Total charity income fell for the first time in 10 years, new figures show, highlighting the effects of the Covid-19 pandemic on the UK voluntary sector.
The UK Civil Society Almanac, published today by the National Council for Voluntary Organisations, shows that total UK voluntary sector income was £56.9bn in 2020/21, down £1.8bn from the previous year.
The NCVO warned that the reduction showed the voluntary sector was facing its own “long Covid effect”, which left many charities vulnerable to the cost-of-living crisis.
Total sector income had risen year on year since 2012/13.
The reduction comes despite a rise in income from the government, due in part to initiatives including the furlough scheme, which enabled many organisations to continue paying staff while services were closed due to the pandemic.
The NCVO’s data shows public donations remained the largest income source at £26.4bn but this was down by 14 per cent on the previous year.
Investment income fell by 15 per cent to £4.5bn, but government income rose by 6 per cent to £5.9bn. Total spending was £53.8bn.
Researchers concluded that the effects of the pandemic were more harshly felt by smaller organisations, defined as those with an annual income of less than £1m.
The NCVO total funding for these organisations fell by £4.6bn in 2020/21 compared with the previous year, while larger organisations’ income went up by £4.6bn over the same period.
But the almanac concludes charity closures during the pandemic were lower than anticipated.
Sarah Vibert, chief executive of the NCVO, said the data revealed a “grim picture” of the sector’s post-pandemic finances.
She said the fall in overall income “has been particularly felt by smaller charities, who despite the continued goodwill and generosity of the public, saw a significant income reduction.”
She said: “This left them extremely vulnerable to the cost-of-living crisis, and many simply couldn’t weather this storm.
“We are now facing the long Covid effect. Each day we see smaller voluntary sector organisations make tough decisions to scale back, cut services or shut their doors for good.
“Charities, and the communities they support, need and deserve a more sustainable future if we’re going to make any progress in addressing inequalities across the country.”
The almanac confirms figures published last year in the government’s Labour Force Survey, which showed the number of people working in the UK voluntary sector dropped by 4 per cent to about 925,000.
But it says that despite this, the sector’s workforce has grown by 24 per cent since 2011 and outstripped growth levels in both the public and private sectors over the past 10 years.
Researchers found that the voluntary sector appears to be less ethnically diverse than the private and public sectors, with 90 per cent of staff identifying as white compared with 86 and 87 per cent in the public and private sectors respectively.
It says the proportion of employees from the global majority, referred to as black, Asian and minority ethnic, has not changed in the past eight years.
The almanac says that women make up 67 per cent of the voluntary sector workforce, while the sector has an older age profile than the private sector.
It finds that the majority of voluntary sector employees work in smaller organisations with fewer than 50 paid staff members.
About a third work at least partially remotely, it finds, with 28 per cent working from home and 10 per cent working from different places with home as a base.
There has been a steady increase year on year in the number of older people, defined as those aged 50 and older, and disabled people working in the UK voluntary sector, the almanac says.
The data has been compiled from sources including a weighted sample of about 10,000 accounts submitted to the Charity Commission.
This means the financial data lags behind because of the need to wait until accounts are submitted to the regulator.
Researchers also used data from the Office for National Statistics’ Community Life Survey and Labour Force Survey plus data from the NCVO, the Third Sector Research Centre, the Scottish Council for Voluntary Organisations and the Northern Ireland Council for Voluntary Action.
– This article was updated on 12 October 2023 after the NCVO corrected the figure in its press release for the change in total income