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.
  • In 2016/17 the sector had liabilities worth £22.4bn and more than half of them (53%) were long term, including creditors, pensions and provisions.
  • The sector’s pension deficit is £3.2bn and accounts for 14% of total liabilities.

More than half of the sector’s liabilities are long term (payable after one year)

Over time

  • The sector’s total liabilities have been increasing since 2012/13, with the biggest jump in 2016/17 when liabilities were up by 12% reaching their highest level of £22.4bn. This was mainly driven by growth in long term liabilities such as creditors and pensions.
  • In 2016/17, the pension deficit grew significantly by 55% from £2bn to £3.2bn, and made up 14% of the total liabilities compared to 10% in 2015/16.
  • Provisions more than doubled between 2015/16 and 2016/17 but are still low overall at £507.8m.

The sectors’ total liabilities were up by 12% reaching their highest level

By size

  • Bigger organisations are more likely to have long term liabilities. These make up almost two-thirds (63%) of super-major voluntary organisations’ liabilities and half (49%) of major voluntary organisations’ liabilities.
  • The bigger organisations also have the largest pension deficits. 84% (£2.7bn) of the sector’s pension liabilities are held by major and super-major voluntary organisations (organisations with an income over £10m).
  • Pensions make up less than 1% of the liabilities of 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


  • In 2016/17, pension liabilities grew overall by 55% to £3.2bn, and have grown for organisations of all sizes.
  • Super-major voluntary organisations have seen the biggest growth with their pension deficit almost doubling: Their pension liabilities grew by £751.6m from £890.5m to £1.6bn, an increase of 84%.
  • Medium, large and major voluntary organisations have seen a percentage growth in their pension liabilities between 30% and 39%.
  • The growth of £300m for micro and small voluntary organisations represented a 235% change to 2015/16 (not displayed in the chart). This high figure could be explained by new pension arrangements for organisations of all sizes (see context below) but might also be skewed by outliers in our sample.

Pension liabilities have grown across organisations of all sizes


  • Borrowing is primarily in the form of mortgage finance, although loans from trustees are cited in the accounts of smaller organisations.
  • Data on this area is poor, particularly for small organisations. The figures for 2016/17 are estimated applying ratios from research undertaken in 2015 on 2012/13 data.
  • We estimate that the sector had loans worth of £3.7bn, making up about one-fifth (20%) of total liabilities.

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

Putting it into context

Both government changes to workplace pensions bringing in automatic enrolment and a new reporting standard for charities have contributed to the growth in pensions.

Since April 2017, employers of all sizes including voluntary organisations are required to provide a workplace pension and auto-enrol their staff. The total minimum contribution has been growing incrementally from 2% before April 2018 to 8% from April 2019. It is expected that the sector will see its pension liabilities grow even more in the next couple of years.

At the same time, the new reporting standard FRS 102 has impacted on how charities are required to report their pension liabilities.

  • 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 of calculation the pension benefit (using defined benefit valuations) which could have contributed to a growth 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 has led to significant volatility in charities’ net asset values.

More data and research

  • Download more Almanac data
  • Have a look at the report by Hymans Robertson on defined benefit pension funding in the charitable sector

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.