What is the state of the sector's finances?

Overview

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

  • In 2017/18, the sector’s total income grew by 2% to £53.5bn. The public continued to be the largest income source (£25.4bn) making up 47% of voluntary organisations’ total income.
  • Total spending stands at £51.3bn, with the majority of the sector’s spending going towards charitable activities (85%). This includes direct charitable activities (£35.9bn) and grant making (£7.9bn).
  • The sector spends 96% of its income. However, the difference between income and spending (£2.2bn) 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 2017/18, both income and spending increased, but income grew slightly more than spending. Total income went up by £1.2bn to £53.5bn while spending grew by £863m to £51.3bn.
  • Total income growth remained at 2%, same as the previous year, but lower than the three years before when income was growing between 3-6%.

Income and spending have increased between 2000/01 and 2017/18, but growth is slowing down

Income sources

  • In 2017/18, the public continued to be the largest income source for the sector, accounting for almost half (47%) of its total income, followed by government (29%).
  • Overall income growth was largely due to increasing income from the public (+£1bn) accounting for 83% of all income growth. Legacies alone were up by £629m accounting for half of the increase in total income.
  • Government grew by £281m after three years of slightly falling income. While total amounts remained fairly stable between 2008/09 and 2017/18, income from government as a proportion of the sector’s total income has fallen continuously from 37% to 29%.

The public accounts for most of the growth in total income

By size

  • In 2017/18, income decreased for micro, small and medium-sized organisations but grew for bigger organisations.
  • More than half (£29bn) of the sector’s income was generated by major and super-major voluntary organisations – those with an income over £10m. Their share of the sector’s income has almost continuously grown from 38% in 2000/01 to 54% in 2017/18.
  • Much of the increase was concentrated in super-major voluntary organisations with an income over £100m. In 2017/18, the number of super-major voluntary organisations continued to grow from 51 in to 56, accounting for almost a quarter (23%) of the sector’s total income.
  • The total growth in the income of super-major organisations can be explained by their increased number but also by the strategies and decisions of individual organisations. For example, they include:
    • organisations that were former government institutions (Canal and River Trust),
    • organisations that have grown through mergers (Oasis International Association),
    • organisations that have centralised their funds, previously held internationally (Save the Children International)
    • organisations that have received large one-off gifts (The Capricorn Foundation).

The income going to bigger organisations has grown over time as amount and share of the sector’s total income

Assets

  • Net assets are made up of what the sector owns in current and fixed assets, including buildings and investments, minus what it owes to creditors, including pension liabilities.
  • In 2017/18, the sector’s net assets continued to grow and reached a new peak of £142bn.
  • Investments were the main driver in the overall growth of assets and grew by £4.1bn (4%) amounting to £110.9bn. This is a smaller increase compared to the average growth rate of 7% in the last five years, as a result of greater market volatility.
  • Pensions liabilities were down by 24%, leading to a total pension deficit of £2.5bn for the sector down from £3.3bn in 2016/17.

Assets increased as a result of growth in investments and falling liabilities

More data and research