UK Civil Society Almanac 2012 /
What are the main trends in statutory funding?

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Where does the sector’s statutory funding come from?

Income from statutory sources totalled £13.9 billion in 2009/10. This includes resources from UK central, local and devolved administrations, international bodies, and overseas governments. Total income from statutory sources has increased by 61% in real terms from £8.6 billion in 2000/01. In cash terms, the increase is even greater (109%). Statutory income has increased every year except in 2008/09, which saw a decrease of £0.4 billion largely due to inflation. Between 2008/09 and 2009/10 statutory income again increased in real terms, by £569 million. Much of this growth has been driven by contracting. 2009/10 was likely the high water mark for this source for the foreseeable future.

The voluntary sector has an important financial relationship with local government. In 2009/10, 51% of statutory income, £7.0 billion, came from local authorities. The proportion has remained relatively stable, varying only between 50%-52% since 2004/05. It is worth noting that this income accrues to local and national voluntary organisations. A further 44% of statutory income (£6.1 billion) comes from central government and the NHS. European and international statutory sources provide approximately £0.8 billion in income (6%).

Statutory funding to the voluntary sector by tier of government, 2009/10 (£ billions)
A bar showing statutory income from local, central and NHS, and European and International government.

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Grants and contracts

Statutory funders transfer resources to voluntary organisations using a number of mechanisms, but such flows can be summarised as either voluntary income (grants) or earned income (contracts). Contract income from statutory bodies was worth £10.9 billion in 2009/10, a real increase of £6.7 billion (157%) in ten years. Much of this growth took place in the second half of the decade as government spending on public services increased.[33a] Between 2003/04 and 2008/09, grants from statutory funders declined year-on-year by £2.5 billion. Between 2008/09 and 2009/10 statutory grants increased slightly by £0.2 billion (7%).

Voluntary sector grant and contract income from statutory sources, 2000/01 – 2009/10 (£ billions)
An area chart showing how statutory contracts have increased whilst statutory grants have declined over the last decade

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*2002/03 figures are inferred.
Amount of money the voluntary sector receives from Local Authorities.[33b]

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Where does statutory funding go to in the sector?

Organisation size appears to be correlated with both the amount and relative importance of statutory income generated. Over four-fifths (81%) of the sector’s statutory income is received by the 4,558 organisations with an annual income of £1 million or more. Major organisations received £7.0 billion in statutory contracts and grants whilst large organisations received £4.3 billion. Small and micro organisations – almost 139,000 in number – receive only 3% of total statutory income.

On average, organisations with an income greater than £100,000 receive 39% of their income from the state. Medium sized organisations receive 16% of total government funding to the sector – £2.2 billion – yet statutory funding accounts for 35% of their overall income. This is indicative of a wider problem: statutory funding is critical to the voluntary sector economy, but its small share of overall public expenditure suggests the state is less dependent upon the sector (see question 34 for further information on public sector spending cuts).

Voluntary sector organisations within the employment and training sub-sector generate three-quarters (75%) of their income from statutory sources. Three other sub-sectors generate over half of their income from statutory sources: law and advocacy (58%), social services (56%) and umbrella bodies (51%).

Statutory funding as a proportion of total income by size of organisation, 2009/10 (%)
Bar chart which shows that larger organisations receive a higher proportion of their income from statutory sources than smaller ones.

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Statutory income and proportion of organisations that receive state funding, 2009/10
 Statutory income (£ millions)Proportion of organisations that receive state funding (%)Estimated number of organisations that receive statutory funding*
Medium 2,202.7 5612,000
Large 4,330.1 693,000
Major 6,964.5 76362
Total 13,884.3 2541,000

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Source: NCVO/TSRC, Charity Commission
*Numbers are rounded and do not sum exactly

How many voluntary sector organisations have a financial relationship with the state?

Three-quarters (75%) of all voluntary organisations do not receive any income from statutory sources. Conversely, 25% of the sector – 41,000 organisations – has a direct financial relationship with the state. Larger organisations are much more likely to receive funding from statutory sources. These estimates do not take account of other forms of support, such as Gift Aid or business rate relief. Just over half of all registered charities (53%) hadn’t applied for local funding or bid for contracts from local statutory bodies over the last five years. Of those that had applied, just under two-thirds (64%) had been fairly or very successful.[33c]

Just over six-in-ten registered charities (61%) hadn’t applied for national funding or bid for contracts from national statutory bodies over the last five years. Of those that had applied, half (50%) had been successful.[33c]

Just under one-in-ten registered charities (9%) are satisfied with national statutory funding or bidding arrangements whilst 16% were dissatisfied.[33c] Twenty-five per-cent of registered charities currently had direct dealings with local statutory bodies in their local area whilst 70% either had not much contact or none at all.[33c]

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Note that this shift partly reflects changed or improved accounting practices – in short, better recognition of when income is in fact a contract.
NCVO/TSRC, Charity Commission
Office for Civil Society (2010) National survey of charities and social enterprises (NSCSE)
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UK Civil Society Almanac 2012 / The Voluntary Sector /Income: in focus

Published: 17-02-2012 / Tagged: