Charity Commission data published this week seems to show ever more charities being registered, and big charities taking over. But can a surface reading of the numbers be trusted?
This week, the Charity Commission published new data on the charities on its register. In various places on social media, the data has been used to draw three conclusions:
1. There are more charities than there have been for a long time.
2. Charity income is growing fast.
3. The divide between big charities and small ones is getting bigger.
I think all of these conclusions may be wrong. Or at least, they may be right, but I'm not sure this data supports them. I want to look at why.
There are more charities now
Well, maybe. Applications for registration do seem to be going up. Charity staff numbers seem to be going up. But I'm not sure that isn’t the reason there are more charities on the register. That’s to do with data cleansing.
Every so often, the Charity Commission looks at the register and strips out everyone who hasn’t filed accounts for years. If you look at the old data, you’ll see jumps and dips. Here’s a graph:
I don't know for sure that we will follow the same pattern, but if we do, then shortly we should see a dip back down to 160,000.
Charity income is growing fast
The figures show that charity income has grown by £2.24bn year-on-year, and £30bn in a decade. Sounds impressive. But wait, what if we correct for inflation and economic growth?
Basically, the last year was actually negative compared to overall economy. The economy grew 1.5 per cent in real terms, and inflating was around 2.5 per cent, so you’d expect charity income to have risen by roughly £3bn.
The last decade was slightly positive. If the sector had grown with the economy since 2007, it would be around £68bn by now. But I have to wonder how much of the increase is organic, and how much is big new charities being dumped out of the state and into the sector – especially housing associations and universities. All of it, I suspect.
Small charities are not growing, while big ones are
The Commission divides charities up into income bands, and identifies how many charities are in each band. But the income bands haven’t changed for a decade, during which time, as we’ve observed above, the economy has moved on. Having £1 today only makes you as rich as if you’d had 66p a decade ago.
This means we aren’t comparing like with like. If we assume that all the charities which are now over £10m were just under that threshold beforehand, then that suggests that big charities are probably growing slightly faster than the rest of the sector, but not massively so.
We can’t tell anything whatsoever about any other band of charities, since in theory the number of charities in any band with a lower and upper limit should always remain constant, with the same average income, over any period of time.
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