Social care charity Sue Ryder saw its income drop by £1.4m to £78.6m in the year to 31 March, though falls in statutory funding and voluntary donations were offset somewhat by solid income growth from its shops.

The charity had intended that 2011/12 would be an “investment year” and had budgeted for a deficit as it spent money expanding and improving its store portfolio.  In the end, the deficit was £3.2m.

The annual report and accounts, just published, show that revenues from contracts, grants and voluntary donations slid by £4.6m compared with the previous year, including a fall in legacies of £2.3m.

Because of the operating deficit and retail capital expansion, free reserves declined by £6m to just under £18m, amounting to 2.6 months’ worth of expenditure.  This is below the stated policy of three months’ worth of spending and the trustees hope that recent investments in the retail chain and in senior fundraising staff, will restore the reserves.

By the year-end, the charity employed three more managers on salaries of between £60,000 and £70,000, in an effort to boost fundraising income this year. 

Overall staff numbers fell by five, from 2,191 to 2,186, but the numbers of care services staff reduced by 74 while the numbers employed in retail and support services increased by 69.

However, it was an excellent year for Sue Ryder shops, with income up from £33.4m in 2010 to £36.6m.  A net profit of £7.6m was generated from the 392 stores, before support costs.  Some 46 new shops were added to the portfolio during the year and next year a further 40 are predicted to open.

The charity said it was seeing a substantial growth in the numbers of 18 to 24-year-olds volunteering, and the value to the charity of its 9,019 volunteers – 7,340 of which help out in the retail business - exceeded £22m. 

• Sue Ryder is one of 74 charities that provided information to the Charity Shops Survey 2012, to be published on 1 October. Click here to pre-order your copy.