What is the state of the sector's finances?
Overview
In 2021/22, the voluntary sector’s total income was £69.1bn (adjusted for inflation as of April 2022 for consistency).
However, when breaking down income into detailed categories, only £55bn can be accounted for. This is partly due to variations in reporting and partly the result of a smaller sample size. The remaining £14bn comes from income that could not be fully categorised.
The available data reflects a variety of income sources, including public donations, government funding, and investments.
The £14bn gap indicates that some income sources may not have been fully captured in the reporting process. The inflation-adjusted figures provide consistency for comparison, as many charities close their financial years at different points during the year.
Income and spending by charity size
Larger organisations continue to dominate the sector’s finances. In 2021/22 major and super-major organisations (income over £10m) accounted for 57% of the sector’s income and spending.
On the other hand, micro and small organisations (income under £100,000) made up just 3% of the income and spending.
Median income ranges from £3,400 for micro organisations to £254.1m for super-major organisations.
Since 2020/21 there has been a much greater increase in median income for super-major organisations (up 16% from £218.4million in 2020/21) than for any other size category.
The sector is experiencing a competitive funding environment, during a period of economic volatility.
Total expenditure has:
- declined from £2.8bn to £2.1bn for micro and small organisations
- remained stable at £8.2bn for medium organisations
- increased from £53.5bn to £55.1bn for large, major and super-major organisations.
This reflects the greater challenges that smaller organisations face in the current economic environment.
Total income by source
The public continues to be the most significant contributor to the sector’s total income.
In 2021/22, public contributions made up 48% of total sector income, similar to the level in the previous year.
Government funding contributed 26%, though this has declined from 30% in 2020/21.
Income from the voluntary sector had increased slightly to 12%, from 10%.
Voluntary and earned income
In 2021/22, voluntary income made up 46% of total income – in line with the previous year. This income includes:
- donations and legacies from the public (21%)
- government grants (8%)
- funding from other organisations (7%).
Income from earned activities (charitable activities and generating funds) made up 45% of income, similar to 2020/21.
The public remains the largest source of earned income, contributing 20% of total income.
In 2021/22, government contracts accounted for 20% of income, this is a substantial portion of the sector's earned income although this had decreased from 23% in the previous year.
Investment income
In 2021/22, investment income, including rents, dividends, and interest, was fairly stable, at 9% of total income. This reflects the sector’s diversified approach to revenue generation.
Expenditure breakdown
The majority of the sector’s expenditure continues to be on charitable activities.
In 2021/22 this accounted for £52.3bn (80%) of total spending and is a sharp increase from the £44.7bn (69%) reported in 2020/21. This indicates an increased focus on delivering services and programs.
Grants issued by organisations to fund other charities or individuals represented £6.6bn (10%), down from £11.5bn (18%) in 2020/21, displaced by spend on charitable activities.
Costs of generating funds, which includes expenses related to fundraising efforts, were £6.3bn (10%), down just slightly from £7.5bn (12%).
More Almanac data
Research and resources
- Read our research briefing on super-major organisations, exploring the trends for the largest organisations in more depth
- Read the research done by TSRC at the University of Birmingham looking at income trajectories of charities over time
- Take a look at a Pro Bono Economics blog on the impact of the cost of living crisis on voluntary sector organisations.
- The Directory for Social Change (DSC)’s Funds Online, a database of funding opportunities. Smaller organisations with an annual income below £1m can also use My Funding Central.
- Use this helpful briefing from charity accounting firm Crowe to understand the process, opportunities and challenges of benchmarking for charities.
- NCVO guidance on:
- See our training on charity finance
