13 to £75.3bn in 2016/17. 

The total figure grew by £4.1bn, or 5.7 per cent, over the past year alone, the report says. 

But it says 75 per cent of the increase since 2012/13 – equating to £13.5bn – came at charities with annual incomes of more than £10m.

The total income of charities with annual incomes of under £250,000 fell by 2.3 per cent over the same period, it says. 

"Across the charity sector’s diverse causes, it is generally the case that the largest organisations have the competitive advantage and are getting larger, while the smallest organisations struggle to generate revenue that surpasses that of the previous year," the report says.

"The general trend is that the larger charities are getting larger, whereas the smaller ones are struggling," it adds. 

The report says that the voluntary sector is experiencing "further polarisation" between large and small charities, the report says.

It says the largest charities generated a combined surplus of £1.7bn in 2016/17, while the smallest organisations made a collective deficit.

"Many of the smallest organisations are spending more than they are earning," it says. "Sometimes this is on purpose – for instance, when a charity is winding down and is intentionally using up its reserves – but where it is not intentional the organisation is forced to eat into its net assets, reducing its financial stability.

"Many small charities are on a knife-edge, struggling to keep their organisations afloat into the next financial year."

The report is based on figures from the Charity Financials database, which focuses on the largest 5,000 UK charities by total income, expenditure and funds/assets, and supplemented by data provided by the Charity Commission on every other registered charity in England and Wales. 

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