UK Civil Society Almanac 2022

In the Almanac, a definition of ‘general charities’ is used to provide estimates for the voluntary sector.1 The definition is based on common features across non-profit organisations and was originally constructed to fit ONS national accounting purposes.

Included in the ‘general charities’ definition are registered charities that meet the following criteria:

1. Formality (institutionalised to some extent)
2. Independence (separate from the state)
3. Non-profit distributing (not returning profits generated to owners or directors)
4. Self-governance
5. Voluntarism (involving some meaningful degree of voluntary participation)
6. Public benefit

This definition excludes registered charities that do not meet these criteria, for example sacramental religious bodies or places of worship as well as organisations like independent schools, government-controlled bodies, or housing associations.

NCVO recognises the limitations of the ‘general charities’ definition, which excludes some common types of charitable organisation and means that our summary results differ from the headline figures published in the Charity Commission register. We are currently undertaking work to improve the Almanac process and outputs, and the ‘general charity’ definition is under review as part of this.

Within the Almanac, voluntary organisations are divided into six groups based on their annual income.

We use a modified version of the International Classification of Non-profit Organisations (ICNPO) to describe the activities of voluntary organisations. Organisations are classified into 18 subsectors. Please see the methodology section for more information.

Income of voluntary organisations is classified by type (whether the income is given voluntarily or in return for something) and source (the origin of the income).

Types of spending

The Financial Reporting Standard FRS102 requires voluntary organisations to assign their spending to one of three categories. Each of these then include all costs related to that activity, including staff costs, management and administration.

Expenditure on raising funds includes the costs of:

• Fundraising trading, for example costs for organising events, lotteries or running charity shops.
• Generating voluntary income or fundraising costs with direct marketing, seeking grants or contracting agencies to seek funds on behalf of the organisation.
• Investment management costs, eg obtaining investment advice, rent collection, property repairs.

Expenditure on charitable activities includes the cost of:

• Money spent delivering the charitable work that the organisation was set up to do, including governance costs.

Other expenditures include expenditures that fit in neither of the above categories.

Assets

• Net assets: Net assets, or total funds, represent the net worth of a charity and is calculating by using the total assets minus all liabilities.
• Current assets: Assets that can be converted into cash within a year (ie cash in bank, petty cash, money owed to organisations, short term investments, goods for sale).
• Fixed assets: Assets held on a long-term basis. They can be either fixed assets for charitable use (which include buildings and equipment) or investments. They also include intangible fixed assets which is things like intellectual property.
• Reserves: That part of a charities income funds which are freely available.

Liabilities

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 deficit represents the difference between the value of a pension scheme’s liabilities and the pension assets needed to cover those liabilities.

Economic contribution

The contribution to the economy of different sectors is measured by the Office for National Statistics (ONS) based on their production or output (Gross Value Added, GVA), similar to Gross Domestic Product (GDP). Note that contribution to GDP or GVA is not simply equal to turnover.

Although voluntary organisations are included in ONS estimates as part of ‘Non-Profit Institutions Serving Households’ (NPISH), NPISH is not synonymous with the voluntary sector. NCVO and ONS therefore developed a method of estimating the voluntary sector’s GVA, in the early 2000s. Although it has its limitations, we judge it provides the best indication of the economic value of the sector.

The method calculates GVA as follows:

Staff costs + Expenditure on goods and services - Income from sales of goods and services2

Volunteering

• Formal volunteering: giving unpaid help through a group, club or organisation.
• Informal volunteering: giving unpaid help, as an individual, to people who are not a relative.
• Regular volunteering: volunteering at least once a month.
• Recent volunteers: those who have given unpaid help within the last 12 months.