How much do voluntary organisations get from government?

Overview

Government remains the second largest income source for the voluntary sector

  • In 2016/17, government remained the second largest income source for the sector just behind the public. Income from government stands at £15.8bn and makes up 31% of the sector’s total income.
  • Income from government includes income from:
    • central government departments,
    • local authorities,
    • devolved and regional government,
    • the EU and international governments,
    • town and parish councils,
    • NHS trusts
    • a range of non-departmental public bodies (NDPBs).
  • The income generally goes directly from the government body to the voluntary organisation, but there are sometimes more complex arrangements such as subcontracting, match funding and direct payments to the beneficiaries.
  • Although this income represents a significant amount for the voluntary sector, it accounts for only a small part of total government spending, around 2%.

Over time

  • Over the last four years, the amount of income from government has remained fairly stable, between £15.8bn and £16.1bn.
  • However, as a proportion of the sector’s total income, income from government has fallen continuously over the last seven years. It made up 37% of the total income in 2009/10 but dropped to 31% in 2016/17.
  • Looking at longer-term trends, income from government grew significantly between 2000/01 and 2009/10. The peak was followed by reductions until 2012/13, in line with the general reduction in government spending following the recession, and then a slight increase.
  • Government income may be in the form of contracts or grants. In 2016/17, there was a fall of £0.8bn in income from government contracts, while income from government grants went up by £0.7bn. However, it is increasingly difficult to distinguish between contracts and grant funding in the financial accounts of charities.

The amount of income from government has remained fairly stable over the last four years but it has fallen as a proportion of total income

By source

  • While overall income from government has remained fairly stable, income from local government has gone down. Traditionally the largest source of income from government, by 2016/17 it had fallen to £7.3bn, the same as central government income.
  • As a proportion of all income from government, local government income has fallen from 52% in 2004/05 to 46% in 2016/17, its lowest proportion since 2004/05.
  • Compared to 2015/16, income from central government has grown slightly by £0.3bn to £7.3bn. This is the opposite trend to the previous year, when income from local government increased slightly and income from central government decreased. However, year-to-year fluctuations are difficult to interpret as government spending might vary in line with the five-year cycles of spending reviews (see context below).
  • European and international sources of income remained the smallest component, accounting for 7% of income from government. However, both the amount and proportion of income from European and international government has grown in the last two years and stood at £1.2bn in 2016/17.

Income from local government has been falling while income from central government has grown slightly

By size

  • Smaller organisations continued to receive a lower proportion of their income from government. In 2016/17, micro and small voluntary organisations – those with an income below £100,000 – received 15% of their income from government, compared to 32% for medium to super-major organisations.
  • Larger organisations receive a greater proportion of income from government. In 2016/17, organisations with an income of over £1m received 86% of all the money that was given to the sector by government.
  • Major organisations, with an income between £10m and £100m, received the greatest amount (£6.2bn) from government, accounting for 39% of their total income in 2016/17.

Smaller organisations continued to receive a lower proportion of their income from government

By subsector

  • In 2016/17, voluntary organisations delivering social services continued to be the subsector receiving the largest amount of income from government (£5bn), accounting for 45% of their total income. Other sectors receiving large amounts of government income are health (£2.1bn), international development (£1.8bn) and culture and recreation (£1.2bn).
  • Some other sectors receive high proportions of income from government, although they received smaller amounts in cash terms. Government income makes up 49% of the total income for organisations working in employment and training, and 43% for playgroups and nurseries, and organisations working in law and advocacy.
  • International development is the only sector that has seen almost continuous growth in government income. Their income from government has grown by 43% over the last eight years. However, a lot of this growth is due to European and international sources.

The social services sector continued to receive the largest amount from government

Putting it into context

Income fluctuations

Fluctuations in income from government for the sector have historically tracked departmental spending, with public spending cuts often being ‘front loaded’ at the beginning of spending cycles. This year’s Almanac data covers the second year of the 2015 spending review period, which set out £18bn of cuts to departmental spending by 2020. The continuing small reduction in overall in funding from government this year (from £15.9bn in 2015/16 and £15.8bn in 2016/17) is consistent with those spending review reductions. The sector can probably expect further reductions to come.

Income distribution

The continuing uneven distribution of income from government across different-sized voluntary organisations reflects the trend towards the commissioning of large-scale contracts. Major organisations, which receive the largest proportion of income from government, are more likely to have the resources and capacity to bid and deliver large scale public service contracts.

More data and research