The NCVO recently published its 2019 UK Civil Society Almanac and it has some interesting insights into trends in the charity sector (based on 2016/17 data).
The first thing to say is that the charity sector in the UK is big, really big: 166,854 active registered organisations with £131.2bn of assets, employing 865,916 people and receiving £50.6bn total income in 2016/17. The sector contributes £17.1 bn to the UK economy (equivalent to the GDP of a small country such as Honduras) and formal volunteering has an estimated value of £23.6bn. Nine in ten households in the UK have accessed services from voluntary organisations at some point in the last year.
We shouldn't forget, however, that only 51 organisations account for 22% of total income (dominated by health, international development and children’s causes), whereas 82% of charities have income of less than £100,000 a year, accounting for only 4% of total sector income (with children and young people being the most common beneficiary group amongst these)! Social services continues to dominate total spending in the sector (with 10.6% of total spend) followed by International development, culture/recreation and health.
When you dig deeper into the Almanac some interesting trends and insights can be seen. We’ve highlighted just a few here.
Some of the traditional sources of funding for charities are in decline, including:
continued decline in public sector funding (particularly from local government);
a further slight fall in public donations (our next blog will look at this in more detail); and
a fall in earned income for the first time in 6 years (is this a blip?).
Yet overall income has increased by 2% so what is going on?
Firstly, income from legacies continues to grow; up 50% in the last 5 years (a sign of an ageing population with more wealth than ever before perhaps).
The biggest change in the most recent data, however, is growth in income from grants from other charities, which accounts for the totality of the overall increase in income. That said, such grants still only constitute 4.8% of total income (and only 5.3% if the Lottery is also included). Moreover, international development causes dominate income from grants (with 37% going to such causes). Therefore, a rush to grant making trusts is not likely to solve any charity’s income worries.
Assets and liabilities
Perhaps not surprisingly smaller charities are much less likely to hold healthy levels of reserves than the big players but bigger organisations are much more likely to carry long-term liabilities. What is worrying though, is that pension liabilities are soaring (up 55% to £3.2bn) and these are present in all sizes of charity. A ticking time-bomb perhaps, left over from the days of charities being admitted to local government pension schemes as they took staff transferring to them from councils. There has to be considerable doubt about whether the sector will be able to manage this in the long term.
The charity workforce
The charity workforce declined in numbers slightly in 2016/17 but the long term trend is up (11% in 8 years). Women make up two thirds of the workforce and the level of skills is high (over half have a degree level qualification or higher). Interestingly the voluntary sector reports the lowest incidence of skills shortage compared to the public and private sectors.
The sector has significantly more part-time workers but also more workers on temporary contracts (albeit other sectors are catching up on the latter).
Levels of formal volunteering have remained stable with more than one fifth of the population volunteering on a regular basis (at least once a month). Formal volunteers tend to be older, well-educated and from higher socio-economic groups. The main motivations for volunteering appear to be genuinely philanthropic and the biggest barrier seems to be the need for flexibility to fit volunteering around other aspects of life.
Overall, the Almanac concludes that the sector has five key benefits for society as a whole: service delivery, innovation, advocacy, self-expression and leadership and community building. Charities really do seem to be the glue that holds society together.
At Almond Tree Strategic Consulting we love working with charities because, in our own small way, we want to be part of that glue. That’s why we are committed to corporate social responsibility and why we will continue to advocate for the value of charities (and smaller charities in particular).
If you’d like to chat about any of the issues we raise in this blog or more generally about how it impacts your charity, it strategy and fundraising in particular please contact us at email@example.com to arrange free initial telephone discussion.