Assets

The sector’s net assets are worth £112.7bn

Over 80% of voluntary organisations hold assets which they commonly use to contribute towards their charitable activities or to help generate funds. Total net assets are made up of fixed assets and current assets minus liabilities.

Calculation of net assets
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  • The sector’s total gross assets (excluding pension assets) are worth £128.4bn.
  • When the liabilities of £17.7bn are subtracted from total assets, the voluntary sector’s net assets are worth £112.7bn.
Assets and liabilities of voluntary organisations, 2014/15 (£bn)
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Distribution of assets

The majority of assets are held by just 3% of voluntary organisations

  • The distribution of assets in the sector is uneven: large, major and super-major charities represent 3% of voluntary organisations but hold 86% of the sector’s net assets.
  • Whereas micro and small organisations, with income of less than £100,000, make up 82% of the voluntary organisations but own just 0.6% (£630m) of the sector’s net assets.
Distribution of net assets by size of organisations 2014/15 (£bn, %)
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50% of assets are held by the top 100 asset owners

  • Half of the sector’s assets (£57bn) are held by just 100 organisations.
  • The five largest asset-owners alone hold almost a third (30%) of the sector’s net assets (£33.4bn).
  • Because of the significant asset-base of a relatively small number of voluntary organisations, a change in their fortunes can have a considerable impact on the picture of the asset-base of the sector as a whole.
Top 5 largest asset owning organisations, 2014/15 (£bn)
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Types of assets

Larger organisations are more likely to hold fixed assets than smaller charities

  • Overall 83% of the sector’s assets are fixed assets, and 17% are current assets.
  • Fixed assets include tangible fixed assets (the buildings and equipment with substantial value that are owned by organisations to enable them to fulfil their mission), and investment assets (such as shareholdings or investment property), which are to generate income. Current assets consist primarily of cash at the bank, stocks of unsold goods, and monies owed to organisations.
  • The proportion of fixed to current assets varies considerably by size of organisation: Whereas between 80% and 90% of the assets held by larger organisations are fixed assets, this proportion is less for small and medium sized voluntary organisations (71% – 77%).
Proportion of fixed and current assets held by size of organisation, 2014/15 (%)
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Approximately a quarter of voluntary organisations hold tangible fixed assets

  • The voluntary sector’s holdings of tangible fixed assets were worth £22.9bn in 2014/15.
  • We estimate that around 40,000 voluntary organisations (24%) hold some form of tangible fixed asset (e.g. buildings or land).
  • The larger the organisation, the more likely they are to hold tangible fixed assets: Ownership rates are highest amongst the major and super-major organisations, with 90% or more owning some form of property, in contrast to only 15% of micro and small organisations.
Proportion of organisations with tangible fixed assets by size, 2014/15 (%)
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Most of the sector’s funds are unrestricted

  • In 2014/15, the voluntary sector received over £66bn in unrestricted funds which was 59% of the total funds.
  • Smaller and medium sized charities tend to have a higher proportion of unrestricted funds, whereas larger charities hold more endowment funds and larger pension assets compared to smaller organisations.
Types of funds per size of organisation, 2014/15 (%)
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Over time

The net worth of the sector has grown steadily over the last four years

  • The net worth (or net assets) of the sector has continued to recover following the losses that occurred during the financial crisis in 2008/09, when the value of assets and investments saw a sharp decrease in every sector of the UK economy.
  • It is not back to pre-crisis levels in real terms but is now at a comparable level to 2010/11.
Real term changes in net worth of the sector over time (£bn, 2014/15 prices)
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Reserves

An organisation’s reserves represent the proportion of their assets that can be readily accessed in the event of a cash flow problem, for example to meet redundancy costs if an organisation is forced to close.

In general, reserves serve as unrestricted cash that an organisation has available to sustain its operations. A useful definition of the kinds of funds that constitute reserves has recently been published by the Charity Commission.[1]

Distribution of reserves

75% of voluntary organisations have some reserves but many organisations, especially smaller ones, operate with no reserves at all

  • Around 65,000 of voluntary organisations (75%) had some reserves in the financial year 2014/15. The remaining organisations (25%) are running without any reserves.
Proportion of organisations without reserves by size, 2014/15 (%)
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Level of reserves

The sector’s reserves are growing slowly following a slight dip in 2012/13

  • The voluntary sector held reserves worth £49.6bn in 2014/15.
  • Alongside the continuous increase in spending of the sector since 2011/12, the sector’s total reserves have started to slowly grow again following a slight dip in 2012/13.
  • Between 2000/01 and 2014/15 the sector’s spending increased by 45% and total reserves decreased by 8% (both in real terms, 2014/15 prices).
Real term expenditure and reserves (£bn, 2014/15 prices)
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Reserves can also be expressed in terms of the months of expenditure that the reserves would cover.

  • On this basis, the average amount of reserves held by operating charities (that is excluding grant-making foundations with large assets) was around 6 months in 2014/15. Including grant makers, it was around 14 months.
  • The average amount held by operating charities and grant makers has remained steady over the past four years.
Reserves as months of expenditure over time
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By sub-sector

The average level of reserves varies considerably by sub-sector

  • Organisations with reserves of more than one year work in research, housing and religion or are grant-making foundations.
  • Whereas charities working in culture and recreation, and village halls have less than 3 months of reserves on average.
Average level of reserves as months of expenditure by sub-sector, 2014/15
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References

1
https://www.gov.uk/government/publications/charities-and-reserves-cc19/charities-and-reserves
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UK Civil Society Almanac 2017 / The Voluntary Sector /Assets

Published: 08-05-2017 / Tagged: | | |

https://data.ncvo.org.uk/a/almanac17/assets-and-reserves-2-2/