Charities subdued by financial climate, NCVO Almanac data shows

New data released today shows the powerful effect that high inflation had on charity sector finances in recent years. The UK Civil Society Almanac 2013, published by NCVO, examines charities’ accounts for financial year 2010/11.

In cash terms, the charity sector generated an extra £2bn in income in 2010/11 compared to the previous year, with a total income of £38.3bn. However, rising costs – inflation was at 5% – wiped out the effect of this increase and meant that the sector’s real-terms income was almost identical to its level in 2009/10.

The Almanac registered its biggest fall in the sector’s real-terms spending since it began recording in 1996. Spending stood at £36.8bn in 2010/11, a real-terms fall in spending by the sector of £800m compared to the previous year’s inflation-adjusted figure of £37.6bn.

The data covers a period when the UK was no longer in recession, and before government plans to reduce public spending had come into effect.

Other data in the Almanac shows:

The proportion of income from government grants and contracts remained steady after a decade in which contract income had consistently increased and grant income decreased
Individuals remained the sector’s dominant source of income, with income from individuals increasing by £945m. This trend is consistent with the UK Giving findings for that year.
Sector assets regained value that they had lost during the recession, with the sector’s total assets topping £100bn for the first time. Income from investments remained low, however, and reserve levels did not recover to the same extent as assets overall.
Sir Stuart Etherington, chief executive of NCVO, said:

‘This was clearly the year we started to see charities’ struggles reflected in the bottom line. While many charities continued to spend during the recession, perhaps to meet growing demand, it seems some were running out of steam by this point.

‘We expect to see the effect of public spending reductions in future years’ data, but it’s important to remember that while only around one in four charities receive any income from public bodies, all charities feel the effects of inflation. We see from the Almanac that inflation completely undermined the increase in the sector’s income in this year.

‘Since the financial crash of 2008 the economic environment has remained fragile and fractious. These are very different circumstances to those many in the sector had been accustomed to operating in. They make prediction and planning difficult. I see much inspirational work despite these difficulties, but it would be a brave person who wasn’t planning for these troubles to continue for some time to come.’

The UK Civil Society Almanac is the benchmark in high-quality data on the charity sector in the UK. NCVO researchers sample 10,000 charity accounts as filed with the Charity Commission in order to create the most accurate possible picture of sector trends.

Notes

UK Civil Society Almanac methodology: Charities’ financial accounts must be filed with the Charity Commission no later than 10 months following the financial year end. In collaboration with the Third Sector Research Centre, NCVO then digitises data from the accounts of a sample of charities and analyses it to construct the most accurate available picture of the sector.

Detailed data, analysis and methodological notes are available at http://data.ncvo-vol.org.uk from Tuesday 30 April.

NCVO champions and strengthens the voluntary sector, with over 10,000 members, from the largest charities to the smallest community organisations www.ncvo-vol.org.uk.

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