UK Charities Under “Recession” Stress - Report

Charities faced a "toxic mix of circumstances" over the past year, with increased demand for services, rising costs and an unprecedented fall in income according to the UK National Council of Voluntary Organisations.

New figures from NCVO’s Civil Society Almanac depict a charity sector struggling with the worst recession for fifty years.

The figures show that charities were hit by £2.3 billion in rising costs purely as a result of inflation between 2008 and 2010.

Speaking at the NCVO Annual Conference in London, NCVO chief executive Sir Stuart Etherington also highlighted a dramatic drop in the voluntary sector workforce, losing over 70,000 staff in the past year.

The figures also show that charities spent the years since the start of the recession 'swimming against the tide' to meet increased demand from users and beneficiaries.

During the height of the recession in 2010, NCVO says voluntary organisations spent 99 per cent of their income (£36.3 billion out of £36.7 billion) in order to keep pace with rising costs and expand their services to cope with demand; this was the smallest gap between income in spending in ten years.

Many organisations dipped into their reserves to stay afloat, and a higher proportion of funding was channelled directly to frontline charitable activity.

Sir Stuart Etherington also suggested that the pendulum has swung too far from grants to contracts.

He said income from statutory grants had declined steadily from a peak of £5.3 billion in real terms in 2003/4 to £3 billion in 2009/10.

At the same time, the decade saw a significant increase in contract income as voluntary organisations' role in public service delivery expanded, from £4.3 billion in 2000/1 to £10.9 billion in 2009/10.

Sir Stuart said: 'This new research shows how charities have had to spend every last penny just to keep their heads above water. 

The charity sector has already taken a significant hit and we must act quickly to ensure that communities are not deprived of vital services.'

Other findings from the 2012 NCVO Civil Society Almanac include:

• At a glance: in 2010 there were 163,763 voluntary organisations in the UK, with an income of £36.7 billion employing 765,000 staff.
• Peak funding: in 2007/08, £38.0 billion was the voluntary sector's highest recorded income in current prices.
• Spending is up: a real increase of £1.1 billion over the 2 years 2008-2010.
• In the face of the recession, charities expanded their services in order to meet increased demand.
• Inflation is biting: increasing prices cost the sector £2.3 billion over the 2 years 2008-2010.
• Grants squeeze: during the recession public sector grants fell by almost £500 million.
• More service delivery: The sector gets £13.9 billion from government, 79% is contracts for services.
• Cuts: by the end of the spending review period 2015/16, the voluntary sector is forecast to lose £1.2 billion in government income each year, a cumulative total of £3.3 billion.
• Giving down, buying up: charitable giving fell by £383 million in the recession, but sales to the public increased by £905 million (this would cover raffle tickets, charity shops and membership fees).
• Sustainability: in 2009/10 voluntary organisations spent 99% of all incoming resources
• Reserves: free reserves were £42.2 billion in 2009/10: in real terms, £4.1 billion lower than at the beginning of the decade.

The full speech can be found online.