Income from government overview
- In 2013/14 the sector received £15bn from government bodies, of which 81% was earned through contracts or fees.
- The majority of the sector’s income from government comes from relationships with local government, with £7.4bn incoming from this source. Central government and the NHS accounted for £6.8bn, while the remaining £0.9bn came from the EU, international governments and international agencies like the UN.
Income from government fell from 2009/10 as austerity hit, but has increased between 2012/13 and 2013/14
The data allows us to build a picture of income from government over a number of years, including four of the five years of the 2010-2015 Conservative and Liberal Democrat coalition government.
- Income from government appears to have increased between 2012/13 and 2013/14, by around £0.5bn. The majority of this rise was in the largest charities, as described below.
- Overall, this is a different pattern to the previous few years. Up to 2009/10, income from government grew (with occasional fluctuations) to a peak of £15.6bn and was a key factor in the growth of the sector over that period. After 2009/10, income from government decreased, following the pattern of the general reduction in government spending.
- The decrease occurred particularly between 2010/11 and 2011/12 (the first full year after the government’s spending review), with income from government falling to £14.6bn in 2011/12 and £14.5bn in 2012/13. The 2013/14 level is still £600m below the peak of 2009/10.
Growth in government income was predominantly seen in the largest organisations
- As with overall income, the growth in government income mostly occurred in organisations with an income over £100m.
- Government income for these ‘super-major’ organisations increased by over £400m, accounting for most of the total rise in government income across the voluntary sector. For example, the International Rescue Committee (IRC UK) received over half of its funding (£81m) from the Department for International Development (DfID) in 2013/14 and The Shaw Trust received £102m, mostly from the Department for Work and Pensions’ (DWP). St Andrew’s Healthcare received the largest amount from government (£188m) for the delivery of mental health services.
- Government income also increased by £130m for large organisations; for all other income bands it remained the same or slightly decreased.
Income from local and central government
Income from both local and central government fell until 2012/13 but increased in 2013/14
- Local government funding to the sector fell fairly sharply between 2007/08 and 2008/09 and again between 2010/11 and 2011/12, after which there was relative stability.
- In 2013/14, however, local government funding to the sector appears to have increased by around £200m from 2012/13. Around £80m of this increase was experienced by super-major organisations.
- Even with this apparent increase, local government funding in 2013/14 is still £475m less than in 2009/10.
- The fall in central government funding was more consistent, decreasing steadily from a highpoint of £7bn in 2009/10 to £6.5bn in 2012/13.
- In 2013/14, there appeared to be an overall increase of over £270m compared with 2012/13. Again, this is mostly accounted for by super-major organisations, which increased their central government funding by over £350m.
- Even with this apparent increase, central government funding in 2013/14 is still around £200m less than in 2009/10.
Grants from government are less than half of the level seen ten years ago
- A trend of the last decade has been a switch from grants to contracts, although this ratio has stabilised since income from government started falling after 2009/10. In 2003/04 grants peaked at £6.1bn, over half of all income to the voluntary sector from government. Since that time contracts have grown in importance as grants have become less common. In 2013/14 grants made up just 19% of income from government (£2.8bn).
- Income from both grants and contracts has fallen since 2009/10. Grants have fallen at a faster rate than contracts over that period, although they are starting from a lower base. Income from both grants and contracts appeared to increase slightly between 2012/13 and 2013/14.
Government funding by sub-sector and size
The sub-sectors dealing with employment and training and social services have the highest proportion of their funding from government
- Splitting the data into sub-sectors shows that different sectors attract different levels of funding from government. Organisations working in employment and training, and social services and health continue to receive the highest proportion of their income from government (54%, and 49% respectively in 2013/14).
- However, whilst government income to health organisations has increased slightly since 2008/09, it has fallen by over £500m for social service organisations.
- There is little variation in the relative proportion of government income coming from local and central government for different sized organisations. For most income bands, central government income ranges from 40%-50%, and local government income from 37%-51% of overall government income. The major different is for micro organisations whose government income predominantly comes from local government.
- In terms of actual amounts, over half of total funding from government to the voluntary sector is received by major and super-major organisations, and two-fifths of all local government funding.
Income from government in context
- The £15bn income that the voluntary sector receives from government forms a significant part of its incoming resources, even after the reductions seen in recent years. When viewed in the context of the whole of government, however, grants and contracts with the voluntary sector form a minor part of the government’s finances.
- The Whole of Government Accounts, published by HM Treasury, present a rounded picture of the entirety of government finances. The headline figures report that the government spent £718bn in 2013/14. This suggests that government spending on the voluntary sector accounts for around 2% of total government spending.
- Broken down further, voluntary sector contracts worth £12.2bn account for around 6% of government’s £189.8bn spend on purchasing goods and services, and voluntary sector grants worth £2.8bn account for around 5% of government’s £59.8bn spend on grants and subsidies.
- A further breakdown shows that £4.9bn of voluntary sector income from central government contracts accounts for around 4% of central government’s £115.8bn spend on contracting, and that £6.7bn of income from local government contracts accounts for around 10% of local government’s £65.2bn spend on contracting.
- These numbers imply that while government is a key part of the voluntary sector funding landscape, the voluntary sector is a minor player in the totality of government funding. However, for individual departments, agencies and local authorities the voluntary sector plays a large role in the delivery of services and as a partner of government.
Variation by region
- The proportion of income from government varies by the region that organisations are based in. Organisations based in East Midlands and the North West receive the largest proportion of their income from the government (42%) whilst London-based organisations and those in the South West have the lowest proportion of income from government (28% and 26% respectively). This pattern was similar in 2012/13.
- However, this pattern changes when broken down by local and central government. Income from local government ranges from 42% for organisations in the East Midlands to 62% for organisations in the North West, whilst the proportion of income from central government ranges from 32% for organisations in the East of England to 57% for organisations in the East Midlands.
- Most regions received a very small proportion of government income from Europe and international sources, with the exception of London and the South East (which received 9%and 10% respectively).