What's the state of the voluntary sector's finances?

Overview

The sector spend the vast majority of its income on charitable activities

  • In 2016/17, the sector’s total income grew by 2% to £50.6bn. The public continued to be the largest income source (£22.9bn) making up 45% of voluntary organisations’ total income.
  • Total spending stands at £48.7bn, with the majority of the sector’s spending going towards charitable activities (86%). This includes direct charitable activities (£34.7bn) and grant making (£7.0bn).
  • The sector spends 96% of its income. However, the difference between income and spending (£1.9bn) does not necessarily imply that the sector has surplus income. Capital expenditure on equipment or buildings is spread over the life of the asset, while total income includes items such as legacies that are spent over multiple years.

Over time

  • In 2016/17, both income and spending continued to grow, but income grew slightly more than spending.
  • Total income grew by £910.8m (2%) to £50.6bn. This growth rate is slightly lower than in the last three years where income had grown between 3% to 6%.
  • Spending grew by £343.4m (1%) to £48.7bn, more slowly than income and at a lower rate than spending growth in previous years.

Income and spending continued to grow but at a slower rate than in previous years

Income sources

  • In 2016/17, the public continued to be the largest income source for the sector, accounting for almost half (45%) of its income. The second largest income source was government, accounting for almost a third (31%) of total income.
  • The growth in total income was largely due to increasing income from investments and from the voluntary sector, while income from individuals and government fell in the same period.
  • Just under half (49%) of the sector’s income is generated through contracts, fees and services, and fundraising activities, while voluntary income (donations, legacies, grants) make up 43%.

The public and government remain the largest income sources, but both of them have plateaued

By size

  • In 2016/17, income grew for larger organisations but decreased for micro, small and medium organisations compared to the previous year.
  • In 2016/17, more than half (£26.8bn) of the sector’s income was generated by major and super-major voluntary organisations – those with income over £10m. Their share of the sector’s income has almost continuously grown from 38% in 2000/01 to 53% in 2016/17.
  • Much of the increase was concentrated in super-major voluntary organisations with an income over £100m. In 2016/17, the number of super-major voluntary organisations continued to grow from 45 in to 51, accounting for 22% of the sector’s total income alone.
  • The growth in the income of super-major organisations can be explained by their increased number but also their strategies and decision-making. For example, they include:
    • organisations that were former government institutions (Canal & River Trust),
    • organisations that have grown through mergers (Change, Grow, Live),
    • organisations that have centralised their funds which were previously held internationally (Save the Children International),
    • and organisations that have received large one-off gifts (Power to Change Trust, Steve Morgan Foundations).
  • For more information read our research briefing on Britain’s biggest charities.

The share of income going to bigger organisations has grown over time

Assets

  • Net assets are made up of what the sector owns in current and fixed assets, including buildings and investments, minus money the sector owes to creditors, including pension liabilities.
  • In 2016/17, the sector’s net assets continued to grow beyond pre-crisis levels and reached a new peak of £131.2bn.
  • Investments were the main driver in the overall growth of assets and grew by £6.9bn (7%) amounting to £102.3bn. This is similar to the average growth rate of 6% in the last four years.
  • Pensions liabilities were up by 55%, leading to a total pension deficit of £3.2bn for the sector. However, significant growth in investments meant that net assets were still up overall.

Assets continued to grow mainly as a result of strong investment performance

More data and research