It’s Small Charity Week and time to recognise and reflect on the work of smaller charities. A recent report published by IPPR North highlighted the importance of small charities in wider society, arguing that they are most likely to be rooted and embedded in communities, often engaging with local problems and the hardest to reach people. Yet paradoxically, research commissioned by TSB to coincide with Small Charity Week also demonstrated that many people are unaware of the small charities in their local area. This may in turn impact how much funding they receive to do their work.
We summarise here what we know about small charities from Almanac data, including who they are, where they operate and what they do.
How small is small?
There is no one definition of ‘small’. The Small Charities Coalition for example defines small charities as those with an income under £1m. However, for NCVO’s Almanac, we define ‘micro’ charities as those with an income under £10,000 and ‘small’ charities as those with an income under £100,000. NCVO also recently carried out a detailed analysis of charities with an income between £25,000 and £1m, so here we will focus on the very smallest charities with an income under £100,000.
What data do we have for small organisations?
From the point of view of the Almanac, which is based on information from charities’ accounts, we have relatively limited data for micro and small organisations due to the low reporting requirements from the Charity Commission. However, as part of the Almanac we do take a sample of accounts for these organisations and extract detailed information that gives us a more in depth understanding their finances.
Here, we use both the latest data from the Charity Commission (downloaded in May 2016) and some breakdowns of data from our 2013/14 Almanac data.
The bulk of the sector consists of small charities and they mostly work locally
- There are over 100,000 registered small charities in England and Wales, nearly 80% of all charities. Around half of all small charities have an income between £1 and £10,000.
- Overall income for these organisations totals £1.9bn and spending at £2.2bn. Spending exceeds income for all four income bands. This may be partly because they are drawing on assets in addition to income, but may also indicate they are running a deficit.
|Number of organisations||Income||Spending|
|10k to 25k||24,414||£399,309,255||£444,551,363|
|25k to 100k||25,660||£1,342,519,823||£1,365,594,825|
- Our data supports IPPR North’s research showing that the vast majority (c.70-80%) of small organisations of all sizes work in their local area.
- The geographical distribution of small charities does not differ greatly from the general distribution of charities, with more organisations both overall and per 1,000 of the population in the South East, South West and East of England.
- The biggest disparity is in London, where there are far fewer smaller charities; this reflects what we know from our Navigating Change report that smaller charities are more likely to be based in rural areas.
Small charities work in diverse ways
- The smallest charities are not simply made up of PTAs, village halls and scout groups, they cover a diverse range of activities, as with larger charities. The biggest number work in social services and culture and recreation.
Income and spending patterns are different for smaller charities
- Small charities’ funding mix differs somewhat from large charities. For example, 70% of income for micro charities comes from individuals, with only around 8% coming from government, around two-thirds of which is from local government. Nearly 20% of their income comes from investments.
- By contrast, for charities over £100,000, government contributes between 30-40% of overall income and income from individuals around 40-45%, with investment income generally constituting less than 10% of income.
- Around 35% of spending for micro charities is in the form of grants, compared with a 13% average for the sector, and overall they spend 90% on grants and charitable activities, compared with 85% average for the sector.
Are we asking the right questions?
The size of an organisation does not directly reflect its output or impact. At the moment we lack the data to fully understand the difference that many smaller charities are making in their local communities, and to wider society. Their relatively small income and spending is unlikely to be a reflection of the scope of their overall activity, not least as smaller organisations are more likely to be run and managed by volunteers. Only 1.8% of micro organisations and 6.7% of small organisations have paid staff, compared with over 80% of organisations over £1m. Indeed, our analysis of fundraising efficiency shows that micro charities generate the highest ratio of income per pound (£10.34 for every £1 spent), precisely because their costs are so much lower.
There are also a vast number of organisations that are too small to register and that we cannot capture with our data. Research from 2001 for example estimates an additional 600,000 such unincorporated groups and organisations.
Small charities operate quite differently to other charities. As a result, rather than directly comparing small and large charities, we may need to re-frame how we think about the smallest charities altogether.
- MacGillivray, A., Conaty, P., & Wadhams, C. (2001). Low Flying Heroes: Micro-social enterprise below the radar screen. London: New Economics Foundation