What reserves and assets do voluntary organisations have?

Over time

  • Net assets represent the net worth of the sector (total assets minus liabilities). In 2016/17, the sector’s total assets were worth £153.6bn while money owed to creditors and other liabilities amounted to £22.4bn.
  • Fixed assets make up the majority (84%) of the sector’s total assets, valued at £129.2bn. They include investments assets (£102.3bn), tangible fixed assets (£26.7bn) like buildings and equipment, and intangible fixed assets (£195.8m) like intellectual property.
  • In 2016/17, the sector’s net assets grew by 4% to £131.2bn, marking a new record high. This was due to a notable growth in fixed assets across all income bands, mainly from investments.

The sector’s net assets continued to grow

Distribution

  • The majority of assets are held by a minority of organisations: large, major and super-major voluntary organisations represent 4% of organisations but own 87% of the sector’s assets.
  • About 89% of voluntary organisations own some form of asset. But asset ownership is dependent on size, with smaller organisations less likely to hold assets, in particular fixed assets.

The vast majority of the sector’s assets are held by a small number of bigger organisations

Fixed assets

  • Tangible fixed assets made up 17% of the sectors’ total assets and amounted to £26.7bn in 2016/17.
  • About a quarter (24%) of all voluntary organisations own buildings or equipment but larger organisations are much more likely to do so. Only 15% of micro and small voluntary organisations own some form of property in contrast to 98% of super-major voluntary organisations.
  • The average value of tangible fixed assets for those who own them is £659,000 but ranges remarkably by size, from £34,000 for micro and small voluntary organisations to £93.5m for super-major voluntary organisations.

Only a small minority of organisations with an income under £100,000 own buildings and equipment

Investments

  • In 2016/17, investment assets made up two-thirds (67%) of the sector’s total assets and amounted to £102.3bn. Investment income stands at £4.1bn up by 17% from the previous year.
  • Both investment assets and investment income have grown at a relatively steady pace since 2009/10.
  • Investment assets are not evenly distributed: 41% of investment assets are held by just seven organisations with more than £1bn investment assets each. The Wellcome Trust owns 23% of all investment assets.

Investment assets and investment income continued to grow

Investment management costs

  • Costs of managing investments includes the costs of obtaining investment advice, managing the portfolio and, for investment property, rent collection and maintenance cost.
  • The total costs of managing investments fell by 6% to £480m in 2016/17 from the previous year. However, as a proportion of the sector’s spending these costs have been relatively stable making up around 1% of the sector’s total spending.

The costs of managing investments remain relatively stable as a proportion of the sector's total spending

Reserves

  • In 2016/17, the sector held reserves worth £56.5bn up from £55.1bn the year before, but reserves were still lower than at their peak of £61.2bn in 2007/08.
  • About one quarter (24%) of voluntary organisations doesn’t hold any reserves.
  • The level of reserves can also be expressed in terms of the number of months of expenditure they would cover. On average, voluntary organisations hold reserves of around 13.9 months, but only around 6.3 months when grant-making foundations are excluded.
  • The level of reserves differs notably by subsector: Organisations in research hold on average 70 months (more than 5 years) of reserves, while at the other end of the scale village halls hold just 2 months.

The level of reserves organisations hold differs notably across subsectors

Putting it into context

The sector continued to see a growth in investment assets and investment income. This is most likely a real trend but it may also be partly due to changes, brought about by the financial standard FRS 102, in the way charities are required to report their assets and investment income.

For investment assets, the guidance states that investment properties must be measured initially at cost and subsequently at fair value. This means that charities are required to revalue their investment assets at successive balance sheet dates. Charities now also need to disclose the methods used in determining the value of an investment and whether an independent valuer was used. In addition, gains/losses in investments are now included within ‘net incoming resources’ and no longer under ‘other recognised gains/losses’.

More data and research

Notes and definitions

Definitions of terms used:

  • Net assets: Net assets, or total funds, represent the net worth of a charity and is calculated by using the total assets minus all liabilities.
  • Current assets: Assets that can be converted into cash within a year (ie cash in bank, petty cash, money owed to organisations, short term investments, goods for sales).
  • Fixed assets: Assets held on a long-term basis. They can be either fixed assets for charitable use (which include buildings and equipment) or investments. They also include intangible fixed assets which is things like intellectual property.
  • Liabilities: What organisations owe to creditors, either long-term (payable after 12 months) such as loans or pension provisions, or short-term (payable within the next 12 months).
  • Reserves: That part of a charities income funds which are freely available.