NCVO: Boost small charities with dormant assets funding

Charities can expect to see little rise in income from donations or government, with earned income the best prospect for future growth, the charity sector’s representative body said today.

Authoritative new data on the charity sector’s finances published today by the National Council for Voluntary Organisations (NCVO) shows that income from government is at best flat-lining for most of the sector, while the charity representative body forecasts a challenging public fundraising environment as a consequence of broader economic conditions.

NCVO said that local charities should be helped with money from dormant assets to establish their future sustainability.

NCVO data shows the charity sector overall saw modest growth, with total income rising to £45.5bn in 2014/15, the year for which the data is newly available, from £44.3bn in 2013/14 (in 14/15 terms).

Government income static

Income from government increased around 1% overall, to £15.3bn. Income from local government, both in contracts and grants, continued to decline from its 2010 level, as local authorities tightened their spending. Income from central government has grown in total but the rise has been almost entirely driven by a relatively small number of grants and contracts going to the very largest charities.

Rise in donations unlikely

Meanwhile, Office of Budget Responsibility forecasts for household income predict no substantial growth over the coming years. NCVO analysis shows that charity giving is broadly correlated with household income, suggesting it may therefore be difficult for charities to grow donations from the public.

Earned income continues to grow

The main growth area for charities in recent years has been in earned income. While donations from the public grew only 6% between 2007/08 and 2014/15 (£7.19bn to £7.65bn), earned income from the public grew 35% over the same period (£7.74bn to £10.45bn). Charities’ earned income includes fees for their services and also income from selling goods or services to raise money.

Help small charities with dormant assets cash

NCVO reiterated its manifesto call for forthcoming money from dormant assets to be used to capitalise small charities in order to give them a leg up with earning income.

The government has been considering how to allocate a predicted £2bn of money from dormant stocks and shares holdings. NCVO said the money should be used to create endowment funds that would support local charities into the future, and to help charities and community groups buy community assets such as sports pitches, parks, historic buildings or pubs. These could help them develop sources of ongoing income while retaining the assets for the benefit of their communities.

Sir Stuart Etherington, chief executive of NCVO, said:

Charities have been becoming increasingly entrepreneurial in recent times. With no realistic prospect of an overall increase in government spending and what look to be tough public fundraising conditions, this is a trend that will have to continue if the sector is to see growth in the next few years.

While some charities will doubtless buck these trends the picture for small and medium charities in particular looks challenging.

The next government could boost local charities and community groups for a generation by using the money from dormant assets to endow community foundations with investment that can generate returns to support charities for a generation to come. They could also help communities buy assets that are important to them, putting them under the control of local people through charities and community groups.

Notes

All figures are in 2014/15 terms.

NCVO’s UK Civil Society Almanac is the authoritative source of information on the sector’s finances. It is created through the analysis of a sample of around 8,000 charities’ accounts, as submitted to the Charity Commission. It is used by the ONS in their calculations for the sector’s contribution to the economy. 2014/15 is the latest data available as charities have up to 10 months from their year-end to submit their accounts to the Commission.

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