'Less volatile' sources of income on the rise

Mathew Little

Charities' income from non-voluntary sources, especially public service contracts, is growing, according to a report by the credit ratings agency Standard & Poor's.

The report on the creditworthiness of the UK charity sector argues that government provides a less volatile source of funds than corporations or the public.

"Income from corporate donations can be affected directly by economic fluctuations, and personal donations are subject to changing attitudes," said Hugo Foxwood, the firm's credit analyst. "By contrast, the demand for public services and the Government's tendency to outsource these services to charities are more constant."

For the top 500 charities, income from fees and other non-voluntary sources has increased to 45.8 per cent of total income in 2004. Four years earlier, this figure was 43.7 per cent.

But the report argues that if charities are to safeguard their creditworthiness, they must charge the full economic cost of their services.

"If they do not do this, and donors perceive that they are subsidising government services rather than funding separate non-statutory projects, then income from voluntary sources might also decline," it says.

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