Voluntary sector income saw a modest rise to £45.5bn, with earned income being the main growth area, according to the latest UK Civil Society Almanac published today by NCVO.
The Almanac is based on data reported by charities for the year to March 2015 and shows that sector income rose by 2.7 per cent in real terms, from £44.3bn in 2013/14.
Total contribution to the economy is estimated to be £12.2bn. Civil society organisations employ 2.2 million people, which is 7 per cent of the total UK workforce.
Income from government forms one third of the sector's income and was relatively stable at £15.3bn. Most of this is in the form of contracts to deliver services. Income from local government continued to decline and is less than that from central government for the first time.
Individuals accounted for £20.6bn - £10.1bn voluntary income and the rest is earned.
Donations make up 37 per cent of income from individuals at £7.6bn.
Income from the private sector fell by 16 per cent to £1.9bn.
NCVO predicts that challenging economic times meant that a rise in donations is unlikely.
Growth of earned income
Earned income from the public continued to grow and now accounts for 23 per cent of the sector’s income.
This includes fees for their services and income selling goods or services to raise money.
Between 2007/08 and 2014/15 earned income grew by 35 per cent from £7.74bn to £10.45bn.
Sir Stuart Etherington, chief executive of NCVO, said: “Charities have been becoming increasingly entrepreneurial in recent times. With no realistic prospect of an overall increase in government spending and what look to be tough public fundraising conditions, this is a trend that will have to continue if the sector is to see growth in the next few years.”
Use dormant assets to help charities
The Almanac highlights that while the sector’s reserves are slowly growing and are now worth £49.6bn, 44 per cent of small and micro charities have no reserves.
NCVO said the figures underscored its call for the government to use £2bn released by dormant assets to capitalise smaller charities.
It would like to see the government create endowment funds for small and local charities and to help charities and community groups buy community assets.
Etherington added: “While some charities will doubtless buck these trends the picture for small and medium charities in particular looks challenging.
“The next government could boost local charities and community groups for a generation by using the money from dormant assets to endow community foundations with investment that can generate returns to support charities for a generation to come. They could also help communities buy assets that are important to them, putting them under the control of local people through charities and community groups.”
The sector spent a total of £43.3bn in 2014/15, with 84 per cent going towards charitable aims – either as activity or in grants.
Charities spent £5.9bn on generating income, with larger charities dedicating a larger proportion of their income to generating income.
Super major charities, those with incomes over £100m, spent 36 per cent on generating income. Those at small charities spent 18 per cent.
The voluntary sector spent £6.4bn on grants, but the ten largest grantmakers dominate and between them account for 26 per cent of all grants made.
The Almanac is created through the analysis of a sample of around 8,000 charities’ accounts, as submitted to the Charity Commission. It is used by the ONS in their calculations for the sector’s contribution to the economy. 2014/15 is the latest data available as charities have up to 10 months from their year-end to submit their accounts to the Commission.