What are the financial liabilities of voluntary organisations?


  • Liabilities show the money that voluntary organisations owe to others. These can be grants committed in advance, taxes owed and other creditors, and also include loans, mortgages, pensions and provisions. Liabilities can be short term, payable within one year, or long term, payable after one year which includes creditors, pensions and provisions.
  • In 2017/18 the sector had liabilities worth £22.4bn and more than half of these (52%) were long term including creditors, pensions and provisions.
  • The sector’s pension deficit is £2.5bn and accounts for 11% of total liabilities.

More than half of the sector’s liabilities are long term including pensions and provisions

Over time

  • For the first time since 2012/13, the sector’s total liabilities have fallen. They decreased by 4% and stood at £22.4bn in 2017/18. This was largely due to falling long-term liabilities while short-term liabilities remained unchanged.
  • In 2017/18, the pension deficit fell by 24% from £3.3bn to £2.5bn after a notable jump last year. They make up 11% of the total liabilities. The volatility in pension liabilities is linked to the way charities are required to report their pension deficit and wider volatility in the market. See the context section on this page for more detail.
  • Provisions went down by 15% and are the lowest type of liability with £440m.

The sector’s total liabilities fell for the first time in five years

By size

  • Bigger organisations are more likely to have long-term liabilities. These types of liabilities make up 59% of what super-major organisations owe to others and half (49%) of what major organisations owe. They account for only a third (34%) of medium sized organisations’ liabilities.
  • Bigger organisations also have the largest pension deficits. 82% (£2.1bn) of the sector’s pension liabilities are held by major and super-major organisations, those with an income over £10m.
  • Pensions make up just over 1% of the liabilities held by micro and small voluntary organisations, as these tend to be volunteer-led with no, or only a small, paid workforce.

Bigger organisations are more likely to carry long term liabilities


  • Borrowing in the sector is primarily in the form of mortgage finance, although loans from trustees are cited in the accounts of smaller organisations.
  • Data on loans is poor, particularly for small organisations. The figures for 2017/18 are estimated applying ratios from research undertaken in 2015, based on 2012/13 data.
  • We estimate that the sector had loans worth of £3.6bn in 2017/18, making up almost one-fifth (18%) of total liabilities.

Loans are estimated to account for about one-fifth of the sector’s liabilities

Spotlight: Social investment

Social investment is a source of funding that aims to generate social as well as financial returns. The investment is aimed to create a positive impact for people, communities or the environment, but unlike a grant, the investment is expected to be returned to the investor. There is a wide range of types of capital, from unsecured loans to socially responsible investment funds, with varying levels of risk involved. Typical recipients include not just charities but also social enterprises, cooperatives, community interest companies, and any other type of social purpose organisations. In 2011, the UK government set out their strategy to further grow social investments and have since then created the Big Society Capital and Access, and put in place the social investment tax relief scheme to encourage individual investors.

The size of the social investment market is difficult to calculate due the variety of investment mechanisms and the absence of a unified market or exchange platform. Since 2016, Big Society Capital has published annual estimates on the size and composition of social investment in the UK. According to their latest data, social investment in the UK has been growing and was estimated at £3.6bn in 2018, spread across approximately 4,000 transactions. However, since areas such as friends and family loans, local authorities, equity and crowdfunding are not included, this is likely to be an underestimation of the size of the social investment market.

Putting it into context

The change in the pension deficits is likely to be impacted by the fairly new reporting standard FRS 102, which changed how charities are required to report their pension liabilities, as highlighted below.

  • Different treatment for multi-employer pension schemes: For the first time, charities whose employees belong to a local government pension scheme (or similar) had to use a different method to calculate the pension benefit (using defined benefit valuations) which could have contributed to more volatility in their pension liability
  • Changes to valuation of defined benefit schemes: The valuation for a defined benefit scheme needs to be done by a professionally qualified actuary, appointed by the charity. The valuation of these schemes is usually done on an annual basis, although this is not required if the basis of the valuation is not significantly changed. With FRS 102, the changes in valuation methodology have led to significant volatility in charities’ net asset values.

More data and research

Notes and definitions

Liabilities are reported in the balance sheet and they show the money that voluntary organisations owe to others. These can be grants committed in advance, loans, accruals, taxes owed and other creditors.

  • Current or short-term liabilities are payments owed in the next twelve months and might include accounts payable (where money is owed because a product or service has been received before a payment is due) or loans.
  • Long-term liabilities are obligations due more than a year into the future, and include loans, provisions and pension obligations.
  • Pension liabilities are long-term liabilities. A pension deficit represents the difference between the value of a pension scheme’s liabilities and the pension assets needed to cover those liabilities. The deficit means that the assets in the pension schemes are insufficient to meet the pensions that will need to be paid out in the future.