The charity sector’s total income grew by just 1% to £56bn in 2018-19, new analysis of charity accounts published today by NCVO shows.
This is the slowest rate of growth in five years, with just two out of six income streams tracked by NCVO seeing increases, according to the UK Civil Society Almanac.
In the previous five years total sector income grew by between 2% and 6% each year.
NCVO’s annual publication tracking the sector’s financial health was published this morning, with the umbrella body warning that the present situation is worse due pressures on the sector during the pandemic.
Due to the lag between financial year ends and charities filing their accounts with the regulator, as well the time it takes to clean and analyse a sample 10,000, this year's Almanac covers 2018-19. NCVO is conducting other research with charities to produce regular snapshots of the current situation.
While income grew overall, and did so for larger charities, it decreased for micro, small and medium-sized organisations (those with incomes below £1m).
In 2018-19 spending grew by £1.3bn to £54.2bn, an increase of 2%.
Growth driven by income from the public
Income from the public increased from £26.2bn to £27.1bn, or 3.5%, and now accounts for nearly half of all the sector’s income.
This tranche includes voluntary income such as donations and legacies, and income earned in different ways including trading such as charity shops and membership fees.
The other income stream to see an increase was, investment, which rose from £4.2bn to £4.7bn, or by 12.3%.
Government income falling
In 2018-19, income from the government decreased from £16.2bn to £15.8bn, or 2.1%, since the previous year.
Government income peaked at £17.6bn, in 2009-10 when it made up or 37% of voluntary sector income. Income from government now represents 28% of total income, which is the lowest proportion since NCVO began gathering data.
NCVO says that in 2018-19, the sector’s income from European and international governments “fell drastically” by £1.1bn, or 18%. The UK voted to leave the European Union in 2016 and during the period covered by this analysis was in the middle of negotiating the future relationship.
Income from the National Lottery, private sector and other voluntary sector organisations also fell during the period.
The NCVO data on workforce trends is more up-to-date, and covers up to September 2020.
Some 950,000 people worked in the sector at this point, an increase of 3% on September 2019.
This contrasts with the private sector, which experienced a 2% decrease in employee numbers over the same period.
However the voluntary sector employs around 3% of the UK’s workforce, substantially smaller than the the public and private sectors, although it has grown by by 20% since 2010
Anya Martin, research and insight manager at NCVO, described this growth as “unexpected”, and said: “It remains to be seen whether this will continue after the withdrawal of the furlough scheme, but it is clear the sector’s varied funding streams and the support packages for employers have helped to keep employment in the sector buoyant.
“Given the rise in employment in the sector, there will also likely be an impact on charities in the coming years from the recently announced increase in national insurance contributions.”