Charity finances: Income growth slows but assets reach record levels

Income growth slowed in the charity sector in 2016/17, according to the latest edition of the authoritative research on the sector’s finances, the NCVO UK Civil Society Almanac, published today.

Near plateaus in public and government income were partially compensated for by strong performances in grants and investment income, leading to overall growth but at a slower rate than previous years, the research shows.

Public income down

Earned and voluntary income from the public both fell slightly, and although legacy income continued to grow, this led to an overall small dip in public income for the first time since 2008/09.

NCVO said the fall was likely attributable to a range of factors, including re-focused fundraising strategies and higher standards of data-protection regulation.

Proportion of government income at lowest level

While the amount of income from government remained essentially static at £15.8bn, growth in other income areas has meant that government income fell from a peak of 37% of the sector’s overall income in 2009/10 to 31% in 2016/17. This is the lowest level recorded by the Almanac since the start of the data series in 2000/01.

Assets and liabilities grow

The sector’s net assets stood at a record level of £131.2bn, with growth in fixed assets outstripping growth in liabilities, despite significant growth in pension liabilities as a result of automatic enrolment and changes in accounting standards.

Karl Wilding, director of public policy at NCVO, said:

The sector's income as a whole is still growing, which is positive, but it’s at a slower rate than we’ve seen recently. And it’s important to note the factors driving growth, assets and legacy income, are less likely to be things small charities have access to.

Grant makers should be especially conscious of this, as they are a key way of distributing the proceeds of asset growth to those organisations which are asset poor. Greater collaboration, simpler access to grants and proportionate reporting requirements are a few examples of what will help here.

The drop in public income reflects other findings we’ve seen and anecdotal evidence. Clearly lots of organisations were adapting their fundraising strategies at this point in time, preparing to meet higher data-protection standards, and doing a lot of internal work rather than launching donor-recruitment campaigns. I’m hopeful that re-focusing on the right sort of engagement with supporters will pay off in the long run.

Notes

The UK Civil Society Almanac 2019 covers the financial year 2016/17. The Almanac is prepared using data from a sample of around 8,000 charities’ annual accounts submitted to the Charity Commission and weighted to the scale of the sector as a whole.

 

 

Site by Clickingmad