Lisa Hornung: The key findings from this year's NCVO Almanac

08 Jul 2020 Voices

NCVO's data and research manager, Lisa Hornung, looks at the key findings in the Almanac 2020 and how they relate to the current state of the sector.

The 2020 edition of NCVO’s UK Civil Society Almanac, published today, provides a comprehensive overview of facts and figures related to the voluntary sector. Although most of the latest data covers the financial years 2017-18, there is a lot we can learn about the challenges that charities are facing today, and possibly in the future.

The Almanac is compiled using a sample of around 10,000 charities’ annual reports, aggregated and weighted to match the sector. It is the authoritative resource for information on the voluntary sector’s finances and is used by the Office for National Statistics in calculating charities’ contribution to national accounts. Here is a brief look at some of this the latest report’s key findings. 

It’s likely we will see a shrinking sector in the short term

In 2017-18, the voluntary sector experienced modest income growth of 2% with the total income going up by £1.2bn to £53.5bn between 2016-17 and 2017-18. This was the same level of growth the sector experienced the previous year, confirming that the faster growth seen years prior was beginning to level off.

It is worth noting that almost half of this increase was accounted for by two individual legacies that totalled £555m. Although we publish the Almanac annually, events such as these are a reminder of the limitations of single-year comparisons.

Income from government, which amounted to £15.7bn in 2017-18, has remained largely stable in recent years. But as income from other sources continue to grow, income from government as a proportion of the sector’s total income has fallen and remained at its lowest point of 29%.

The public is still the largest income source for the sector, representing almost half, 47%, of its income. Half of the money from the public came in the form of voluntary income. This includes donations, such as bucket collections or direct debits, and legacies.

The other half came from earned income, where people are given something in return, including training courses, sales from charity shops or admission fees for fundraising events. In the context of coronavirus, it is this earned income that will be most vulnerable to social-distancing restrictions. Whilst we have seen the public being generous with online donations during the pandemic, these restrictions will most likely result in some loss of income from the public.

Charities of different sizes may face slightly different challenges

With the forecasted economic downturn and loss of individual giving, there is no doubt that the sector will be smaller in the immediate future. However, the effects of the pandemic and of social distancing measures will be different for organisations with different income profiles. Bigger organisations are more likely to own buildings and hold some reserves, however, their operating costs are also higher and many of them will now have to consider changes to their workforce.

While smaller charities are more likely to have lower operating costs or to be solely volunteer led, instability associated with short-term funding streams is to be a more critical issue and the removal or retention of single funding awards can be the difference between survival and closure.

The number of employees in the sector is likely to decrease

Since 2010, the number of people working in the voluntary sector has grown almost continuously. In 2019, a total of 909,088 people worked for voluntary organisations, representing almost 3% of the total UK workforce. The largest number of voluntary sector employees are working in social work at 37%, which is 15% more than the previous year.

The sudden lockdowns will have been challenging for many organisations, now having to deliver most of their work remotely. The government job retention scheme has been helpful in supporting many organisations through the immediate crisis.

According to government figures, more than 160,000 charity staff have been furloughed in the first six weeks of the scheme. However, with upcoming changes to the scheme and things enter a new normal, job losses will be inevitable affecting some parts of the sector more than others. 

The way in which volunteering takes place will have changed

Volunteering rates have remained stable over the last few years. In 2018-19, 22% of people regularly volunteered with a group, club or organisation. Due to social distancing measures and shielding overall rates might have dropped with many of the most regular volunteers falling into an at-risk group or because their normal volunteering activities are suspended.

During this pandemic we have seen some organisations shift to online or remote volunteering to continue engagement whilst possibly excluding certain groups.

At the same time, thousands of people have come together in more than 700 mutual aid groups across the country while the NHS Volunteer Responder Scheme received around 750,00 volunteer applications. It remains to be seen if the pandemic will affect overall numbers of people volunteering, but the ways in which people volunteer will have changed.

Recovery is possible but will take time

It took several years for the sector’s assets to recover from the 2008 financial crisis, but by 2017-18 the recovery was complete. The sector’s reserves hit £63.5bn, reaching pre-2007-08 financial-crisis levels for the first time.

However, the value of reserves held as shares will have been impacted since by the effects of the coronavirus pandemic on the markets. As we saw with the aftermath of the 2008 financial crisis, recovery is possible, but the speed of bounce back this time will vary for different subsectors and will largely depend on the overall economic recovery.  

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