Three key insights from this year’s NCVO Almanac

Each year the Almanac provides us with an opportunity to understand and reflect on how the voluntary sector is changing and evolving. It's a chance to see an overall picture of the health of the sector.

Our latest data, which gives the clearest picture yet of the impact covid-19 had on the sector, shows that the sector is suffering from the ‘long covid effect’. This is leaving it exposed to the long-term impacts of the cost-of-living crisis.

This year’s publication is based on:

• financial accounts data from 2020/2021
• workforce, volunteering and salary data (and other sources) from 2022.

Here are three key insights from this year’s Almanac.

Voluntary sector income has been increasing year on year since 2012/13, but the impact of the pandemic has resulted in the first fall in overall sector income in almost a decade.

Despite an increase in government income – largely as a result of furlough and emergency funding for charities – overall sector income declined by a staggering £1.8bn (3.06%).

It fell from £58.7bn in 2019/20 to £56.9bn in 2020/21. Taking inflation into account, this represents a 6% decline in sector income.

The public remained the biggest income source (46% or £26.4bn) for the sector in 20/21. However, there was a substantial decline in income from the public, going from £30bn in 19/20 to £26.4bn in 20/21.

This year’s data reveals that many of the key metrics for the sector’s health are in decline when looking at:

• income
• the number of organisations
• the size of the workforce
• the amount of people volunteering.

However, this doesn’t mean that the impact of these changes has been even across the sector.

For example, the fall in sector income was not evenly spread among voluntary sector organisations. It was felt more by smaller organisations (those with income below £1m) compared to larger organisations (those with income over £1m).

Small organisations saw a significant income reduction of 11% in 2020/21 compared with the previous year.

Part of the reason for this is the fact that smaller organisations are also far more reliant on public giving – which declined in 20/21 – than larger organisations.

Smaller organisations are also much less likely to receive income from government funding – which grew in 20/21 – than larger organisations.

The impact of this meant that small charities were more exposed when the cost of living crisis created more demand and more financial pressures on their services.

As a result, the number of smaller organisations has continued to decline as a proportion of all charities.

With fewer opportunities for in-person volunteering during the lockdowns, the data shows a sharp drop in formal volunteering levels in 2020/21.

The numbers are still yet to recover to pre-pandemic levels, with 14.2m formally volunteering in 2021/22 compared to 20m formally volunteering in 2019/20.

With the unprecedented changes to daily lives brought about by the pandemic and the resulting restrictions, we saw an initial increase in informal volunteering (which includes giving unpaid help without being involved in groups, clubs or organisations).

However, our research shows that following its rise earlier in the pandemic (54% stated they volunteered informally at least once in a year), the number of people informally volunteering dropped back to pre-pandemic levels in 2021/22 (46% volunteering informally at least once in a year).

With formal volunteering levels not recovering to pre-pandemic levels, and the increase in informal volunteering we saw not continuing, the data echoes what we're hearing from our members.

Organisations are struggling to retain and recruit volunteers. This will be particularly concerning for smaller organisations that rely more on volunteers.

With the sector under increasing pressure during the cost of living crisis, the longer-term impact of the pandemic has left many voluntary organisations in a vulnerable position.

As household incomes are further squeezed this winter, many voluntary organisations could see their incomes shrink further.

Alongside concerns for their income, there will also be challenges for organisations that are more reliant on volunteer support.

With the volunteering numbers still yet to recover to pre-pandemic levels, many will struggle to meet the increased demand for their services.

Unfortunately, many organisations will face difficulties over the coming months. At NCVO, we’re continuing to work hard to understand the challenges and tough decisions voluntary sector organisations may need to make this winter.

Through our work, we're offering support, and raising awareness of the realities facing many organisations and communities over the coming months.