Charities in England and Wales have seen their collective annual income grow faster than their expenditure to over £100bn, according to new analysis by the regulator.
The Charity Commission published its latest analysis of annual returns data this week, which shows that total gross income grew by 6% year-on-year to £102bn, while expenditure increased by 5% to £101bn.
For financial years ending in 2024, the margin between total sector income and expenditure therefore increased by £300m to £1.01bn, up from a five-year low of £701m a year earlier.
However, the £1.01bn margin remains lower than pre-pandemic levels, and smaller charities reported an operating deficit collectively.
Charities spent £5.13bn more overall on delivering positive societal impact in 2024 compared with 2023, the commission reported.
Some 110,756 charities were required to submit the charity annual return, with the compliance rate growing to 97%.
£290m deficit for smaller charities
Some 92% of charities that submitted an annual return in financial years ending 2024 had incomes of less than £1m, 87% had £500,000 or less and 62% had less than £100,000.
Only 3% reported an income of £5m or more. These 2,801 charities had incomes of £76.6bn (75% of the sector’s income) and expenditures of £75.6bn (75% of the sector’s expenditure).
Nearly half of the £102bn total income was generated by charitable activities such as charging fees for services or supplying services to the government.
Almost a third was down to the public’s generosity, with donations and legacies raising £32bn.
A tenth came from trading activities, valued at £10.5bn across 53,585 charities. The remainder was derived from investments (6%) and other sources (3%).
While charities with incomes above £500,000 reported a positive margin of £1.30bn, those with smaller incomes (under £500,000) reported an operating deficit of £290m.
“While more than half of charities (57%) had more income than expenditure, indicating some level of financial resilience, around two in five charities (41%) had expenditure that exceeded income, indicating an ongoing risk to operational sustainability for some charities,” the commission’s analysis reads.
17% of the sector’s income from government
Charities received £17.7bn from government contracts or grants in financial years ending in 2024, representing 17% of the sector’s income.
A tenth of charities reported overseas spending, representing around a tenth of the sector’s expenditure.
Overseas income stood at £10.5bn and expenditure at £10.9bn overall, with £430m more spent outside the UK than received into the country by registered charities.
Across the sector, there were 3.8 volunteers for every paid worker supporting charities on average, up from 3.5 the year before.
The number of volunteers overall increased by 58,188 to 6.28 million from 6.22 million the year before.
Almost seven in 10 charities reported having volunteers, with the average number of volunteers per charity being 85.
The 1.6 million people employed across almost 50,000 charities were 139,725 fewer than reported in the previous annual return, including 9,870 fewer employees working overseas.
Trusteeships reached 923,019 across all registered charities by the end of 2024, an average of 5.4 trustees per charity, and the same as for 2023.
Charity leaders under ‘considerable financial pressures’
David Holdsworth, chief executive of the commission, said: “Charities across England and Wales continue to make a huge impact and this analysis of charities’ annual returns underlines their significant social and economic contribution at a local, national and global level.
“But charity leaders up and down both countries continue to tell us they are under considerable financial pressures.
“This has an ongoing impact on their ability to deliver, which is felt keenly by the communities they serve.
“One of the most important things trustees can do is plan and act on any ‘early warning indicators’ to help manage their finances whilst they still have a range of options. We have guidance to help charities facing challenging times.”
