The UK Voluntary Sector Almanac The State of the Sector. Oliver Reichardt David Kane Karl Wilding. Supported by

Transcription

1 The UK Voluntary Sector Almanac The State of the Sector 2007 Oliver Reichardt David Kane Karl Wilding Supported by

2 Fast Facts 2004/ /04 Size Number of General Charities 164, ,247 Income Total Income 27.7 billion 26.9 billion Average Income 168, ,983 Voluntary Income 12.2 billion 12.1 billion Earned Income 13.3 billion 12.8 billion Investment Income 2.2 billion 2.0 billion Income from Individuals 9.8 billion 9.5 billion Income from Government 10.2 billion 9.8 billion Income from National Lottery 0.5 billion 0.4 billion Income from other sources 7.2 billion 7.2 billion Expenditure Total Current Expenditure 25.1 billion 25.4 billion Average Expenditure 152, ,153 Expenditure on Charitable Activities 17.7 billion 17.1 billion Expenditure on Grants 3.4 billion 3.9 billion Expenditure on Generating Funds 2.4 billion 2.7 billion Expenditure on Management and Administration 1.5 billion 1.8 billion Assets and Liabilities Total Assets 88.5 billion 80.4 billion Total Liabilities 10.9 billion 12.1 billion Net Assets 77.6 billion 68.3 billion Giving Amount donated 8.9 billion 8.4 billion UK population donating at least once a month 57.6% 57.2% Mean amount given per donor Workforce UK Paid workforce 611, ,000 Employment Status Full Time 61% 62% Part Time 39% 38% Gender Female 69% 69% Male 31% 31% Volunteering Number of People volunteering at least once a month 11.6 million 11.7 million at least once a year 17.9 million 17.9 million Equivalent number of full time workers (estimated) 1.2 million 1.1 million

3 cover pages 11/6/07 12:09 pm Page i The UK Voluntary Sector Almanac The State of the Sector 2007 Oliver Reichardt David Kane Karl Wilding Supported by

4 NCVO produces a wide range of accessible books and guides for organisations working in the voluntary and community sector. Subjects covered include: Trustee and governance Employment and diversity Finance and sustainable funding Managing, marketing and communications Voluntary sector research and policy Performance improvement For more information about the complete range of NCVO titles, go to or phone NCVO s HelpDesk free on Members of NCVO receive a 30% discount on all titles, and membership is free for organisations with an income of less than 10,000 per year. To find out more, go to or ring our Membership team on The data used to compile this publication has been provided to us by GuideStar UK, the UK s most comprehensive on-line encyclopedia of charities at Published by NCVO Regent s Wharf, 8 All Saints Street, London N1 9RL First published 2000 This edition published 2007 NCVO 2007 Registered Charity Number: All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of NCVO. Edited by Jane Carroll Design by NCVO Printed by Latimer Trend British Library Cataloguing in Public Data A catalogue record for this book is available from the British Library ISBN: Guidestar ( and ONS ( data, where used, is subject to copyright and should not be reproduced without the permission of the relevant organisation. Every effort has been made by NCVO to ensure the accuracy of the information contained within this publication. However, NCVO cannot be held responsible for any action an individual or organisation takes, or fails to take, as a result of this information.

5 Contents Contents Foreword Sponsor s foreword xi xiii Chapter 1: The UK voluntary sector: an overview 1 Chapter 2: What do we mean by the voluntary sector? Defining criteria The general charities definition Conclusion 9 Chapter 3: The policy context in the nations England Scotland Wales Northern Ireland 17 Chapter 4: The voluntary sector: population and distribution Total numbers Geographical distribution Conclusion 21 Chapter 5: Income Introduction Total and average income The distribution of total income Sources and types of income Voluntary sector income streams Sources of income Types of income Conclusion 39 Chapter 6: Expenditure Introduction Total current expenditure Categories of current expenditure Costs of generating funds 47 iii

6 The UK Voluntary Sector Almanac Charitable expenditure Conclusion 49 Chapter 7: The National Lottery Introduction National Lottery funding distribution and contribution to the sector Policy developments Conclusion 53 Chapter 8: Individual giving Introduction Distribution Causes Methods for giving Donor characteristics Nation/region Conclusion 62 Chapter 9: The paid workforce Introduction Labour Force Survey estimates Nations and regions Employment status Gender and employment status Remuneration and benefits in the voluntary sector Conclusion 67 Chapter 10: Volunteers and trustees Introduction Active community participation Formal volunteering Trustees Conclusion 73 Chapter 11: Assets and liabilities Introduction Definitions 75 iv

7 Contents 11.3 Overview Assets Liabilities Total funds Conclusion 78 Appendix 1: Methodology 81 Appendix 2: Glossary 85 Appendix 3: Acronyms and abbreviations 89 Appendix 4: Further reading 91 Appendix 5: Authors 93 Appendix 6: Acknowledgements 95 v

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9 Tables and figures Tables and figures Chapter 4: Scope and structure of the voluntary sector Table 1: Total number of general charities 20 Table 2: Ratio of general charities to population, by region and country 20 Chapter 5: Income Table 3: Total income by size of organisation ( million) 23 Table 4: Average income by size of organisation ( ) 24 Figure 1: Number of charities moving up income strata Figure 2: Number of charities moving down income strata Figure 3: Net movement of charities between income strata Figure 4: Percentage of organisations and share of income by size of organisation 26 Figure 5: Distribution of general charities share of the sector s income (%) 27 Figure 6: Total income by UK nation and region (%) 28 Table 5: Typology of income types and sources 30 Table 6: Income types and sources, 2004/05 (% of total) 31 Table 7: Income types and sources, 2001/02 (% of total) 32 Figure 7: Sources of income (%) 34 Figure 8: Change in total income by type (%) 35 Figure 9: Sources of earned income (including trading subsidiaries) 36 Figure 10: Sources of voluntary income (including legacies) 37 Table 8: Legacy income by size of organisation 38 Figure 11: Sources of investment income 39 Table 9: Total income by size of organisation ( million) 40 Table 10: Income sources by size of organisation ( million) 40 Table 11: Income types by size of organisation ( million) 41 Table 12: Total income by size of organisation (% of total incoming resources) 41 Table 13: Income sources by size of organisation (% of total incoming resources) 42 Table 14: Income types by size of organisation (% of total incoming resources) 42 vii

10 The UK Voluntary Sector Almanac 2007 Chapter 6: Expenditure Table 15: Total current expenditure by size of organisation ( million) 43 Figure 12: Percentage of organisations and share of total current expenditure by size of organisation 44 Table 16: Average current expenditure by size of organisation 44 Table 17: Total current expenditure as a proportion of total income (%) 45 Figure 13: Categories of total current expenditure (%) 46 Figure 14: Categories of total current expenditure by year 46 Table 18: Breakdown of current expenditure by size of organisation ( million) 49 Table 19: Breakdown of current expenditure by size of organisation, (%) 50 Chapter 7: The National Lottery Figure 15: National Lottery good causes funding distribution (%) 51 Figure 16: National Lottery s contribution to total income by size of organisation (%) 52 Chapter 8: Individual giving Table 20: The mean and median amounts given to charity (to the nearest ) 55 Figure 17: Amount given each month ( ) 56 Figure 18: Donor population and total amount given, by gift size 56 Figure 19: Proportion of population giving to each cause, % 57 Figure 20: Share of total amount given by cause, % 58 Table 21: Relative popularity of different giving mechanisms 58 Figure 21: Use of Gift Aid by size of average monthly gift (% of donors) 59 Table 22: Giving patterns by gender and income band 60 Table 23: Amount given per person, raw amount and as a percentage of income 60 Table 24: Giving data by age band 61 Figure 22: Amount given in 2004/05 and 2005/06 in an average month per donor by age band 61 Table 25: Average monthly giving by region and nation of UK 62 Chapter 9: The paid workforce Table 26: Total UK workforce by sector (headcount, thousands) 63 Table 27: Total UK workforce by sector (FTEs, thousands) 64 Table 28: Private, public and voluntary sector workforce by region and nation (headcount, thousands) 64 Table 29: Voluntary sector workforce by employment status (headcount, thousands) 65 Table 30: Full-time and part-time employment status by sector, 2005 (headcount, %) 65 viii

11 Tables and figures Figure 23: Private, public and voluntary sector employment by gender (headcount, %) 66 Table 31: Voluntary sector employment by gender and employment status (headcount, %) 66 Table 32: Average basic annual salary and total annual earnings ( ) 67 Chapter 10: Volunteers and trustees Figure 24: Participation in voluntary and community activities by type of activity (%) 70 Figure 25: Participation in voluntary and community activities by type of activity (at least once a year) (%) 70 Table 33: Types of formal volunteering undertaken at least once in the last 12 months (%) 71 Chapter 11: Assets and liabilities Table 34: Total assets, liabilities and funds ( million) 76 Table 35: Funds expressed as number of years operating costs 77 Table 36: Assets, liabilities and funds by size of organisation ( million) 79 Table 37: Breakdown of liabilities by size of organisation ( million) 79 Table 38: Breakdown of assets by size of organisation (as a % of total assets) 80 Table 39: Breakdown of liabilities by size of organisation (%) 80 Table 40: Breakdown of funds by size of organisation (%) 80 Appendix 1: Methodology Table 41: General charities population and sample, England and Wales 81 ix

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13 Foreword Ed Miliband MP The NCVO Almanac continues to be the sector s most important reference book and it is a privilege for me as the minister for the third sector to have the chance to contribute this foreword. William Beveridge wrote in his pamphlet, Voluntary Action, of the driving power of social conscience that he saw in the sector. Today it is as true as ever. I have seen it at first hand from the many inspiring people I have met. But what I have also learnt during my time as a minister is that this inspiration can be expressed in a variety of ways, as the Almanac reflects. And we should, I believe, celebrate both the diversity of organisations within the sector from the largest social enterprise to the smallest community group and the range of activity from public service delivery to advocacy and campaigning. Government does not create the creativity and dynamism that we see reflected across the sector. But we can help or hinder it. My aim is that we enable the sector to flourish in all its diversity. In my view, that requires us to see government and sector as partners not rivals. What does this mean in practice? foreword First, while individual giving has an essential place in helping charities to flourish and has grown since 1997, government funding must also play its part. I am proud of the fact that government funding for the work of the sector has significantly increased. Second, the Almanac demonstrates the importance and vibrancy of the smallest charities and community groups which do so much to build the civic life of our neighbourhoods. Many of them are very small organisations and we need to help ensure that there is grant funding available for them to continue to do their work. We also need to recognise the dynamism and creativity that can be unleashed when community groups can control and own local assets. Third, as we rightly praise small organisations relying on grant funding, we should also be proud of the role played by large and small organisations in contributing to public services. The genius of the sector is its ability to engage the user and we need to provide opportunities for those organisations that wish to do so, to use that genius to help deliver transformative public services. Fourth, we should never forget that all parts of the sector, because of their closeness to the user, are powerful advocates for change in government policy and public attitudes. Many of the most important changes of the last decade from debt relief to environmental protection have happened because of the powerful advocacy of the sector. We must defend and celebrate this right to campaign. xi

14 The UK Voluntary Sector Almanac 2007 Finally, we should build partnership on the most solid evidence and this Almanac shows how important that is for informing our work. Since the first edition 11 years ago, NCVO has been able to chart the changing shape and size of the sector, and demonstrate not just the successes but the areas of challenge. I look forward to the Almanac being widely used and helping to build understanding and knowledge of the sector s work. It is a privilege to be part of the mission of fairness and justice which the sector represents and to which this Almanac testifies. Ed Miliband is the minister for the third sector in the Cabinet Office xii

15 Sponsor s foreword Sponsor s foreword Rathbones is privileged to write this foreword to the UK Voluntary Sector Almanac 2007 since our involvement with this sector has spanned over 100 years. At the beginning of the last century members of the Rathbone family were involved with the voluntary sector through activities such as the pioneering of district nursing, as we know it today, and the creation of Liverpool University. Today the company specialises in the management of 1 billion of charitable funds for a broad spectrum of activities. Managing investments is only one part of the business of helping the third sector. Increasingly trustees are looking to professionals to help guide them through the maze of investment jargon and actually help them to understand the plethora of investment options which are now available. Alternative investments such as structured products, private equity and hedge funds are being actively considered and incorporated into charity portfolios and whilst short-term income needs are of course paramount, the compendium provides invaluable information on the necessity for longer-term capital appreciation without which future income could be prejudiced. Many of Rathbones initiatives with the voluntary sector involve other professional firms such as lawyers and accountants with whom we have close professional links. Such firms can no longer work in isolation of each other as a rounded knowledge of the key issues affecting individual voluntary organisations, and indeed their sectors, is a pre-requisite to the provision of a personal service. The UK Voluntary Sector Almanac 2007 is an ideal reference guide for all those professionals who are involved with the voluntary sector. sponsor s foreword xiii

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17 The UK voluntary sector: an overview Chapter 1 The UK voluntary sector: an overview The continued overall growth of the UK voluntary sector as a whole is still very much in evidence, but this has not been across the board. The operating environment is mixed, with strong public support and relations with the state set against higher interest rates and an increasingly competitive market. This summary outlines how this environment has affected organisations differently depending on their size. 1 The long-term expansion of the sector is still in evidence There has been an increase in active general charities in the UK from 98,000 in 1991 to 164,500 in More recently, since 2000, the sector has seen a net increase of 23,000 organisations. More accurate estimates of moribund charities have caused a dip of 5,000 on last year s Almanac figures. While some of this growth inevitably reflects more accurate public registers, it is clear that real growth is significant. The number of large charities has doubled A 40% increase in the number of general charities since 1995 masks a much bigger increase in the number of large charities. Those with incomes of over 1 million have doubled in number in the last decade, as a result of both organic growth (small charities getting bigger) and the inclusion of new entrants that begin life with significant resources. While some of these new entrants reflect significant new resources coming into the sector (such as new charitable foundations) others reflect the charitisation of the public sector. The voluntary sector s income is rising The sector s total income was 27.7 billion in 2004/05, an increase of just over 800 million from 2003/04. However, the total amount generated by organisations with incomes of up to 10 million actually fell, leaving only the income stratum above 10 million with a rise in total income. This highlights the fact that an increased share of money is going to a small group of the very largest charities. but most individual organisations incomes are again falling Our evidence shows that average incomes for organisations up to 10 million fell, leaving only those charities over 10 million with average increases. The fall in the average income of organisations in the 100,000 to 1 million band between 2001/02 and 2004/05 was over 32,000 equivalent to a member of staff while the fall in the 1 million to 10 million band was over 200,000. Of course, within this there will be winners and losers at all levels. 1

18 The UK Voluntary Sector Almanac 2007 Overall, average income for the whole sector increased from 158,983 to 168,195, owing to a greater number of organisations in the bigger income bands. However, increasing competition for resources, in part due to the expansion in the number of charities, is clearly affecting large parts of the sector. Volatility of income is a problem Charities incomes are highly volatile, with over 10% of charities moving up or down an income band between 2003/04 and 2004/05. This makes medium- and long-term financial planning difficult, a key barrier to better use of financial resources, and highlights the need for longer contracts to counteract this. Large organisations account for a greater share of income The sector s income continues to be heavily concentrated in a relatively small number of organisations. Over 70% of total income is now generated by just 2% of the sector. These organisations are likely to increasingly shape public perception of the sector as a whole, while being responsible for a growing proportion of charitable activities delivered by the sector. At the other end of the scale, the vast majority (86.8%) of organisations have incomes of less than 100,000 and generate less than 7% of the sector s income. These organisations are usually local or regional in outlook and rely on the local area for most of their funding. Social enterprise is driving the voluntary sector economy Voluntary income continues to distinguish the charitable sector from other sectors, though it is now the case that earned income is edging ahead in the funding mix. The sector now generates 13.3 billion of earned income and 12.2 billion of voluntary income. The balance is made up by returns on investments of 2.2 billion, including dividends and interest payments. The sector is steadily earning more of its income 48% in 2004/05 compared with 33% in 1994/95 while voluntary income has fallen slightly in importance over time, from 47% in 1994/95 to 44% in 2004/05. This is due to faster growth in earned income rather than any fall in voluntary income. Investment income share dividends and interest on savings has consistently been less important in the funding mix in recent years (8% in 2004/05 compared with 20% in 1994/95). This reflects lower returns on investment, partly because of tax changes, but it could also be due to a number of other reasons such as pressures on pension funds or growing financial caution on the part of trustees. 2

19 The UK voluntary sector: an overview as are statutory income sources The expanding role of the voluntary and community sector in the delivery of public services has translated into an increasing transfer of resources from the statutory to the voluntary sector. Income from statutory sources (including overseas governments) was 10.2 billion in 2004/05, with an additional 500 million from the National Lottery. This is 820 million more than income from individuals. The split between fee and grant income from statutory organisations has tipped decisively towards fee income, which is now 62% of statutory income. Although this split can often be artificial, if correct it illustrates a long-term shift from grants to contracts. 1 Income from individuals, however, is tipping the other way. In 2001/02, 55% of income from individuals was in the form of grants and donations (excluding legacies) whereas in 2004/05 this increased to two-thirds (66%). The sector is becoming more efficient The sector had operating expenditures of 25.1 billion in 2004/05, a decrease of 1.3% compared with 2003/04. This represented 90.7% of income, a more conservative stance than in recent years, though it could be that the sector is investing more in capital assets such as buildings. Expenditure on charitable activities continues to account for the largest proportion of expenditure. If grant-making is added, our data show that 84% of the sector s expenditure is spent on the direct delivery of mission. The balance, 16%, is spent on fundraising, management and administration. Expenditure on charitable activities (including grants) increased by 135 million from the year before, whereas expenditure on fundraising, management and administration fell by just over 450 million. This points to the increasing efficiency of the sector. In 2001/02 every 1 spent on generating funds corresponded with 9.56 in income whereas in 2004/05 every 1 spent on generating funds corresponded with in income, again highlighting the sector s increasing efficiency. Charitable giving is widespread among the public Figures from UK Giving 2005/06, published in 2007 by NCVO and Charities Aid Foundation, show that almost three-fifths (57.6%) of the UK adult population give to charity in a typical month, giving an average of 15 a month for the UK adult population as a whole. This amounts to 89 billion over the year in total, at least maintaining 2004/05 levels. 3

20 The UK Voluntary Sector Almanac 2007 Medical research attracts more donors than any other cause and is supported by 40% of donors. The other most popular causes were young people s causes and hospitals and hospices, which attracted 25% and 24% of donors respectively. The number of paid employees continues to increase Evidence from the UK Labour Force Survey indicates that the sector employed 611,000 people in 2005, an increase of 128,000 people since This represents a growth of over 26%, double the growth in public sector employees and more than double the growth of private sector employees, highlighting the increasing importance of the sector. The sector now equates to 2.2% of the overall paid workforce. Total employment can also be expressed as full-time equivalents (FTEs), a more accurate indicator of the workforce capacity. The sector now employs an estimated 486,000 FTE paid staff, an increase of over 100,000 since This is a smaller increase than that for total headcount, a reflection of the significant role of part-time work in the sector. with part-time working still a distinctive feature of the sector The sector s fastest employment growth between 2000 and 2005 has been in full-time working, reversing the trend of the previous five years. Between 1995 and 2000, part-time staff increased by 6,000 more than full-time staff whereas between 2000 and 2005 full-time staff increased by 19,000 more than part-time staff. The 39% of the voluntary sector workforce currently employed on a part-time basis is still considerably higher than 29% for the public sector and only 23% for the private sector. It is possible that staff (the majority of whom are women) are attracted to the voluntary sector by the flexible working hours that can contribute to a healthy work life balance. Formal volunteering is slowly increasing Volunteer input continues to underpin the sector. The 2005 Home Office Citizenship Survey (HOCS) estimates that 44% of the population of England and Wales volunteered formally at least once in the last 12 months, up from 39% in There is a large difference between the number of people who have participated at least once in the last 12 months and those displaying a regular monthly commitment. For the UK adult population as a whole, 21.4 million people formally volunteered at least once a year and 14.1 million formally volunteered at least once a month. This highlights the UK s culture of volunteering. with formal volunteers equating to double the paid workforce An estimated 1.2 million full-time UK workers would be needed to replace formal volunteers, well over twice the number of full-time equivalent paid employees in the voluntary sector. This would be at a cost of approximately 27.5 billion (based on the national average wage), demonstrating the continuing role of volunteering in underpinning the sector. 4

21 The UK voluntary sector: an overview In 2003, 54% of formal volunteers in England and Wales reported that they helped to organise or run an activity or event, highlighting the social nature of volunteering. The value of total assets has risen The value of the sector s net assets has risen to 78 billion in 2004/05 from 68.3 billion the year before. This is equivalent to 3.1 years expenditure, a slight increase from 2.7 years' in 2003/04. It should be noted that approximately 25% of the total funds are tied up in fixed assets and are therefore not available for immediate use or liquidation. Looking ahead: the sector in the second half of the decade Greater political uncertainty, rising interest rates, more emphasis on delivery of public services, the drive to increase and embed active citizenship and the severe competition for resources make for an uncertain future for the sector. 1 There is no cause to be unduly pessimistic, however: charities retain widespread public and political support and the sector is still drawing in income over and above the rate of inflation. Renewed regulatory and development infrastructures are also building sector and organisational capacity. The Comprehensive Spending Review 2007, due for publication this autumn, will set the parameters for public spending for three years from 2008 until This will be key in setting out the government s view of the financial relationship between the state and the sector, for example in public service delivery. Charities need to be ready to respond to the outcomes of this review. 5

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23 What do we mean by the voluntary sector? Chapter 2 What do we mean by the voluntary sector? 2.1 Defining criteria Because of its remarkable diversity, defining the voluntary sector has never been easy and there is no universally agreed definition of the voluntary sector in the UK. Although the term voluntary and community sector (VCS) has been increasingly used, it has been criticised by some as being too broad and by others as too narrow. The inception of the Office of the Third Sector has increased usage of third sector, though again there is little consensus over an operational definition, let alone whether or not we are the third sector. 2 The number of organisations included or excluded as a result of the particular definition used can be large. These definitions are based primarily on a number of criteria that describe different aspects of an organisation: its aims, its way of working and its relationship with other organisations and institutions. Depending on the definition employed, organised voluntary action will meet several or all of the following criteria: Formality People and their activities have a structured organisational form. This may take the form of a constitution or a formal set of rules. Any definition using this attribute will exclude large numbers of informal, community-based activities and temporary forms of activity. Independence Organisations are constitutionally and institutionally separate from the statutory and private sectors. This would exclude organisations that in National Accounts terms belong to general government, such as higher education establishments and registered charities that are also non-departmental public bodies (NDPBs) or quasi non-governmental organisations (quangos) such as the British Council. In the case of the Almanac, this criterion is responsible for excluding a significant number of large (over 10 million income) registered charities. Non-profit-distribution Organisations do not distribute profits to shareholders or owners. Although undertaking activities such as trading to generate a surplus is not excluded, proceeds should not be for the personal benefit of any individuals connected with the organisation and should be directed towards achieving the organisation s charitable objectives. This would therefore exclude cooperatives. 7

24 The UK Voluntary Sector Almanac 2007 Self-governance Organisations are truly independent in determining their own course. This would exclude, for example, organisations that are charities within the National Health Service, on the grounds that they are ultimately controlled by a statutory body. Voluntarism There is a meaningful degree of voluntarism in terms of money or time. The donation of time includes that given by trustees. Private benefit versus public benefit Organisations do not exist solely for the benefit of their own members (such as friendly societies, housing associations or independent schools), but have a wider public benefit. This may, however, include certain organisations that mainly benefit a specific group of people or even just their members when the objectives of the organisation provide a function that would otherwise need to be provided from statutory sources (such as disability associations or community transport). Sacramental religious bodies and political parties are often excluded under this criterion. While some consider that their activities are solely for the benefit of their members, others would argue that they have wider public benefit. 2.2 The general charities definition As in previous Almanacs, the general charities definition is used in this edition, which enables the exclusion of organisations that have charitable status but do not satisfy the criteria set out above. For example, NDPBs with charitable status are excluded from the definition on the grounds that they are not independent. The general charities definition is not perfect. It does not include the smallest communitybased organisations that are below the radar and arguably under-reports the number and economic weight of the sector that policy-makers are so interested in. However, the clear limits to the definition enable the production of robust, clearly defined estimates for both numbers of organisations and their economic contribution. For England and Wales, the register of charities maintained by the Charity Commission provides the list from which general charities are selected. Databases maintained by NICVA in Northern Ireland and SCVO in Scotland provide similar source material. A process of removal, using the fixed criteria for exclusion outlined above, produces the general charities population. Although the criteria for inclusion have remained constant, the changing organisational landscape in the UK has meant that a number of large organisations, many of them previously under the control of local authorities, have gained charitable status in recent years. This new floorspace has played its part in the reported growth in previous Almanacs. 8

25 What do we mean by the voluntary sector? 2.3 Conclusion Continuing changes in the landscape between the state, individuals and the private sector mean that traditional definitions are being tested to the limit, while collective nouns such as the VCS are becoming harder to sustain. It will therefore be increasingly important to use a range of definitions based on a common framework. For future editions of the Almanac, that means continuing to report on general charities as the core of our sector, while also reporting on a much broader set of entities that satisfy some, though not all, of the defining characteristics. The 2008 edition of the Almanac will report on this work. 2 9

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27 The policy context in the nations Chapter 3 The policy context in the nations The public policy environment continues to be broadly favourable towards the voluntary and community sector across the UK, despite concerns that the relationship between the state and individual organisations can and does go wrong. The sector remains a partner of choice, to the extent that many of the concerns voiced relate to the close proximity between the sector and the state. Indeed, the increasing preference for charitable bodies as vehicles for statutory services has blurred the boundaries between sectors that some believe should remain distinct. 3 The willingness to collaborate has been matched by resources, and as the analysis in the current edition of the Almanac demonstrates, evidence suggests that over 10 billion each year flows from statutory bodies to the sector. Much of this relates to the role of organisations in delivering public services, though the relationship covers a much wider set of policies and activities. The role of voluntary and community sector organisations (VCOs) in active citizenship and community safety, for example, has been increasingly highlighted in recent years. However, with these opportunities come new challenges. VCOs can play an important role in helping government to achieve specific policy objectives, where these coincide with their mission. But this must not be at the expense of support for the sector s wider contribution to the social, cultural, economic and political life of the UK. This chapter briefly outlines some of the key policy initiatives and issues, and in doing so aims to provide a context for the changes in the voluntary sector economy outlined in later chapters. 3.1 England Government and political parties across the spectrum continue to support both voluntary and community organisations and wider voluntary action. Nevertheless, there are continuing tensions in the sector that goodwill sometimes fails to translate into resources or action, or that any new resources come with significantly greater demands upon organisations. The public policy environment continues to emphasise a greater range and depth of roles and responsibilities for the sector. Perhaps in recognition of these changes, a number of reviews or commissions are taking place or nearing completion. A Treasury-led review of the third sector in the role of social and economic regeneration (see box), a major investigation into the role of the voluntary sector by the Conservatives Social Justice Policy Group, plus reviews by independent bodies into volunteering (The England Volunteering Development Council s Commission on the Future of Volunteering) and broader civil society (Carnegie UK Trust s inquiry into 11

28 The UK Voluntary Sector Almanac 2007 the future of civil society in the UK and Ireland) manifest both interest and concern for the future of the sector and wider voluntary action. In addition, the Commission on Unclaimed Assets is likely to recommend changes that aim to make a material impact on the funding of the voluntary and community sector, while the government s Comprehensive Spending Review 2007 (itself home to the Third Sector Review) is expected to make medium-term spending decisions that will have an impact across central and local government, and on institutions that collaborate right across the voluntary and community sector. Although the numerous reviews and commissions are distinct, there are common themes, including: funding, and the sustainability of the sector, with a greater emphasis on new forms of financing organisations that move beyond the traditional grants/contracts dichotomy; the relationship between organisations and wider voluntarism and the state; the role of organisations in the delivery of public services, and how this fits with other roles such as advocacy; and more fundamental questions regarding the purpose and value of organisations or wider voluntary action. These questions are perhaps the inevitable result of a sector that is changing rapidly, and of a government that is keen on reform across a number of areas, most notably public services. One key reform within government, however, has been institutional, with the creation of an Office of the Third Sector (OTS) within the Cabinet Office and an independent Office of the Compact Commissioner. Perhaps significantly, OTS has brought together both the social enterprise and voluntary and community sector policy functions within government, while the ministerial portfolio for the third sector has also been given greater prominence. OTS aims to deliver its own generic policy programme as well as representing the sector across government. The latter reflects the fact that the sector is affected by policies from a range of central government departments, the more so as its role (both real and intended) has widened. Key policy areas for the sector currently include the following: Public service reform and delivery: This remains the major policy focus for the government, though the increasing number of questions being asked regarding value for money perhaps represents a slight change in emphasis. Tensions continue regarding whether services are simply transferred to the sector, or whether the underlying frameworks for reform and subsequent delivery are put in place to enable transformation. Initiatives also continue to make the market work better, most recently with the publication by OTS of a public services action plan. 12

29 The policy context in the nations Local government reform: It remains the case that most VCOs experience of the state is at the local level, either through local commissioners of services such as primary care trusts (PCTs) or via relationships with local government. Such relationships are hit and miss, and perhaps account for those who disagree with the opening statement in this chapter that the public policy environment is generally conducive to the sector The local government White Paper sets out government thinking in this area, arguing that citizens and communities should have a stronger voice to shape the places where they live and the services that they receive. In making this argument it is positive in its vision of the relationship between local government and the sector. Although it stops short of any obligation to involve the sector in decision making, it clearly sets out the potential role of the sector as a basis for connecting with communities and neighbourhoods, recognising its role as a vehicle for active citizens. 3 Funding and finance: Sustainable (or in some cases, any) funding remains the key issue for many voluntary and community organisations (and in turn policy-makers) particularly in light of the almost inexorable rise in statutory funding as a proportion of the sector s revenue base. At the time of writing, considerable pressure on the public finances is likely to lead to a tight spending review. Another significant pressure is the need to fund part of the London Olympics from the proceeds of the National Lottery, although a commitment has been made by government to preserve the level of funding distributed to the sector. Policy is likely to increasingly look to building existing sources of voluntary income, particularly donations from individuals and business, or to develop new endowment-type arrangements (such as those proposed by the Commission on Unclaimed Assets). At the same time, the social enterprise model is being watched closely, with particular interest in loan finance. This includes interest in financial instruments that either subsidise traditional market models or capacity-building work that enables organisations to bear more market-oriented rates of interest. Underlying all these approaches is a recognition that grants are not always appropriate and that an under-capitalised sector needs to recycle monies where possible in order to make more go further. 3.2 Scotland The May 2007 elections ended a period of unprecedented uncertainty in the national Scottish Parliament. It was also the first time that proportional representation was used for local authority elections. In the lead up to them, there was a moderate increase in interest in the role of the sector, particularly in public services. This was accompanied by considerable reshuffling of Scottish Executive ministers responsible for the voluntary 13

30 The UK Voluntary Sector Almanac 2007 sector, relocation of the unit responsible for voluntary issues and their adoption of the term third sector. New legislation includes a bill for the Protection of Vulnerable Groups, which aims to broaden out previous legislation that focused more specifically on child protection. There has been much concern about the costs of implementing the proposals, particularly the intention to introduce retrospective vetting for volunteers. In March 2007, the Scottish Executive launched its differentiated strategy for supporting social enterprises. This aims to deploy 1.5 million to help raise their profile, open up markets, increase the range of finance available and provide better business support. The development of this strategy has been managed by a dedicated social economy unit established by the Scottish Executive within its agency, Communities Scotland. The agency has also been responsible for managing a Futurebuilders Scotland fund for supporting those organisations that use a businesslike approach to delivering goods or services. However, considerable confusion remains about what differentiates social enterprises from enterprising activity in other voluntary organisations. Scotland s new charity regulator, the Office of the Scottish Charity Regulator (OSCR), has used its first year of operation to establish how it fits into the wider regulatory environment. OSCR has also used this year to consolidate its database of charities and in April 2007 finished purging any charity it had not had contact with. OSCR has experienced some initial teething difficulties around application of the law and maintaining consistency in its decisions; however, this should be resolved once its statutory appeals panel is set up in late In some cases, such as the legal basis for trustee indemnity insurance, OSCR has referred the law back to the Executive to introduce reparatory legislation. Meanwhile, the specific regulatory burdens on various subsectors have increased since 2004, with new care commission standards, requirements concerning disclosure checks, fire safety, food and drink licensing, and planning procedures. The funding environment has seen a number of changes. The reductions in European funding to Scotland due to re-prioritisation towards the new accession states has begun to hit a number of organisations, particularly in rural areas. The Scottish Executive put in place 12 million in transitional funding to help soften the blow but has been criticised for limiting this to large organisations only. The Big Lottery Fund for Scotland became operational in 2006, disbursing an estimated 70 million per year for Scottish good causes. The Fund has developed a proactive and forwardlooking approach, investing in voluntary sector infrastructure as part of its programme. Full-cost recovery remains an area of concern and is associated with the closure of a number of high-profile organisations, at least partly owing to the lack of fully costed service provision. Research commissioned by the Scottish Executive-led Strategic Funding Partnership highlighted the dearth of full-cost recovery based contracts. Commitments to 14

31 The policy context in the nations the principle of full-cost recovery by the Executive and Convention of Scottish Local Authorities have not been followed up with any serious form of implementation, particularly at local level. Scottish civil society returned to the limelight in May 2007 when Glasgow hosted the second in a series of three CIVICUS World Assemblies. Glasgow had also hosted the first of these events in June Third Sector Review: an opportunity and a challenge Liz Atkins, Director of Public Policy, NCVO The Third Sector Review is the largest government consultation ever undertaken about the future role of the sector, involving over a thousand organisations. Much broader than previous reviews, it examined what is needed for the sector to thrive over the next ten years, including issues such as advocacy, volunteering, community cohesion and public service reform. 3 While the Third Sector Review is about much more than funding, it does form part of the government s thinking on the 2007 Comprehensive Spending Review, which sets government spending between 2008 and 2011 and its strategy for the next decade. The high-level involvement of the third sector in this process demonstrates the importance that government places on the relationship, but also throws up new challenges for the sector. In particular, it is widely acknowledged that there are likely to be fewer resources in the next spending round, increasing pressure to achieve more with less. This is an opportunity as well as a challenge for the sector to demonstrate the efficiencies it can achieve, not by being the cheap option but by delivering value for money through different ways of working. For example, voluntary and community organisations are likely to focus on a particular group or community and can often join up service provision from a number of agencies and across governmental boundaries. They might also provide preventive services, such as running a healthy living initiative, that could reduce future calls on the NHS, resulting in savings to the public purse. To appreciate the benefits the sector brings, government must give as much weight to effectiveness as to immediate cost savings in its thinking about efficiency. 15

32 The UK Voluntary Sector Almanac 2007 The review s interim report recognises the need of voluntary and community organisations for a range of funding mechanisms from government, including grants, contracts and investment. But the sector also needs to ensure that it is exploiting the full range of financing options including earned income, development of an asset base, grant funding and loan finance. NCVO has called on the government to make a renewed commitment to the Compact, to better support the third sector s workforce, to engage in sustainable funding practices and to demonstrate in its review stronger appreciation of the campaigning and advocacy work of the sector. It is now time for the government to learn from its experience in the last ten years and to focus on what works. And for the sector to rise to the challenge and to demonstrate that it deserves the trust placed in it by the government and the public. 3.3 Wales The Government of Wales Act 2006 created two legally separate bodies with differing roles. The National Assembly for Wales (the legislature) comprises the 60 Assembly members, and the Welsh Assembly Government (the executive), comprises the Welsh Ministers and Deputy Ministers (including the First Minister) and the Counsel General. It also brought about a number of changes that came into force after the May 2007 Assembly elections. The main alterations are the opportunity for Wales to gain more powers from Westminster and an enhanced scrutiny role for Assembly members, who will spend more time examining legislation and government policy. The statutory duty to promote the interests of the voluntary sector (through the Voluntary Sector Scheme) is transferred to the Assembly Government only. Following the independent review in 2004, the Voluntary Sector Scheme s strategic action plan is in draft form. Its preparation has provided a valuable opportunity to examine the contribution being made by the voluntary sector to the development of Welsh society as a whole and to explore how this contribution could be enhanced through closer alignment with the Assembly Government s strategic objectives. The strategy explicitly recognises the link between active citizenship and volunteering by empowering citizens as active and influential contributors to the good of society through involvement in the third sector. The document presents a vision for the Assembly Government s future work with the sector with a focus on promoting and supporting volunteering; increasing citizen voice; and harnessing and supporting the sector s distinctive strengths in order to transform the responsiveness and reach of public services. It 16

33 The policy context in the nations proposes an Assembly Government Third Sector Unit and challenges funders to become more community development oriented and to support capacity-building. The strategy has evolved in the context of the developing policy for improved public services. Making the Connections Delivering beyond Boundaries is the Welsh Assembly Government s response to the Beecham review. Through this, local service organisations will begin setting up Local Service Boards (LSBs) in 2007/08. These will grow out of the existing community strategy partnerships but will focus on action and joint delivery as well as joint planning. Work will start, initially in a small number of local areas, to develop Local Service Agreements between the LSBs and the Welsh Assembly Government. Ministers will sign off local service agreements and Assembly Government officials will serve on the boards. The Wales Spatial Plan, which involves regional partnerships integrating environmental, social and economic planning and chaired by ministers, has continued to develop. The plan s regional programmes of work have begun linking with national strategies such as the transport strategy, the environment strategy and the coastal tourism strategy as well as regional projects. 3 The European Structural Fund programmes are coming into being, with major changes in the delivery mechanisms in Wales aiming to strengthen the strategic delivery of the programmes. Strategic frameworks, led by Welsh Assembly Government departments, have been introduced. The Wales Spatial Plan leads on three frameworks to be developed at the regional partnership level, linking with planning and the environment. In response the voluntary sector is organising itself into national or regional consortia able to deliver elements of the Frameworks where the sector feels best placed to contribute to programme delivery, such as community economic development, increasing employment and tackling economic inactivity. 3.4 Northern Ireland For Northern Ireland, 2007 will be a landmark year in terms of charity legislation, with the passing into law of the new Northern Ireland Charities Order and the formation of the Charity Commission for Northern Ireland. To date, voluntary and community organisations in Northern Ireland have operated under very arcane charity legislation and these developments will bring Northern Ireland into line with the rest of the UK. It is envisaged that the first register of charities in Northern Ireland will be operational by the end of Positive Steps (the government s response to Investing Together, the report of the task force on resourcing the voluntary and community sector) is nearing the end of its two-year implementation phase. So far, much of this process has been in the background and many in the voluntary and community sector have wondered what its impact has been. 17

34 The UK Voluntary Sector Almanac 2007 Nevertheless a review of support services for voluntary and community organisations has been conducted. A support services strategy will be published some time in 2007 and has the potential to have long-lasting implications for those organisations that currently deliver services to other voluntary and community organisations. In the broader context, at the time of writing the political future of Northern Ireland is still uncertain. The elections for the Assembly were held in March but there is still no indication that power sharing will become a reality. The return of the Assembly is seen by all sections of Northern Irish society as an important step towards a normalised political environment. The recent election has seen the language of bread and butter policy issues supersede the old, entrenched constitutional debate that has characterised Northern Irish politics for decades. Nevertheless, voting appears to have taken place along the usual constitutional lines. An important recent step towards normal politics was the publication of a long awaited Anti- Poverty Strategy. The voluntary and community sector conducted a concerted campaign to ensure that any policy developed by government was robust and effective. It remains to be seen if the new Anti-Poverty Strategy will achieve all of its targets but it has been a prime example of the collective voluntary and community sector challenging government. The Review of Public Administration remains a widely discussed issue in Northern Ireland, with many seasoned commentators unsure how great the impact will be on the voluntary and community sector. However, it is clear that the sector s relationship with central and local government will change in 2009 in key areas such as the delivery of public services and community planning. Despite massive improvements in Northern Ireland over the last decade, sectarianism and its impact on day-to-day life is still very much in existence, if not necessarily discussed openly. The government has published A Shared Future, accompanied by the first draft Triennial Action Plan, both of which have been broadly welcomed. Sectarianism and racism are problems found at every level of society across Northern Ireland. The policy document recognises for the first time the seriousness of this as a policy challenge, but it is weak in many areas. There is also frustration that full implementation of the Shared Future policy seems to be awaiting political progress. A few years behind other parts of the UK, the publication of the Northern Ireland Sustainable Development Strategy has been welcomed and many demands of the voluntary and community sector have been included within it. There is a strong desire to see First Steps towards Sustainability fully implemented across all sectors of society. Alongside this, calls for an independent Environmental Protection Agency for Northern Ireland are finally being heeded and a review of environmental governance has taken place. 18

35 The voluntary sector: population and distribution Chapter 4 The voluntary sector: population and distribution This chapter summarises the distribution and total number of general charities in the UK. It also includes a brief analysis of the growth in the number of general charities. The analysis in this section is based on the definitional framework outlined in Chapter 2 and in doing so provides the operational definition for the financial indicators laid out in later sections of the Almanac. The general charities definition is a pragmatic one: it recognises that the Charity Commission s register of charities provides the basis for estimating the size of the sector in England and Wales, while estimates for Scotland and Northern Ireland are based on databases maintained by SCVO and NICVA. In all cases, the general charities definition and subsequently the numbers below is a subset of the known universe of voluntary organisations and of organisations with charitable status, for reasons laid out already. Therefore, the UK-wide numbers reported below are lower than those reported by the Charity Commission for England and Wales. Neither is wrong they simply report on a different set of entities Total numbers As of 31 March 2005 there were 164,415 active general charities in the UK. 1 This is a significant increase on previous estimates of 120,000 roughly ten years ago in 1994/95 and 98,000 in 1990/91. The increase represents a real growth in the number of general charities although, inevitably, improved administration of the public register of charities and other databases will have had some impact on reported numbers. More recently, the 2006 Almanac gave a total of 169,247 charities. The reduction in the number of charities between this year and last year is due to methodological issues rather than a fall in the number of charities. Whereas the 2006 Almanac looked at all general charities up to July 2005 to get a population figure, yet used financial data from the 2003/04 financial year, this year s Almanac uses both population and financial figures for the 2004/05 financial year. Therefore this excludes the 1,184 charities registered between April and July 2005, after the end of the 2004/05 financial year. The remainder of the difference is due to the removal from the Charity Commission of charities that were closed or merged during the 2004/05 financial year. Normally this would be counterbalanced by newly registered charities, but as they were already included in last year s figures, this change has not been recorded. 1 These estimates exclude the subsidiaries and branches of main charities. 19

36 The UK Voluntary Sector Almanac 2007 The total numbers of general charities by income band for this year and last year are shown in Table 1. Table 1: Total number of general charities Under 10k 10k- 100k 100k- 1m 1m- 10m Over 10m Total 2006 almanac 95,570 51,394 19,064 2, , almanac 96,032 46,709 18,345 3, ,415 Difference 462-4, ,832 Change (%) Source: NCVO, GuideStar UK 4.2 Geographical distribution The distribution of general charities unsurprisingly correlates roughly with the UK s population (Table 2). Table 2: Ratio of general charities to population, by region and country Region General Charities Adult population (000) General Charities per 1000 population London 20,080 6, South East 23,683 6, South West 17,145 4, East of England 16,096 4, East Midlands 10,712 3, West Midlands 11,575 4, Yorkshire and The Humber 10,129 4, North East 4,374 2, North West 12,712 5, England 126,506 40, Scotland 25,963 4, Wales 7,377 2, Northern Ireland 4,569 1, UK 164,415 48, Source: NCVO, GuideStar UK In 2005, just over three-quarters of general charities were based in England, with more than a quarter based in London and the South East, a reflection of the fact that so many charities choose to have their head offices in or around London. England also has a disproportionate share of the largest general charities, which is again a reflection of the location of many national charities head offices. The impact on the distribution of total income is discussed in Chapter 5. 20

37 The voluntary sector: population and distribution 4.3 Conclusion During 2004/05, only charities with an income of over 1,000 a year were required to register with the Charity Commission. Therefore there are large numbers of voluntary and community organisations that are missing from our analysis. This will become a greater issue in the future as the threshold to register has now risen to an income of at least 5,000. Furthermore the General Charities definition is narrower than most people s perceptions of the voluntary and community sector. Widening the inclusion criteria would increase the numbers of charities in every income stratum, not simply those community-based organisations that are most numerous. Nevertheless, the organisations encompassed by the general charities definition work across a broad range of functions and areas, to the benefit of a wide variety of communities. The resources used to undertake these charitable objectives are the focus of the remainder of the Almanac. 4 21

38 The UK Voluntary Sector Almanac

39 Income Chapter 5 Income 5.1 Introduction This chapter covers the sources, types and total amount of income flowing into the UK voluntary sector. However, in such a diverse and rapidly changing environment this overview cannot capture the full picture of what is happening beneath the surface: inevitably the averages and cumulative totals disguise a range of experiences. Large established organisations are gaining charitable status, thereby adding significant sums to the sector s income, while the different sub-sectors experience distinct financial pressures, as do differently sized charities. The changing funding environment is having an impact on various parts of the voluntary and community sector in different ways. The data presented are for the financial year 2004/05, the latest available. Where possible, we have made comparisons with earlier years. All figures have been adjusted for inflation and are expressed in 2004/05 prices in order to show real change Total and average income The total income of the sector was 27.7 billion in 2004/05, a 2.8% real increase on last year s overall total of 26.9 billion (Table 3). Table 3: Total income by size of organisation, 2001/ /05 ( million) Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m Total 2001/ , , , , , / , , , , , / , , , , ,653.7 Change since previous year ( million) , Change since previous year (%) -10.7% -9.2% -7.8% -0.1% 13.6% 2.8% Source: NCVO, GuideStar UK Although total income increased between 2003/04 and 2004/05, our evidence suggests, even more starkly than in previous years, that all but the biggest general charities are struggling to maintain income levels. When those charities with incomes over 10 million are left aside, the total amount generated by organisations actually fell by 678 million in total. This points to the continuing increase in the concentration of wealth in the very largest charities. Inevitably some of the falling income in the lower bands reflects larger organisations moving 23

40 The UK Voluntary Sector Almanac 2007 up into the next income band, but this is not sufficient to explain the falls we have recorded. In other words, a net increase of 28 charities with incomes of more than 10 million does not account for a cumulative increase in income of 1,424 million. As already noted in Chapter 4, the number of general charities in our analysis fell by almost 5,000 between 2003/04 and 2004/05, mostly in the 10, ,000 income band. Even taking this into account, this again does not adequately explain the falls in income we have recorded and therefore the explanation lies in an examination of average incomes. This suggests that, apart from the largest charities, the average turnover in most income bands fell over the year (Table 4). Table 4: Average income by size of organisation, 2000/ /05 ( ) Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m Total 2001/02 3,393 38, ,406 2,977,388 37,096, , /04 3,189 34, ,438 2,850,956 36,071, , /05 2,835 34, ,224 2,769,190 37,491, ,195 Source: NCVO, GuideStar UK Despite the fall in average size in most income bands, the average income across all charities rose. This could be due to the increase in size of the largest charities, but also may be due to the movement of charities between income bands if all the largest charities in a band increase their income and so move up a band, their original band s average will fall as the largest contributors have moved out. Likewise their new band s average will fall as they add to the number of smaller organisations in the new band. Therefore it is useful to look at the movement between bands, shown in Figures 1-3. Over 10% (10.3%) of charities moved between income bands in the last year. As Figures 1 and 2 show, there are large movements both up and down income strata and this is not slanted in any particular direction (Figure 3). This high volatility must have an impact on the sector and underlines anecdotal evidence that one of the major problems charities face is unpredictable income flows, which inhibits proper financial planning for the future. Income is usually given as a measure of both the size of the sector and of individual charities within it. Given this volatility, expenditure should perhaps be used as a better indicator of size as it is less prone to erratic changes between years. 24

41 Income Figure 1: Number of charities moving up income strata 2003/ /05 Over 10m Over 10m ,223 4,298 1m - 10m 100k- 1m 10k - 100k Under 10k m - 10m 100k- 1m 10k - 100k Under 10k 7 Source: NCVO, GuideStar UK Figure 2: Number of charities moving down income strata, 2003/ /05 Over 10m Over 10m 11 1m - 10m 6 1m - 10m k- 1m k- 1m k - 100k 1,106 10k - 100k 6,520 Under 10k Under 10k 6 5 Source: NCVO, GuideStar UK Figure 3: Net movement of charities between income strata, 2003/ /05 1 Over 10m Over 10m ,222 1m - 10m 100k- 1m 10k - 100k Under 10k m - 10m 100k- 1m 10k - 100k Under 10k 1 Source: NCVO, GuideStar UK 1 Note that the aggregate of these figures differs from Table 1 owing to new charities being created or charities becoming moribund, which would not show up on movement between bands. 25

42 The UK Voluntary Sector Almanac 2007 The largest changes in the size of organisations are often for a variety of reasons that have little to do with natural growth or decay. Current charity accounting best practice guidelines (the Charity Commission s Statement of Recommended Practice SORP) state that, when a charity is set up with a substantial endowment, it should put the entire amount as income in the first year. This is likely to be the only year when the charity has income of that magnitude and therefore registers a substantial fall the following year. Conversely, substantial charities may have been set up towards the end of the financial year and therefore registered only a small income in the first year. When the charity is up and running properly the following year it leaps up the income strata, even though this is merely a function of when the charity was set up. 5.3 The distribution of total income As the previous section highlighted, income is unevenly distributed between organisations. The sector s income continues to be heavily concentrated in a relatively small number of organisations, as illustrated in Figure 4. Over 70% of the total income is generated by under 3,500 organisations, just 2% of the sector. Most starkly, there is a small group of what might be called major charities : 18 organisations, mostly household name brands, with an annual income of over 100 million. Together they generate one-eighth of the sector s entire income. These organisations have been particularly successful in either securing public donations and legacies or delivering public services under contract to government. Some have managed both. Examples include Cancer Research UK, The National Trust and Barnardo s. At the other end of the scale, the vast majority (86.8%) of organisations have incomes of less than 100,000 and generate less than 7% of the sector s total income. Figure 4: Percentage of organisations and share of income by size of organisation, 2004/05 Share of total (%) Income 2004/05 General charities 2004/ Under 10k 10k- 100k 100k- 1m 1m- 10m Over 10m Source: NCVO, GuideStar UK 26

43 Income These findings continue the trend in the concentration of resources at the top end of the sector (Figure 5). This is due to both rising average income and an increasing number of organisations in this group. Compared with previous years, all remaining income bands saw their share of total income edge downwards. Figure 5: Distribution of general charities share of the sector s income, /05 (%) Share of total (%) Income 1991 Income 1994/95 Income 2003/04 Income 2004/ under 100k 100-1m 1m- 10m Over 10m Source: NCVO, GuideStar UK The geographical distribution of this income is illustrated in Figure 6. Over three-quarters of UK general charities are based in England, yet they generate 86% of income ( 23 billion). Over 40% of the sector s income is generated by charities based in London despite the fact that only 12% of the UK s charities are located there. This reflects the fact that many organisations with a national remit are located in London, as are many UK headquarters of international organisations. As such, this is an inaccurate picture of the geographical distribution of resources a better indicator may be the distribution of the paid workforce (Chapter 9). 27

44 The UK Voluntary Sector Almanac 2007 Figure 6: Total income by UK nation and region, 2004/05 (%) Income Organisations Source: NCVO, GuideStar UK North East Northern Ireland Wales East Midlands Yorkshire and the Humber East of England West Midlands North West South West Scotland South East London 5.4 Sources and types of income General charities generate income from a variety of sources by undertaking a range of activities. Understanding the relationship between these sources and activities can help understand the changing dynamics of the voluntary sector economy. Income is derived from a range of sources. These are primarily: the general public (excluding payments from charitable foundations set up by individuals); the public sector (government and its agencies in the UK, the European Union and overseas governments); the voluntary sector (such as trusts and grant-making foundations); the private sector (excluding payments from charitable foundations set up by businesses); internal (trading subsidiaries and the proceeds from investments). 28

45 Income Another way to categorise income is by type. They are primarily: voluntary income (income freely given, usually as a grant or donation, for which little or no benefit is received by the donor); earned income from the sales of goods and services (although this may not be at market value), including the gross income of trading subsidiaries; internally generated income (the proceeds generated from investments and cash balances). A typology of income sources and types is displayed in Table 5. Implementing this approach in the analysis of income is not without problems. In particular, the distinction between earned and voluntary income is open to interpretation. For a small proportion of income it has not been possible to identify the source. 5 29

46 The UK Voluntary Sector Almanac 2007 Table 5: Typology of income types and sources Trading subsidiaries present a unique problem using this approach. It is clear that the activities (and resulting income) of trading subsidiaries are not restricted to non-primary purpose trading customers are from all sectors of the economy. Nor do trading subsidiaries simply represent the activities of charity shops. Although the income generated by trading subsidiaries was predominantly earned, a significant minority reported the receipt of donations. Classification was further complicated by the covenanting of surpluses (though not always all profits) to the controlling charity in essence, the charity is receiving a donation. This income has therefore been classified as internally generated (by a subsidiary company) and earned (which reflects the activities undertaken). 30

47 Income 5.5 Voluntary sector income streams Using the approach outlined above, Table 6 illustrates the relative importance of different income streams in 2004/05. Table 6: Income types and sources, 2004/05 (% of total) Source: NCVO, GuideStar UK 5 A sense of how the balance between different income types and sources is changing can be gleaned by comparing the figures with those from 2001/02, illustrated in Table 7. This shows that for income received from individuals, there has been a bigger shift towards voluntary income from earned income while for the public sector the shift is reversed. This is also true for income from other voluntary organisations where earned income has increased rapidly. Overall the shift has been from voluntary to earned income and a small shift from individuals to the public sector, due to faster rising income from the public sector rather than a fall from individuals. Investment returns account for a smaller proportion of incoming resources. Over the longer term, it appears that the role of investment income reached a high point in the mid- 1990s, when returns accounted for 20% of total income. This change is worth further investigation: it could be a function of declining market returns on investment or increasingly risk adverse positions taken by financial directors (and hence lower returns). As the amount of money invested has not declined (see Chapter 11), it cannot be due to reduced investment. 31

48 The UK Voluntary Sector Almanac 2007 Table 7: Income types and sources, 2001/02 (% of total) Source of income Earned income Type of income Voluntary income Investment returns Total General public Public sector Private sector Voluntary sector Internally generated Total Source: NCVO 2004 This continued increase in earned income and a greater reliance on public sector sources is hardly surprising. Strategies for sustainability often emphasise the role of diversified income streams while at the same time central government policy continues to work towards increasing the level of voluntary sector activities in relation to the delivery of public services. The following sections examine these trends in more detail and illustrate how different parts of the sector are changing. Measuring quality in public service provision James Ebdon, Head of Social Protection UK Centre for the Measurement of Government Activity Office for National Statistics Improving performance is a key issue in all sectors of the economy. For public services it is the way to improve delivery to users and also to demonstrate value for money to the tax payer. In general terms we need to know three things to measure performance: inputs the amount of staff, financial or other resources used; quantity in terms of hours of service provided, for example; and quality how good the hour of service or other unit of quantity is. Inputs and quantity are conceptually easy to understand if often difficult to measure in practice. Quality, on the other hand is tricky. For market-priced goods we can 32

49 Income assume that relative prices indicate the relative quality. Public services are more difficult. Not only do we not have price information but the services themselves are increasingly individualised with different packages designed to meet the very different needs of people. Recent developments have moved us towards a solution. As recent White Papers have shown, government and public service regulators have concluded that the way to measure the success of public services is through outcomes. We can measure the success, or the quality, of our services by the changes in welfare of the people receiving them. The Atkinson Review supplies two further key concepts. The first is that measures of quality need to be representative. This means that we cannot rely on a few targets or indicators but instead need a suite of indicators that between them capture the bulk of the quality changes. The second concept is the importance of attribution. To measure the performance of a public service we need to be able to separate out the changes in people s outcomes arising from that service from the changes due to their family, the economy, etc. 5 Creating measures of quality that are representative indicators based on the attributable contribution of a service to outcomes is by no means easy; however, a number of government initiatives are working towards solutions. Many third sector organisations have often claimed that important aspects of their work have been undervalued. These new initiatives provide an opportunity to ensure that, in future, these aspects are included. 5.6 Sources of income There have been areas of both change and continuity in the income mix compared with previous years (Figure 7). Income from statutory sources has continued to increase, reflecting the government s recognition of the growing importance of the sector. Income from the voluntary sector (typically grant-making foundations) has also increased. This increase has not resulted from a growth in voluntary income (which has in fact fallen, suggesting a reduction in grant-making by foundations to charities). Instead, it results from an increase in earned income from other charities. This might suggest that infrastructure charities are offering a greater range of services that other charities wish to use (such as buildings or meeting rooms, a traditional path to earned income). Other suggestions include a greater level of collaboration within the sector (and greater movement of finance as a result), or shifting procurement practices that emphasise trading with other, perhaps relatively green or ethical, non-profits organisations that ultimately recirculate resources within the sector. 33

50 The UK Voluntary Sector Almanac 2007 Internally generated income (either from subsidiaries or investments) has continued to fall, while income from individuals has remained roughly static. However, as the total income of the sector has increased, actual income has increased from this source. Figure 7: Sources of income, 2001/ /05 (%) / / /05 Share of total (%) Individuals Public sector Private sector Voluntary sector Internally generated Source: NCVO, GuideStar UK Income from the private sector fell between 2001/02 and 2003/04 but picked up again last year. This is firmly oriented towards fee income (such as sponsorship), which is almost double voluntary income. This is difficult to explain, though we are aware that the data in relation to corporate giving are likely to under-report payments. Increasing awareness of corporate social responsibility has, paradoxically, made it more difficult to track company giving. This is particularly due to the increased use of in-kind donations from private corporations (employee volunteering, capital gifts, gifts of professional services). The various sources of income are of different relative importance to organisations depending on their size. For example, the general public represent an important source of income for all sizes of organisation, but they represent a progressively bigger proportion of income for larger organisations. For those with incomes over 10 million, individuals provide almost half (46.4%) of income compared with under a quarter (22.3%) for those organisations between 100,000 and 1 million in size. This reflects the fact that larger organisations are able to use their brand status to attract donations from individuals. However, the smallest charities with income under 10,000 reversed this trend, receiving one-third (33.6%) of their income from individuals, perhaps as a result of local support for their causes. 34

51 Income 5.7 Types of income The relative importance of different types of income is shown in Figure 8. Earned income continues to edge upwards while voluntary income continues to edge downwards, following a well-established trend that is mostly driven by statutory sources of income in other words, public service delivery. The first time that earned income generated more than voluntary income was in 2003/04 and it now contributes almost half of the sector s income, 13.3 billion. As mentioned above, this is not surprising given that organisations are being encouraged to think about ways of making their income more sustainable and the strong government interest in engaging the sector in the contracting of public services. It should be noted that the earned income category includes income generated from some activities that might be classified as fundraising; elsewhere in the Almanac this is referred to as purchase giving. For example, the purchase of a raffle or concert ticket is essentially the purchase of an opportunity to take part in an activity. A slightly smaller proportion was made up of grants and donations, amounting to 12.2 billion in 2004/05. Finally, investment returns remain at roughly the same low level as last year, generating 2.1 billion of total income in 2004/05. Investment income does not include proceeds from the disposal of fixed assets (such as investments), which are discussed in Chapter Figure 8: Change in total income by type, 2001/ /05 (%) / / /05 Share of total (%) Earned income Voluntary income Investment income Source: NCVO, GuideStar UK 35

52 The UK Voluntary Sector Almanac 2007 How important are the different types of income to different sizes of organisation? The various types of income are of different relative importance to organisations depending on their size. The smallest charities, those with incomes under 10,000, rely most heavily on earned income (56%) and investment income (21%). Medium-sized organisations with incomes between 100,000 and 1 million receive the greatest percentage of their income from voluntary sources (49.2%), while it is the biggest organisations those with incomes over 10 million that benefit the most from legacies, with these organisations generating one-tenth of their income in this way. This makes sense as it is usually the big brand charities that are able to use their household name status to encourage people to leave a donation in their will Earned income Income is earned from a number of sources through the sale of products and services. For the smallest organisations this might include membership subscriptions for which a benefit is received. For larger organisations it might include payments for consultancy work or sponsorship from the private sector where the purchaser is buying the use of the charitable brand. Sources of earned income are illustrated in Figure 9. The largest single source of the sector s earned income is the public sector ( 6.6 billion), which accounts for almost half of all earned income by the sector. Figure 9: Sources of earned income (including trading subsidiaries), 2004/05 Internally generated 7.7% Voluntary sector 12.6% Individuals 25.0% Private sector 5.2% Public sector 49.5% Source: NCVO, GuideStar UK 36

53 Income In addition to earned income that is directly generated by general charities, income is also generated by separate trading subsidiaries controlled by the parent charity. However, including trading subsidiaries in the analysis is not without problems as the reporting of trading subsidiaries in the parent charity s accounts is frequently poor. Bearing in mind these limitations, our best estimate of the contribution of trading subsidiaries to total incoming resources is 1.02 billion, or 7.7% of the sector s earned income, equivalent to 3.7% of total income Voluntary income Grants, donations and gifts given without expectation of return (i.e. voluntary income) characterise the voluntary sector, even though this form of income has now been overtaken by earned income. The general public continues to be a particularly important source of funding for charities of all sizes from the smallest, which traditionally rely on a local, known base of support, through to the largest general charities, which often rely on high-profile fundraising campaigns and brand-building to pull in donations. Voluntary income from the general public, including legacies, is worth approximately 6.5 billion. 5 Voluntary income from public sector sources (including National Lottery funds) was worth 4.1 billion in 2004/05. Public sector grants were particularly important to mediumsized general charities with incomes of between 100,000 and 1 million, accounting for 21% of their total income. Grants from other voluntary organisations were worth 1.3 billion to general charities in 2004/05. 2 Figure 10: Sources of voluntary income (including legacies), 2004/05 Voluntary sector 10.3% Private sector 3.0% Individuals 53.4% Public sector 33.3% Source: NCVO, GuideStar UK 2 If a figure is sought of total funds entering the sector, this should be discounted as it reflects movement within the sector, as indeed does all income from other charities, whether voluntary or earned. 37

54 The UK Voluntary Sector Almanac 2007 Finally, total gifts and donations from the private sector, worth 371 million, is small in comparison with other sources of income. Medium-sized organisations appear to have the best success in this area, with the smallest organisations faring very badly (Table 13). However, cash giving by the private sector is difficult to track, a situation not helped by the trend towards the establishment of charitable foundations by large businesses. Moreover, the increasing use of non-cash methods of support (such as gifts in kind) and broader forms of corporate social responsibility means that cash giving by businesses is not the entire story Voluntary income from legacies Income from legacies has traditionally been treated as a distinct form of voluntary income. Legacies form a substantial, albeit volatile, income stream worth 1.6 billion to the sector in 2004/05. In terms of both total value and proportion of total income, legacies were disproportionately important to the largest general charities (Table 8). Although charities with incomes of more than 10 million accounted for 43% of total income, they accounted for 72% of legacy income. This group was also particularly reliant on legacies, which accounted for 10% of their total income. Compared with last year, these charities gained a small increase of 1.1% of the legacy income available. All other income bands saw their share of income legacy drop marginally. Table 8: Legacy income by size of organisation, 2004/05 Source: NCVO, GuideStar UK Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m All Total income from legacies ( million) , ,643.1 Legacies as a % of total income Income band s share of total legacies (%) Investment income Investment returns totalling 2.2 billion consisted mainly of interest on deposits (Figure 11). Smaller organisations were particularly reliant on investment income: those with an income of under 10,000 generated over one-fifth (20.7%) of their entire income in this way. This reflects the fact that there are a number of trusts that have considerable long-term stock market holdings but are in the smaller strata as their income is based on returns from investing endowments. These organisations are particularly sensitive to stock market movements. There are also a large number of organisations in this smallest bracket that, owing to their small size, have most of their income as cash in the bank and are therefore relatively sensitive to changes in interest rates. 38

55 Income Figure 11: Sources of investment income, 2004/05 Rent from property 18.3% Dividends etc. 22.4% Interest on deposits 59.3% Source: NCVO, GuideStar UK 5.8 Conclusion At first glance the sector s increasing income seems to be an indicator of healthy growth in the sector. However, this is a reflection of an increase in the higher income bands which masks a decrease in the lower income strata. If this is not ameliorated, it could lead to a narrowing of charitable activities as those smaller and medium-sized charities unable to compete in raising funds have to scale back their charitable activities. Looking at movements between bands, it is clear that the sector suffers from high volatility, which makes long-term financial planning difficult. 5 We are also witnessing the continued shift in the sector s funding mix. Earned income s replacement of voluntary income as the biggest income type reflects changes in the sector as organisations reduce their dependency on donations and grants by finding ways of earning their income. This has gone hand in hand with increased opportunities to bid for public service delivery contracts, with the sector competing for contracts alongside private and public sector bodies. To what degree this represents an addition to the sector rather than a shift within it remains to be seen. 39

56 The UK Voluntary Sector Almanac 2007 Table 9: Total income by size of organisation, 2004/05 ( million) Category Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m Total Individuals , , ,855.8 Public sector (inc NLDs) , , , ,051.8 Voluntary sector ,260.3 Private sector Total voluntary income (ex-legacies) , , , ,538.6 Legacies , ,643.1 Individuals , , ,330.8 Public sector (inc NLDs) , , , ,598.6 Voluntary sector ,672.1 Private sector Total earned income (ex trading subsidiaries) , , , ,297.9 Rent from property Dividends etc ,276.7 Interest on deposits Total investment income ,152.8 Trading subs: gross income ,021.4 Total incoming resources , , , , ,653.7 Source: NCVO, GuideStar UK Table 10: Income sources by size of organisation, 2004/05 ( million) Category Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m Total Individuals , , , ,829.7 Public sector (inc NLDs) , , , ,650.4 Voluntary sector ,932.4 Private sector ,067.1 Internal , ,174.2 Total , , , , ,653.7 Source: NCVO, GuideStar UK 40

57 Income Table 11: Income types by size of organisation, 2004/05 ( million) Source: NCVO, GuideStar UK Table 12: Total income by size of organisation, 2004/05 (% of total incoming resources) 5 Source: NCVO, GuideStar UK 41

58 The UK Voluntary Sector Almanac 2007 Table 13: Income sources by size of organisation, 2004/05 (% of total incoming resources) Source: NCVO, GuideStar UK Table 14: Income types by size of organisation, 2004/05 (% of total incoming resources) Source: NCVO, GuideStar UK 42

59 Expenditure Chapter 6 Expenditure 6.1 Introduction This chapter looks at the voluntary sector s total current expenditure. 1 The data is for the financial year 2004/05, the latest available. Where possible, we have made comparisons with earlier years. All figures have been adjusted for inflation and are expressed in 2004/05 prices to show real change. Finally, we continue to believe that expenditure is a better guide to the operating level of the sector than income. 6.2 Total current expenditure The sector s total current expenditure in 2004/05 was 25 billion (Table 15). This is a slight decrease in expenditure compared with the year before, though a 14.5% increase from three years ago. It is 2.57 billion less than the total income for the year, but these estimates do not take account of capital expenditure (such as equipment or buildings). Table 15: Total current expenditure by size of organisation ( million) 6 Source: NCVO, GuideStar UK There were major differences in expenditure between different sized charities. Those with incomes of less than 1 million decreased their expenditure sharply, while charities between 1 million and 10 million kept their spending roughly static. The largest charities, with income of over 10 million, increased their expenditure by more than 5%. The decisions about where the majority of the money is going in the charitable sector are being concentrated in an ever smaller number of large charities, as Figure 12 shows. 1 All the outgoings of a charity in the financial year, excluding purchases of fixed assets and investments. 43

60 The UK Voluntary Sector Almanac 2007 Figure 12: Percentage of organisations and share of total current expenditure by size of organisation, 2004/ Expenditure 2004/05 General charities 2004/ Share of total (%) Under 10k 10k- 100k 100k- 1m 1m- 10m Over 10m Source: NCVO, GuideStar UK The 2% of charities with an annual income of over 1 million spent over 70% of the sector s outgoing resources. More than 85% of general charities had an income of less than 100,000, but this group accounted for barely 7% of the sector s total current expenditure. As Table 16 shows, average expenditure has fallen in all income strata, which suggests either a lower level of activity or an increase in efficiency. This is true even for the over 10 million pound income stratum, where total expenditure increased, owing to an increasing number of organisations in this stratum. This also explains why the total average expenditure has increased despite a fall in each individual band. Table 16: Average current expenditure by size of organisation Source: NCVO, GuideStar UK 44

61 Expenditure Comparison with income Table 17 shows the relationship between total income and total current expenditure. Expenditure is expressed as a proportion of income, although this analysis does not take into account any purchases of fixed assets (capital expenditure). In 2004/05 organisations spent, on average, 90.7% of their income on operating activities, significantly less than the 94.5% spent the previous year and lower than levels seen even in the 1990s. As total income includes grants or resources received to enable the purchase of fixed assets, it is unsurprising that total income exceeds total current expenditure, and perhaps this reduction is accounted for by charities spending in this area in 2004/05. Conversely, as most of the fall has been in the largest charities with incomes of over 10 million, perhaps these charities have become more prudent and decided to buffer their reserves in the face of future funding uncertainties. Table 17: Total current expenditure as a proportion of total income (%) Under 100k 100k - 1m 1m - 10m Over 10m Total / / / / Source: NCVO, GuideStar UK 6.3 Categories of current expenditure Charity accounting practices, as defined by the SORP, split expenditure into two main categories: the costs associated with generating funds and charitable expenditure. The former applies to all types of income and is not limited to actual fundraising costs. It therefore covers areas such as the costs of trading subsidiaries and investment management charges. This was 2.4 billion or 9.7% of total expenditure in 2004/05. The second category, charitable expenditure, comprises the costs incurred by the charity in meeting its charitable objectives. This category is further broken down into the cost of any grants made, the direct cost of any charitable activities undertaken by the organisation, and the management and administration costs. This was 90.3% of total expenditure, amounting to 22.6 billion. The categories of expenditure are shown in Figure

62 The UK Voluntary Sector Almanac 2007 Figure 13: Categories of total current expenditure, 2004/05 (%) Management and administration 6.0% Total cost of generating funds 9.7% Charitable activities 70.6% Total grants 13.7% Source: NCVO, GuideStar UK Comparison with previous years (Figure 14) shows that organisations have managed to increase their spending on charitable activities while slightly reducing both their back office and fundraising costs, suggesting improved efficiency in the sector. It is particularly worth noting that management and administration is now 6% of expenditure while the cost of generating funds has fallen below 10%. In 2001/02 every 1 spent on generating funds corresponded with 9.56 in income, whereas in 2004/05 every 1 spent on generating funds corresponded with in income. Figure 14: Categories of total current expenditure by year Expenditure (billions) / / / Cost of generating funds Grants Charitable activities Management and administration Source: NCVO, GuideStar UK 46

63 Expenditure 6.4 Costs of generating funds The cost of generating funds can be further broken down into investment management costs, trading subsidiary costs and fundraising and publicity costs. Investment management costs were 86 million in 2004/05, accounting for 0.3% of total expenditure, exactly the same proportion as in 2003/04. Likewise trading subsidiary costs were almost exactly the same proportion as in 2003/04 at 2.8% (compared with 2.7%) or 706 million. These costs can be largely attributed to the established trading subsidiaries of the largest charities, such as charity shops. It is likely to be an underestimate as it appears that some charities have put these costs under fundraising expenditure or have used the net income from trading subsidiaries, rather than splitting the figure into total expenditure and total income. The decrease in expenditure on generating funds from 2003/04 has come through a reduction in expenditure on fundraising and publicity. Charities of all sizes have reduced these costs, accounting for a total reduction of 246 million or 10.0% of total expenditure in this area. However, it still accounted for 67% of activities to generate funds, amounting to 1.6 billion. Don t judge charities on their expenditure alone John Copps, Research Analyst, New Philanthropy Capital 6 New Philanthropy Capital is part of a growing movement towards outcomes analysis of charities. At its core, this means assessing the difference charities make to people s lives, whether it s how good they are at helping someone with mental health problems cope day-to-day; how they improve the experience of terminally ill patients and their families in their final hours or what difference they make in helping children to read and write. But when it comes to judging how effective a charity is, the public seems to be obsessed with expenditure, or perhaps more accurately, certain aspects of expenditure. How much is spent on fundraising? How much does the CEO get paid? How many pennies in each pound does the charity spend on tea bags and paper clips? Of course, looking at how a charity uses its funds is an essential part of analysis. Accounts provide a good overall view of the financial health of an organisation, reveal any major risks and can expose any flagrant abuse of charitable funds. But scrutinising income and expenditure or poring over the balance sheet does not tell half the story. Take fundraising, for example: a common misconception is that the more money spent raising funds, the less effective a charity. But when examined in more detail it is usually the case that the location of a charity, the wealth of the local donor base and the cause it represents are among the biggest influences on the cost of fundraising. Added to this, the fact that fundraising costs are rarely calculated on a consistent basis makes judgements using such measures problematic. 47

64 The UK Voluntary Sector Almanac 2007 Instead, it is measures of impact that will tell you how effective a charity is. How many people with mental health problems find long-term, sustainable work? How many terminally ill patients die at home where they want to die, rather than in hospital? By how much do children s reading scores improve? The focus on expenditure is understandable. Looking at a charity s books is easy, assessing qualitative impacts on people s lives is not. Understanding impacts is what will really tell you whether a charity is effective, and not simplistic financial indicators such as fundraising costs. To be serious about analysing charities, we need to look beyond the numbers. 6.5 Charitable expenditure Activities in furtherance of charitable objects In 2004/05 the sector spent a total of 17.7 billion in furtherance of charitable objects (for example, the delivery of services). This category accounts for around 73% of expenditure for organisations with incomes between 10,000 and 10 million. The smallest organisations with incomes of less than 10,000 spend a greater proportion of their expenditure making grants to achieve their charitable objects while the largest organisations with incomes over 10 million spend more on both grant-making and generating funds (Table 19). Grants to other organisations and individuals Grant-making to both individuals and other organisations is an important feature of the voluntary sector. In order to achieve their charitable aims, general charities spent 3.4 billion in 2004/05 on grants to individuals or other organisations. This represented 13.7% of the sector s total current expenditure. Despite the importance of grants in smaller charities expenditure, it is the larger organisations that spent most in this area. Organisations with incomes over 1 million spent 2.6 billion on grants compared with just less than 800 million spent for organisations with incomes under 1 million (Table 18). Management and administration The final type of charitable expenditure is management and administration costs. Management and administration cost the sector 1.5 billion in 2004/05 (6.0% of the sector s total current expenditure). However, this expenditure varies significantly between different sizes of organisation, with the smallest and largest strata of charities spending significantly less as a proportion of their total expenditure. 48

65 Expenditure The smallest charities are likely to spend less on administration and management as a greater proportion of their staff is made up of volunteers. This includes not only organisations in the community but also grant-making trusts where volunteers meet to decide the disbursement of funds, involving relatively little administration and management. The largest charities use economies of scale to reduce administration and management costs and could sub-contract work, which is recorded as charitable activity even though some of the money given will be spent by the sub-contracted party on administration and management. 6.6 Conclusion The fall in current expenditure by charities is surprising. A number of factors could be driving this caution such as rising interest rates and utility bills, pension scheme deficits and increasing focus on trustee accountability. However, this fall overall has not detracted from funding charitable activities, which increased, pointing to a greater efficiency of resources. Given that in previous years certain parts of the sector spent more than they received in income, this prudence is perhaps wise. Table 18: Breakdown of current expenditure by size of organisation, 2004/05 ( million) 6 Source: NCVO, GuideStar UK 49

66 The UK Voluntary Sector Almanac 2007 Table 19: Breakdown of current expenditure by size of organisation, 2004/05 (%) Source: NCVO, GuideStar UK 50

67 The National Lottery Chapter 7 The National Lottery 7.1 Introduction The National Lottery represents a small but important source of income for the UK voluntary and community sector, providing 1.8% of the sector s total income. The past few years have been turbulent for the National Lottery, with a plethora of policy developments and legal changes resulting from the new National Lottery Act These have included a number of positive wins for the sector but also some concerns as the National Lottery s contribution to the 2012 London Olympics continues to grow. 7.2 National Lottery funding distribution and contribution to the sector According to the National Lottery operator Camelot s annual accounts for the financial year 2004/05, gross ticket sales amounted to 4.77 billion. Over one-quarter ( 1.25 billion) of that total was raised for good causes. Figure 15: National Lottery good causes funding distribution (%) Health, Education and the Environment 33.33% Sport 16.67% 7 Arts 16.67% Source: NCVO, GuideStar UK Charities 16.67% Heritage 16.67% According to charities own financial accounts, National Lottery funding contributed 1.8% ( 492.5m) to general charities income in 2004/2005 (see Chapter 5), broadly similar to the 1.9% reported the previous year. 1 Figure 16 shows the contribution to organisations total income by per cent. It should be noted this could well underestimate funding to the smallest organisations because of difficulties in accurately reporting these grants. 1 This discrepancy between charities reported income from the National Lottery and Camelot s annual accounts is due to the funding of a wider range of organisations than are included in our general charities definition. 51

68 The UK Voluntary Sector Almanac 2007 Figure 16: National Lottery s contribution to total income by size of organisation (%) Share of total (%) Policy developments Under 100k 100k- 1m 1m- 10m 10m All Source: NCVO, GuideStar UK National Lottery Act and the Big Lottery Fund The 2006 National Lottery Act formally created the Big Lottery Fund (BLF) as a legal body and funder in its own right. Of the 28 pence from each 1 Lottery ticket that goes to good causes, half is distributed by the BLF. This new body resulted from a merger of the Community Fund and the New Opportunities Fund. Whereas the Community Fund previously provided funding only for charitable activities, the New Opportunities Fund funded health, education and the environment. After the merger, the board of the BLF pledged that 60-70% of all BLF funding would go towards the third sector, and government has promised to act as guarantor for this. This provides significant protection of National Lottery funding for the voluntary and community sector (VCS). Another protection introduced in the Act safeguards the BLF s independence from government. While the Community Fund was previously expected to take account of policy and funding priorities set by the Secretary of State, the New Opportunities Fund was required to comply with these suggestions. The newly created BLF is expected to take account of funding priorities set by government and thereby maintains the independence to be responsive to bottom-up need. The BLF and some other Lottery distributors are also piloting schemes to increase public involvement in where good causes money is directed. Polls 2 have suggested, however, that any measures to increase public involvement must also improve the public s awareness of where the money to good causes actually goes, in order to avoid an erosion of funding to good causes working in less well-known or less understood areas. 2 ICM Research conducted between 13 and 15 August

69 The National Lottery Additionality The concept of additionality asserts that Lottery funding should be additional to what is funded by government. Legislation of this principle has been attempted previously; however, it had not been put into statute until the new National Lottery Act In their annual reports to Parliament, all Lottery distributors must now include a statement setting out how their policy and practice adhere to the principle of funding projects for which funds are not normally provided by government. London 2012 Olympics In 2004, provisions to divert funding were included in legislation should London win the 2012 Olympics bid. To ensure funding, it provided for: 399 million as a direct transfer from Sport UK, one of the Lottery good causes distributors; 750 million from dedicated Olympics Lottery games; and 401 million as a possible ceiling for contributions from other Lottery good causes funders. In June 2006, the Culture Secretary confirmed that this 401 million would be needed. Since this announcement, there has been speculation about the rising cost of the Olympics. 7 In mid-march 2007, the Culture Secretary announced that an additional 675 million would come from the National Lottery, bringing the total Lottery contribution to billion. However, the government has given assurances that the funding intended for the third sector will not be directly affected. The Olympics funding from the Lottery will be collected in Conclusion Lottery funding continues to be a small but important source of income for the VCS not simply because of the additional income it brings, but because of the types of projects it funds. Looking ahead, it is important to ensure that the principle of additionality is upheld, that Lottery funding is protected from further Olympics funding requests and that the withdrawal of Olympics funds from the Lottery in 2009 does not have an adverse effect on wider good causes funding. 53

70 The UK Voluntary Sector Almanac

71 Individual giving Chapter 8 Individual giving 8.1 Introduction Charitable giving is an important source of income for charities, typically providing resources that are not tied to specific projects and helping organisations maintain an appropriate level of independence. Knowledge of the patterns in charitable giving can help fundraisers to understand donor behaviour and can also give policy-makers insight into social norms and levels of civic engagement. This chapter is based on an annual survey of individual giving run collaboratively by NCVO and the Charities Aid Foundation (CAF). Further details can be found in UK Giving 2005/06 and associated publications. Details on the survey methodology are provided in the Appendix 1. The core findings are: The total amount donated in 2005/06 is estimated at 8.9 billion: this indicates that giving has at least maintained the 2004/05 level. In 2005/06, each month, almost three-fifths (57.6%) of the UK adult population 28 million people gave at least once, maintaining last year s giving levels. 8 Table 20: The mean and median amounts given to charity (to the nearest ) Monthly amount Median Mean All UK adult 2 15 Donors (UK adults who gave at least once in the last month) Distribution In an average month, three-quarters of the total amount given is donated by the one-quarter of donors who give 25 or more. Although there are concerns that this reflects social inequality, it is worth noting that at the level of giving examined in this study, we do not see clear-cut clustering. Instead, we see a gradual falling-off in the popularity of different amounts, with spikes at round numbers such as 5 and

72 The UK Voluntary Sector Almanac 2007 Figure 17: Amount given each month, rounded up ( ) 6 5 % of population Total amount given in one month, rounded up, Although high-level donors might be interpreted as an unusually rich or generous segment of society, the situation is actually considerably more complicated. The motivations for giving larger amounts are diverse and the group of high-level donors certainly does not simply comprise wealthier people. In some cases, giving a larger sum may be a simple matter of convenience, with an individual giving a single large annual gift instead of several smaller but more regular gifts. High-level donors are also more likely to support religious organisations than are other donors, perhaps reflecting a greater level of commitment among these donors rather than greater personal wealth. An ongoing panel survey would be needed to identify the details of the situation. Figure 18: Donor population and total amount given, by gift size % of amount given % of donors Under Total amount given per month 56

73 Individual giving 8.3 Causes The causes that an individual supports represent a very personal response to the world. This response may be based on personal experiences or on an ethical perspective or it may be a response to a particular event or to an engaging fundraising campaign. A further complication is that donors may feel a connection to a particular organisation so that loyalty to the cause is confused with trust in the organisation. With this in mind, any discussion of the choice of cause must recognise that this is neither a straightforward rational choice nor an automatic response to fundraiser pressure. Among the many causes represented by voluntary sector organisations, medical research is particularly popular, supported by two-fifths of the population each month (Figure 19) and attracting nearly one-fifth of the total amount given (Figure 20). Religious organisations receive donations from approximately the same number of people as animal or disability charities but attract a much greater share of the total amount given. The CAF/NCVO individual giving survey asks about many different causes. Presented below are the findings for the most popular causes. Note that many people give to more than one cause so the percentages presented in Figure 19 do not add up to 100%. Figure 19: Proportion of population giving to each cause, % % giving to cause Medical research Children / youth Hospices / hospitals Overseas Animals Disability Religious Other causes 57

74 The UK Voluntary Sector Almanac 2007 Figure 20: Share of total amount given, by cause, % Other causes 20% Medical research 19% Religious 16% Disability 5% Animals 5% Overseas 13% Children/youth 10% Hospices/hospitals 12% 8.4 Methods for giving The method for giving used by a donor often depends on the kind of fundraising used to encourage the donation. From the survey, we see that while cash is the most popular form of giving, direct debit, cards/cheques and events all account for larger amounts of income. Note that many donors use more than one method so that the final column in Table 21 does not add up to 100%. Table 21: Relative popularity of different giving mechanisms Mechanism % of amount given % of donors using this method Cash Cards/cheque Direct Debit Events Fees 4 5 Payroll 2 4 Purchase Raffle 5 28 Other 1 1 Tax-efficient giving The extension of Gift Aid in 2000 to all gift sizes (provided the donor pays income tax) offered a substantial benefit to charities. In 2004/05, Her Majesty s Revenue and Customs (HMRC) estimated the total amount of tax relief from Gift Aid as 0.6bn. Payroll giving is still a relatively minor mechanism for giving but there is a clear potential for continued growth. Legacies provide a further tax-efficient source of income to charities, but these are not covered in the CAF/NCVO individual giving survey. 58

75 Individual giving The overall use of Gift Aid did not change substantially between 2004/05 and 2005/06, with about one-third (34%) of donors using Gift Aid for at least one donation. However, the uptake among high-level donors (giving 100 or more in the reference month) fell from 68% to 57%. Figure 21: Use of Gift Aid, by size of average monthly gift (% of donors) (%) Did not use Gift Aid used Gift Aid Under Although the cut of two pence in the basic rate of income tax introduced in the 2007 Budget will reduce the benefit of Gift Aid, the government has committed itself to conducting a consultation with the sector and to running an awareness-raising campaign. Many donations are still not being Gift Aided, resulting in substantial missed opportunities for the sector Donor characteristics Gender Women are more likely to give to charity than men in an average month, with 61% giving compared with 53% of men. This predominance of women in giving is a long-term pattern observed in previous UK surveys and in other developed countries. A detailed explanation of these differences is beyond the scope of this chapter but some of the main complications are introduced. The patterns in giving are complicated by lifestyle differences and the fact that some giving is derived from households rather than individuals. It may be, for example, that women are more likely to be responsible for household giving so that household gifts are assigned to women more often than men, perhaps contributing to the higher giving proportion for women. Charities may also find it useful to consider whether there is a gender bias in the targeting of their fundraising campaigns. 59

76 The UK Voluntary Sector Almanac 2007 While men are less likely to give, when they do so they tend to give more than women. This fact may be linked to gender inequalities in income. The data presented in Table 22 suggest a more subtle interpretation, since looking at the data within defined income bands, male donors with incomes of 14,560 or over appear to give more than women in the same income band. This pattern is reversed in the lower income bands, perhaps reflecting a difference in the nature of the income. Many women with lower incomes may balance part-time work with family responsibilities but still be living in financially secure households. Among men, a lower income may be more likely to lead to financial insecurity and hence to more cautious giving behaviour. Table 22: Giving patterns by gender and income band 1 Proportion giving each month, % Mean amount given per donor, Income band Men Women All Men Women All 0 4, ,680 9, ,360 14, ,560 25, , All Income Considering only income, another persistent pattern is that, although people with higher incomes tend to give more, they tend to give a smaller proportion of their incomes. Table 23: Amount given per person, raw amount and as a percentage of income Mean amount given per person, Amount given as a percentage of income, % All people People with income of 26, Age The level of charitable giving of an individual is closely linked to his or her age. Despite this, there is no evidence to suggest that the younger generation will not be willing to maintain the current level of giving as the population ages. While social norms play a role in determining giving levels, the relationship between age and charitable giving is likely to be closely related to the changing circumstances of a person s life, with increased income and security leading to a greater likelihood of giving and also to a higher average donation Each of the income bands contained 20% of the sample of the CAF/NCVO giving survey.

77 Individual giving Table 24: Giving data, by age band In Figure 22, we see that giving levels appear to have increased among people in the age bands and However, it is too early to judge whether this forms the start of a trend. Figure 22: Amount given in 2004/05 and 2005/06 in an average month per donor, by age band / / Nation/region Levels of individual giving can vary quite noticeably between different UK regions and nations. Although some of the differences are marginal, the South East of England presents a very different pattern of giving from that seen in the rest of the UK. This is particularly striking in London but can also be seen in the East of England and in the South East. 2 Population figures from National Statistics Online, mid-2005 estimates. 61

78 The UK Voluntary Sector Almanac 2007 While the mean amount given per person is unusually high in London and the South East compared with the rest of the UK, the median amount and the proportion of people giving is relatively low. The median amount given in London is very high ( 17, compared with the UK median of 10), suggesting that there is a large number of people giving a relatively large amount, and not simply a small number of extremely high-level givers. The total amounts raised in London may seem impressive from a fundraising perspective but as a measure of citizenship and social inclusion, the results are not encouraging. These patterns may reflect a widespread lack of social inclusion in the populations of London and the South East, highlighting a worrying division in society. Table 25: Average monthly giving, by region and nation of UK, 2005/ Conclusion Individual giving continues as an important source of income for the voluntary sector. More than just another revenue stream, individual giving helps organisations to maintain their independence and allows individuals to actively engage with their communities and the wider world. A move towards more planned giving would help voluntary organisations plan their spending and could lead to an increased take-up of Gift Aid. Equally important is the manner in which voluntary organisations interact with potential donors. The current giving culture is founded on the high level of public trust currently enjoyed by the voluntary sector and this is a crucial area in which short-term goals must not be allowed to obscure the values of the sector. It must not be taken for granted Note that figures for Northern Ireland are not available.

79 The paid workforce Chapter 9 The paid workforce 9.1 Introduction This chapter illustrates the size and characteristics of the UK voluntary sector s paid workforce. 1 The majority of data in this chapter are based on the UK Labour Force Survey (LFS) for 2005, the latest full year available at the time of analysis. At present, the LFS is the most comprehensive UK-wide survey of employment that can be analysed by sector (voluntary, private and public). The methodology used for this analysis is presented in Appendix 1. This chapter also includes a brief summary of the 18th Annual Voluntary Sector Salary Survey, conducted by Remuneration Economics in partnership with NCVO. The survey provides detailed information on pay and conditions in Labour Force Survey estimates The LFS estimates that 611,000 people were employed in the voluntary sector in 2005 (Table 26). This is an increase of nearly 80,000 (14.9%) since On average, the voluntary sector has been growing by 16,000 people each year over the last five years. Voluntary sector employees now account for 2.2% of the overall paid workforce. During the same period the public sector grew at a slightly lower rate, from 6.2 million employees in 2000 to 7 million in 2005, an increase of 12.7%. The number of private sector employees rose from 19.9 million to 20.5 million, an increase of 3.4%. Table 26: Total UK workforce by sector, (headcount, thousands) Private sector 18,517 19,864 20,536 Public sector 6,135 6,193 6,978 Voluntary sector Total Workforce 25,141 26,592 28,130 Source: Labour Force Survey Base: All people aged 16 and over Total employment can also be expressed as full-time equivalents (FTEs), a more accurate indicator of workforce capacity. The FTE measure reflects the paid human resource available to the sector by converting hours worked by part-time staff into the equivalent number of full-time staff. The sector now employs an estimated 486,000 FTE paid staff. This is an increase of approximately 71,000 since 2000 (17%). 1 More detailed information on the UK voluntary sector workforce, including a ten-year trend analysis of key characteristics such as diversity, employment status and industrial and occupational groupings, can be found in the forthcoming UK Voluntary Sector Workforce Almanac, due to be published in September

80 The UK Voluntary Sector Almanac 2007 Table 27: Total UK workforce by sector, (FTEs, thousands) Private sector 16,000 17,087 17,654 Public sector 5,152 5,147 5,876 Voluntary sector Total Workforce 21,731 22,732 24,104 Source: Labour Force Survey Base: All people aged 16 and over 9.3 Nations and regions Using the LFS it is possible to obtain national and regional breakdowns of employees throughout the UK. Table 28 shows the number of people employed within the private, public and voluntary sectors in each UK region and nation. Table 28: Private, public and voluntary sector workforce by region and nation, 2005 (headcount, thousands) Private sector Public sector Voluntary sector Total North East ,087 North West 2, ,298 Yorkshire & Humberside 1, ,319 East Midlands 1, ,066 West Midlands 1, ,477 Eastern 1, ,640 London 2, ,385 South East 3, ,020 South West 1, ,370 England 17,470 5, ,662 Wales ,319 Scotland 1, ,424 Northern Ireland Total 20,536 6, ,125 Source: Labour Force Survey Base: All people aged 16 and over Almost one-third (32%) of UK voluntary sector workers are based in either London or the South East. This is due to the tendency of many national and international voluntary organisations to establish headquarters within these regions. Interestingly, for both the private and public sectors, the relative percentage of their workforce based in these two regions, 27% and 25%, is less than for the voluntary sector. Scotland employs approximately 10% of the UK s total voluntary sector employees, while Wales and Northern Ireland have a smaller proportion of voluntary sector employees, with 3% and 2% respectively. 64

81 The paid workforce 9.4 Employment status Both full-time and part-time employment within the voluntary sector have seen a substantial increase over the last five years. The number of people employed full-time within the sector increased by nearly 50,000 between 2000 and 2005, while part-time employment increased by 30,000 (Table 29). Table 29: Voluntary sector workforce, by employment status, (headcount, thousands) Full-time Part-time Total Source: Labour Force Survey Base: All people aged 16 and over There is a relatively high percentage of part-time workers in the voluntary sector (Table 30). This is likely to be related to the funding restrictions within the sector. It is possible that employees are attracted to the voluntary sector by these part-time positions and flexible hours that can contribute to a healthy work life balance. Table 30: Full-time and part-time employment status by sector, 2005 (headcount, %) Private sector Public sector Voluntary sector Full-time Part-time Total Source: Labour Force Survey Base: All people aged 16 and over Gender and employment status Women continue to account for the majority of the voluntary sector workforce. In 2005, there were an estimated 424,000 women employed within the sector, equating to 69% of the total. This is similar to the public sector (64%) but contrasts with the private sector, where only 40% of employees are female. 65

82 The UK Voluntary Sector Almanac 2007 Figure 23: Private, public and voluntary sector employment by gender, 2005 (headcount, %) (%) Female Male Private Public Voluntary Sector of employment Source: Labour Force Survey Base: All people aged 16 and over In 2005, just over one-fifth (21%) of male voluntary sector employees were employed parttime, compared with 17% in This growth in the number of males who work part-time could reflect the growing numbers who view the sector as providing an alternative career path alongside taking up the sector s flexible working practices. The situation is very different for females working in the sector, with almost one in every two females working part-time. In 2005, an estimated 197,000 females employed in the sector were working part-time (46%) while 227,000 were employed full-time (54%). Table 31: Voluntary sector employment by gender and employment status, 2005 (headcount, %) Full-time Part-time Total Male Female Total Source: Labour Force Survey Base: All people aged 16 and over 66

83 The paid workforce 9.6 Remuneration and benefits in the voluntary sector The 18th Annual Voluntary Sector Salary Survey 2006 conducted by Remuneration Economics in conjunction with NCVO identifies the latest remuneration trends in the UK voluntary sector. The survey findings show that average salaries and earnings in the sector both increased by 4.9% over the last year, a similar rate to the Average Earnings Index (5.0%) but a higher rate than inflation as measured by the Retail Price Index (3.3%). Table 32 shows the average basic annual salaries and total annual earnings for a number of responsibility levels. Total annual earnings obviously offer a better indication of overall remuneration, but it is worth noting that unlike in the private sector, the differences between the two are not large. Table 32: Average basic annual salary and total annual earnings ( ) Level of Responsibility Basic annual salary 2 Total annual earnings 3 Chief Executive 64,727 65,623 Director 57,292 57,995 Senior Function Head 45,221 46,103 Functional Head 37,973 38,792 Department Manager 32,362 33,137 Specialist/Professional 26,293 26,933 Admin Supervisor 19,775 20,344 Admin Officer 16,941 17,336 Admin Assistant 14,476 14,871 Junior/Trainee Staff 12,783 13,199 Source: Remuneration Economics (2006) 9.7 Conclusion The voluntary sector is now a major UK employer and is experiencing a high level of growth 14.9% between 2000 and A number of factors are driving the recruitment of paid employees in the voluntary sector, in particular, the increased demands of delivering public services, often through partnerships with other organisations. 9 The sustained growth in the sector presents both challenges and opportunities. The notion of a voluntary sector career path is now realisable with a greater variety of career options within the sector. This, combined with the continued growth, is leading to a professionalisation of the sector. Central to this professionalisation will be good employment policies and practices, particularly as a key threat to voluntary sector workforce development continues to be competition from other sectors for skilled employees. Evidence within the forthcoming UK Voluntary Sector Workforce Almanac suggests that paid staff within the sector are relatively well educated. However, skills deficiencies continue to limit the effectiveness of the sector. Our forthcoming research examining skills 2 Basic annual salary before the deduction of tax, national insurance, pension contributions, etc. 3 Basic annual salary plus bonus and London allowance where applicable. 67

84 The UK Voluntary Sector Almanac 2007 gaps and skills shortages in the voluntary sector will enable us to explore this issue in more detail. The sector is in an exciting and important stage as an employer, and with planning and foresight the growth already experienced will lead to a more professional and competitive sector. 68

85 Volunteers and trustees Chapter 10 Volunteers and trustees 10.1 Introduction Although the size of the voluntary sector s paid workforce is increasing, voluntary organisations still rely on the contribution of volunteers even if, for some organisations, this may only be in the form of trustees. This chapter briefly explores the sector s unpaid workforce. The most recent statistics on volunteering are available from the Citizenship Survey (2005), a biennial survey providing a detailed review of trends and attitudes towards citizenship and active citizenship in England and Wales. Estimates of the number of trustees have been reproduced from the Charity Commission Active community participation The Citizenship Survey looks more broadly beyond the term volunteering at active community participation and focuses on: civic participation: 1 engagement in a range of activities such as contacting a local councillor/mp, signing a petition or attending a public meeting; informal volunteering: giving unpaid help as an individual to someone who is not a relative; formal volunteering: giving unpaid help as part of groups, clubs or organisations to benefit others or the environment. 10 The prevalence of each in 2005 is portrayed in Figure 24 below. This illustrates the significant difference between the number of people who have participated at least once in the last 12 months and those displaying a regular monthly commitment. The disparity between the two frequencies of volunteering is an indicator of volunteers levels of involvement and commitment. It points to a movement from long-term to short-term volunteering and towards more episodic volunteering, which has been well documented in the UK, North America and the Netherlands, 2 and requires more flexible approaches from organisations, such as one-off and drop-in volunteer opportunities. 1 The Citizenship Survey looks more broadly at civil renewal; however, for purposes of comparison we have used data on civic participation, the definition for which is consistent throughout the surveys. 2 NCVO (2005) Civil Renewal and Active Citizenship: A Guide to Debate; IVR (2003) A Choice Blend: What Volunteers want from Organisations and Management. As people volunteer in more than one sector the percentages add up 69

86 The UK Voluntary Sector Almanac 2007 Figure 24: Participation in voluntary and community activities by type of activity, 2005 (%) at least once a month at least once in the last year Civic participation Informal volunteering Formal volunteering The level of informal volunteering and civic participation over the period has stayed identical or almost identical. However, there has been an increase in formal volunteering, which has seen a rise from 39% in 2001 to 44% in Figure 25: Participation in voluntary and community activities by type of activity (at least once a year), (%) Civic participation Informal volunteering Formal volunteering 70

87 Volunteers and trustees 10.3 Formal volunteering The Citizenship Survey highlighted the fact that most people who participated in formal voluntary activities at least once a month were involved in the voluntary and community sector (82%), 28% in the public sector and 14% in the private sector (this is most likely to be in the form of internships). 3 People volunteered formally in a wide range of activities, the most popular of which is organising or helping to run an activity or event, illustrating how important the social and convivial nature of participation is. Table 33: Types of formal volunteering undertaken at least once in the last 12 months (%) Activity Organising or helping to run an activity or event Raising or handling money/ taking part in a sponsored event Other practical help Leading the group/ member of committee Providing transport/ driving Giving information/ advice/ counselling Visiting people Secretarial, clerical or admin work Befriending or mentoring people Representing Any other help 9 16 Campaigning 8 11 There has been an increase in the percentage of people participating in nearly every category listed above. As the numbers of people participating in formal volunteering have increased by only a small amount, this would suggest that existing volunteers are taking on additional tasks and responsibilities. This trend towards multiple involvement suggests that organisations are facing recruitment issues in what has become an increasingly competitive environment. 10 The survey also found that: Almost two-fifths (39%) of people who did not participate in formal voluntary activities or did so infrequently said they would like to participate or to do so more often. The barriers to participation were mainly related to perceived time commitments, but 42% of people said they would be more likely to get involved if someone asked them directly. 3 As people volunteer in more than one sector the percentages add up to more than 100%. 71

88 The UK Voluntary Sector Almanac 2007 There were no significant statistical differences between the numbers of women (31%) and men (27%) who formally volunteer at least once a month, although women tended to volunteer more than men informally (41% compared with 32%). The age groups most likely to formally volunteer were 16 to 19-year-olds and 35 to 49-year-olds, with nearly one-third (32%) volunteering formally at least once a month. People who did not have any qualifications were only half as likely as people with qualifications to participate in formal volunteering at least once a month (16% compared with 34%). Overall the number of people volunteering formally in England is estimated at 17.9 million (once a year) and 11.6 million (once a month). If the proportions in the Citizenship Survey are applied to the whole of the UK adult population, 4 these estimates would increase to 21.4 million (once a year) and 14.1 million (once a month) formal volunteers. The 17.9 million people who volunteered formally at least once a year gave, on average, the equivalent of 108 hours each. This represents approximately 3 working weeks each. Based on the 2005 national average wage, 5 an estimated 1 million full-time workers would be needed to replace them at a cost of 23.4 billion. When these figures are extrapolated to include not only England, but the whole of the UK, 6 they rise to an estimated 1.2 million full-time workers at a cost of 27.5 billion (based on the national average wage 2005). However, it should be noted that these estimates take no account of the costs of volunteer development or management Trustees The Citizenship Survey estimates that 35% of formal volunteers are involved in leading a group or being a member of a committee, a higher number than in 2003 (29%). Although the Charity Commission holds the details of over 900,000 trustees for registered charities, there is significant overlap between charities and it is estimated that there are currently more than 1 million charity trustee positions in England and Wales. This discrepancy stresses the recruitment need in boards across the sector. The Charity Commission has reported that 76% of trustees are aged 45 and over, and only 0.5% are under the age of 24. Research for NCVO 7 (Cornforth, 2001) indicates that 55% of trustees are men and only 4.8% are from a black or minority ethnic community Mid-2005 estimated UK population aged 16 and over: 48.6 million (source: ONS, 2007). 5 National average wage for England 2005: 23,300 (source: ONS, 2007). 6 National average wage for UK 2005: 22,900 (source: ONS, 2007). 7 Cornforth, C. (2001) Recent trends in charity governance and trusteeship. London: NCVO:

89 Volunteers and trustees 10.5 Conclusion Volunteers and trustees are an important resource for the voluntary and community sector. Organisations within the sector benefit from the time and skills donated by volunteers, but at the same time also provide a space for voluntary action and active citizenship. Any discussion of the value of volunteers must be broadened beyond their financial value to include the social benefits of this exercise. While new volunteering schemes and government initiatives are undoubtedly providing an impetus and support for volunteering, greater competition among organisations and sectors is increasingly drawing on the pool of active citizens. The move towards more episodic volunteering indicates a need for the sector to move towards more flexible approaches to supporting volunteers

90 The UK Voluntary Sector Almanac

91 Assets and liabilities Chapter 11 Assets and liabilities 11.1 Introduction This chapter provides a summary of the voluntary sector s balance sheet by looking at assets, liabilities and funds. Whereas the analysis of income and expenditure describes the incoming and outgoing resource flows over a 12-month period, information from the balance sheet provides a snapshot of the net worth of the voluntary sector at the end of the financial year Assets, liabilities and funds definitions Nearly all voluntary organisations hold some kind of assets in the form of buildings, office equipment, investments or cash. For many organisations, investment assets are a valuable source of income, while for others the main asset may be the building from which they operate. Either way, asset holdings underpin the sector s long-term viability. Broadly speaking, charities hold the following types of assets: fixed assets, which are mainly sub-divided into intangible assets (intellectual property rights), tangible assets (land, buildings, equipment) and investments. 1 Tangible fixed assets are held for charitable use and enable the organisation to fulfil its charitable purpose. Investment assets are held to generate a return and may include property or equities; and current assets, which are mainly sub-divided into stocks and work in progress (such as stocks of unsold goods), debtors (amounts owed to the organisation) and cash on deposit at banks and building societies. 2 Our analysis combines the first two of these categories. 11 An organisation s assets are usually offset to some degree by their liabilities, such as outstanding loans. Liabilities are either: short-term liabilities (creditors who are owed amounts due within one year of the balance sheet date); or long-term liabilities (creditors who are owed amounts due one year after the balance sheet date, plus any provisions for long-term liabilities or charges). 1 Organisations can also hold intangible assets (such as intellectual property), and inalienable and historic assets (such as a historic building or a collection of paintings). 2 The Charity Commission s Statement of Recommended Practice (SORP) allows some investments to be held as current assets. For the purposes of this chapter, current and fixed asset investments have been grouped together. Cash awaiting reinvestment (and therefore identified as an investment asset in charity accounts) has been added to cash in our analysis. 75

92 The UK Voluntary Sector Almanac 2007 In addition, organisations may make provisions on the balance sheet for expected future costs (i.e. for events that occur post balance sheet ). If short-term and long-term liabilities are subtracted from total assets, the remainder equates to an organisation s total funds. Funds are an estimate of the organisation s net worth, and are sub-divided into: income funds (which may be either unrestricted or restricted, the latter subject to the limitations placed on their use by the donor); endowment funds (capital assets that must be held either for investment or for charitable use); a third category was included in our analysis where the nature of the funds was not specified Assets, liabilities and funds - an overview General charities total assets in 2004/05 totalled 88.5 billion, while their liabilities totalled 10.9 billion (Table 34). Total funds therefore stood at 77.6 billion in 2004/05, up from 68.3 billion in 2003/04. Table 34: Total assets, liabilities and funds, 2004/05 ( million) millions Source: NCVO, GuideStar UK Under 10k 10k - 100k 100k - 1m 1m - 10m Over 10m Total Assets 5, , , , , ,512.8 Liabilities & Provisions , , , ,886.2 Funds 5, , , , , ,626.5 The ratio between net funds and total current expenditure is indicative of the sector s relative health, particularly as many general charities hold reserves to cover future expenditure. Table 35 illustrates the relationship between net funds and total current expenditure. In 2004/05 total funds equated to 3.1 years worth of total current expenditure. 76

93 Assets and liabilities Table 35: Funds expressed as number of years operating costs Source: NCVO, GuideStar UK Under 100k 100k - 1m 1m - 10m Over 10m Total/ Average 2003/04 Total current expenditure ( million) 2, , , , ,413.1 Total funds ( million) 11, , , , ,320.6 Ratio of funds: expenditure (years) /05 Total current expenditure ( million) 1, , , , ,081.3 Total funds ( million) 11, , , , ,626.5 Ratio of funds: expenditure (years) This measure is far from perfect, however. It should be recognised that a significant proportion of total funds (approximately 25%) are tied up as tangible or intangible fixed assets and therefore are not available for immediate use or liquidation Assets The asset holdings of different sizes of organisation are illustrated in Table 36 below. It is noticeable that the proportion of assets held as investments increased with size of organisation. In 2004/05, organisations with incomes below 10,000 held 29.2% of their assets as investments. In contrast, those with incomes over 10 million held 80.1% of their assets as investments. Small organisations held a larger proportion of their assets as bank and cash deposits. This might be an indication of a higher aversion to risk by trustees and management, though many smaller organisations also have a greater need for liquidity than larger organisations, in order to cope with the day-to-day reality of managing cash flows. Types of investment asset General charities held investments to the value of 51.8 billion in 2004/05. Investments are held to generate income, and Chapter 5 has already highlighted the role of investment returns to the sector. The income generated from investment holdings contributed 2.2 billion in 2004/05, or 7.8% of the sector s total income. Most trusts and foundations rely entirely on investments to generate income, which in turn is applied to the activities of operating charities. Therefore, the performance of the sector s investment holdings is of importance to organisations other than those that simply hold investments

94 The UK Voluntary Sector Almanac Liabilities General charities total liabilities (amounts owed and any provisions made for future commitments) totalled 10.9 billion in 2004/05. Total liabilities were equivalent to 12% of total assets in 2004/05. Liabilities are sub-divided into three categories: short-term creditors (payment due within one year), long-term creditors (due after one year), and provisions. The balance of liabilities is towards the short term: 62.9% of liabilities are due for payment within one year Total funds Total funds, or assets less liabilities, represent the net worth of the voluntary sector. In 2004/05 the value of total funds was 77.6 billion, compared with 68.3 billion in 2003/04. Funds are divided into three categories: income funds, endowments and other unspecified funds. Income funds, which are both restricted and unrestricted funds, totalled 55.7 billion. Our analysis indicates that a majority of these funds ( 46.6 billion) are unrestricted. Such funds are available for the purposes of the charity, and can be spent as the trustees see fit within the stated objects of the charity. Restricted funds are subject to special trusts, or instructions, specified by the donor. These make up almost all of the remaining income funds and were worth 8.9 billion in 2004/05. Finally, endowment funds are capital funds that are predominantly non-expendable. Endowment funds were worth 18.7 billion in 2004/05, or 24.2% of total funds Conclusion Despite unease that the income from the sector s investments has fallen over the medium term, the sector continues to rely on a significant asset base. Yet there remains a concern among policy-makers that the sector is, as a whole, under-capitalised. Strategies for sustainability depend on acquisition of physical infrastructure or the building of endowment funds. In the case of the former, loan finance is likely to become a more important tool that charities use in the coming years. 78

95 Assets and liabilities Table 36: Assets, liabilities and funds by size of organisation, 2004/05 ( million) Source: NCVO, GuideStar UK 11 Table 37: Breakdown of liabilities by size of organisation, 2004/05 ( million) Source: NCVO, GuideStar UK 79

96 The UK Voluntary Sector Almanac 2007 Table 38: Breakdown of assets by size of organisation, 2004/05 (%) Source: NCVO, GuideStar UK Table 39: Breakdown of liabilities by size of organisation, 2004/05 (%) Source: NCVO, GuideStar UK Table 40: Breakdown of funds by size of organisation, 2004/05 (%) Source: NCVO, GuideStar UK 80

97 Appendix 1: Methodology Appendix 1 Methodology 1 The Almanac is based on data from a number of sources. The main source for this edition is GuideStar UK (a database of information extracted from organisations financial accounts), but others include NCVO and CAF s survey of individuals charitable giving habits, the Labour Force Survey (LFS) and the Home Office Citizenship Survey, as well as financial data from our sister councils in Northern Ireland and Scotland (NICVA and SCVO). A1.1 Using data from the Charity Commission and GuideStar UK Charity Commission Register The first step was to acquire a full list of charities registered with the Charity Commission, provided by GuideStar UK. Non-general charities were removed, resulting in 134,419 active general charities. GuideStar UK were also able to provide financial data for 40,901 of these charities for the 2004/05 financial year (Table 41). The sample of financial data was then related to the population to calculate a sample size for each income strata. Table 41: General charities population and sample, England and Wales, 2004/05 Under 10k 10k- 100k 100k- 1m 1m- 10m Over 10m Total Population 77,701 38,744 14,922 2, ,419 Sample 2,153 25,884 10,295 2, ,901 Sample (%) Source: NCVO, GuideStar UK Data tidying The fact that GuideStar UK uses organisations financial accounts means that their database provides a fairly comprehensive picture of the sector s financial data. The data was cleaned to remove errors and a number of checks were carried out, including: comparison of income, expenditure, balance sheet and workforce data between this year and last year to look for particularly large increases and decreases; and construction of various ratios between financial variables (for example, between income and expenditure, and investments and dividend income) to look for anomalies. 81

98 The UK Voluntary Sector Almanac 2007 Those few records that had financial returns other than one year in length were converted to one year and where accounts were submitted in a foreign currency they were converted to pounds sterling using an average of the exchange rate over the year. Producing estimates for the whole sector Means (averages) were then calculated for each major category (income, expenditure, assets, liabilities and staff numbers). They were calculated separately for each income band. The next task was to use these averages for each income band to derive totals for the whole sector. To arrive at a total, the average for each band was multiplied by the number of organisations in that band. The resulting totals for the five income bands were then added together to arrive at an estimate of the total for the whole sector for England and Wales. Estimates for Northern Ireland and Scotland (provided by NICVA and SCVO) were then added to arrive at estimates for the UK. Due to rounding figures, some percentage totals may not add up to 100%. A1.2 The Labour Force Survey The quarterly LFS run by the Office for National Statistics (ONS) is the main source of data for analysing paid employment in the voluntary sector (Chapter 9). The quarterly LFS samples an estimated 60,000 private households every quarter. Each quarter of the LFS comprises five waves, each consisting of around 12,000 households. Each wave is interviewed in five successive quarters, such that in any one quarter, one wave will be receiving their first interview, one their second, and so on. As a result, in each quarter approximately 12,000 out of the 60,000 households are new to the survey. Pooling quarterly LFS data Despite the large overall sample size of the LFS (approximately 60,000 households, equating to around 150,000 individuals) because the voluntary sector represents only 2% of paid employees, the datasets have been pooled over four quarters to increase the sample size. For this analysis, data were pooled from four quarters (winter 2004 to autumn 2005). Owing to the wave structure of the data, there is an 80% overlap within each quarter. To produce a sample of unique individuals, LFS methodologists recommend that only waves one and five are taken from each of the four quarters. Weighting the LFS data In April 2004, the ONS reweighted all LFS datasets from 1992 to 2003 to bring LFS data in line with the population estimates from the Census This means that the figures are not directly comparable with those released previously. All of the LFS data presented within this chapter have been reweighted using these new weights so that reliable comparisons can be made across years See Labour Force Survey reweighting and seasonal adjustment review: for further details of the re-weighting exercise.

99 Appendix 1: Methodology Weighting the sample serves two purposes: it enables population estimates to be produced and it compensates for different degrees of non-response among different sub-groups of the population. The LFS adopts a comprehensive weighting procedure which allows for differences in non-response by age, sex and region. Individual weighting fractions were adjusted to reflect the pooled nature of the sample. For this sample, as four quarters were pooled together, each case weight was divided by 4 and then multiplied by 2.5 to account for analysing only waves one and five. To check for consistency, total employment figures using adjusted weights were compared with published LFS data. 1 Analysing employment sector variables The employment sector identification is a two-stage self-classification process. Respondents are first asked whether they work for a private firm, business or a limited company or some other kind of organisation. Those respondents who choose the second option are then asked, what kind of non-private organisation is it? They are then presented with a range of options including charity, voluntary organisation or trust. For the purposes of the analysis for the Almanac, responses to these questions were recoded into a sector variable and defined as private, public or voluntary. A1.3 Individual giving Chapter 8 is based on the annual CAF/NCVO survey of individual giving. The module was included in the July, October and February surveys of the financial year 2004/05 and the results were combined to give a single dataset, yielding a total sample size of 3,745. Further details on the ONS Omnibus survey can be found at The individual giving survey begins with a short preamble to help minimise social desirability effects and then proceeds with a series of nested questions. These questions begin by asking whether the respondent has given by a specified method (such as cash or direct debit) in the last four weeks; if the respondent has used the method, the nested questions then identify which causes the respondent supported through that method and how much was given. The data were cleaned to remove obvious reporting/recording anomalies such as money from an individual s fundraising being reported as giving. The Omnibus survey does not include Northern Ireland in its sample. However, by comparison with other data sources (from the Northern Ireland Statistics and Research Agency and NICVA), we can conclude that extrapolating the results to the Northern Ireland population has a negligible effect on the grossed-up estimate of total individual giving. Triangulation with GuideStar data Each year, several surveys of charitable giving are produced, sometimes yielding very different headline figures. To assess the credibility of the data from the CAF/NCVO individual giving survey, we can compare the 2004/05 survey-based estimate with data from The UK Voluntary Sector Almanac 2006 (which reported on 2003/04 data). 83

100 The UK Voluntary Sector Almanac 2007 To obtain a fair comparison, we remove tax reclaimed through Gift Aid from the GuideStar estimate and remove giving to religious organisations from the survey-based estimate. The estimates then become 7.4bn for the GuideStar data and 7.1bn for the UK Giving data. It should be noted that the estimate from GuideStar data includes some earned income not included in the survey-based estimate and that the survey data also included giving to third sector organisations not registered with the Charity Commission. Despite this, the comparison is encouraging, suggesting that the survey results are robust. A1.4 Citizenship Survey The most recent statistics on volunteering are available from the Citizenship Survey (2005), a biennial survey providing a detailed review of trends and attitudes towards citizenship and active citizenship in England and Wales. This provides the data for Chapter 10. This survey was previously carried out under the title Home Office Citizenship Survey (HOCS) in 2001 and The results of the survey are published in four reports and figures in the Almanac are based on the Active Communities report. While the HOCS covers England and Wales, the 2005 Citizenship Survey: Active Communities Topic Report data only applies to England. All extrapolated figures are based on population statistics from the ONS as of mid

101 Appendix 2: Glossary Appendix 2 Glossary 2 Balance sheet A summary of the assets and liabilities of an organisation at a particular date, usually at the end of the financial year. Capacity-building Increasing the ability of individuals, organisations or communities to take action and achieve their objectives. Charitable foundations and trusts General charities whose primary purpose is awarding grants to other voluntary organisations, other institutions or individuals. Charities Act In December 2006 the government passed the Charities Act, an overhaul of the 400-yearold charity law. Civic participation Civic participation (or vertical participation) relates to participation in state affairs. It includes participation in political processes and governance. Civil participation Civil participation (or horizontal participation) relates to participation in community activities and in less formal types of association. Civil society All organisations operating in the space between the state and the market. Community foundation A fund-raising and grant-making charity established to generate resources for local charities in a specific geographic area (or community ) and to promote the effective use of these resources. Compact (The) The agreement between the government and the whole voluntary and community sector made in 1998 and designed to improve their relationship for mutual advantage. 85

102 The UK Voluntary Sector Almanac 2007 Core costs An organisation s overhead or central costs, as opposed to project costs. Corporate social responsibility Corporate social responsibility (CSR) is a broad concept covering the range of ways in which companies respond to social and environmental factors, alongside making a profit. Current assets Assets that can be converted into cash within a year (i.e. cash in bank, petty cash, money owed to organisations and goods for sale). Debtors People or organisations that owe an organisation money. Depreciation The gradual decrease in the value of assets held. Excepted charities Charities with a small annual turnover and no significant assets. They are excepted from registration they can choose to register if they wish do so. Exempt charities Charities that are not registered and are not subject to the supervisory jurisdiction of the Charity Commission (e.g. universities, leading museums). Fixed assets Assets held on a long-term basis. They can be either fixed assets for charitable use (which include real estate and equipment) or investments. Functional classification of expenditure The classification of expenditure used in the SORP to identify the cost of different functions or activities (such as management and administration). General charity General charities are defined in National Account terms as private, non-profit-making bodies serving persons. This excludes sacramental religious bodies or places of worship. Gifts in kind A gift of goods and services rather than cash. Not-for-profit sector All non-profit organisations including those for private benefit, and those that are noncommercial (e.g. housing associations). The category includes quangos and other organisations close to government (e.g. universities). 86

103 Appendix 2: Glossary Registered charities Charities registered with the Charity Commission. A charity must register if it has a permanent endowment, a total income of more than 5,000 a year or a rateable occupation of any land, including buildings. 2 Restricted funds Funds for which the donor has specified a use. These funds must be spent in accordance with the donor s wishes and trustees cannot make the decision to remove the restriction. Service-level agreement An agreement used by local authorities to fund particular services provided by voluntary organisations. Social capital The stock of active connections among people including the trust, mutual understanding, shared values and behaviours that bind members of communities and make co-operative action possible. Social enterprise Trading for a social purpose. A wide range of organisations fit the definition of social enterprise. These include co-ops, community business, trading arms of charities and a variety of other businesses that use their trading activity to meet social goals. Statement of financial activities (SOFA) Financial statement introduced especially for charities in the SORP. It replaces the income and expenditure account. Statement of Recommended Practice (SORP) Official recommendation on the way a charity should report annually on its resources and activities. Statutory authority An organisation that is required by law to provide public services (i.e. statutory services) and receives central or local government funding. Third sector Used as a synonym for voluntary sector. Trustees The group of (unpaid) people responsible for the control and management of a charity. Unrestricted funds Funds held for the general purposes of the charity, to be spent within the stated objects. 87

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105 Appendix 3: Acronyms and abbreviations Appendix 3 Acronyms and abbreviations 3 BLF CAF CEO CIVICUS CSR DCLG FTE HMRC HOCS IVR LFS LSB NCVO NDPB NHS NICVA NLD ONS OSCR OTS Quango RDS SCVO SOFA SORP VCO VCS WCVA Big Lottery Fund Charities Aid Foundation Chief Executive Officer World Alliance for Citizen Participation Corporate social responsibility Department of Communities and Local Government Full-time equivalent Her Majesty s Revenue and Customs Home Office Citizenship Survey Institute for Volunteering Research Labour Force Survey Local Service Board National Council for Voluntary Organisations Non-departmental public body National Health Service Northern Ireland Council for Voluntary Action National Lottery Distributor Office for National Statistics Office of the Scottish Charity Regulator Office of the Third Sector Quasi non-governmental organisation (Home Office) Research Development Statistics Scottish Council for Voluntary Organisations Statement of financial activities Statement of Recommended Practice Voluntary and Community Sector Organisation Voluntary and community sector Wales Council for Voluntary Action 89

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107 Appendix 4: Resources and further reading Appendix 4 Resources and further reading Books, reports and articles Carrington, D. (2005) Financing the Voluntary and Community Sector future prospects and possibilities in Voluntary action: meeting the challenges of the 21 st century. London: NCVO: 4 Clark et al. (forthcoming September 2007) The UK voluntary sector workforce almanac. London: NCVO Kendall, J. (2003) The voluntary sector: comparative perspectives in the UK. London: Routledge NCVO and CAF (2005) UK giving 2005/06. London: NCVO/CAF: Public Accounts Committee (2006) Working with the voluntary sector. London: The Stationery Office Limited Remuneration Economics (2006) 18 th Annual voluntary sector salary survey. Surrey: Remuneration Economics: Salamon, L., Sokolowski, W. and List, R. (2003) Global civil society: an overview. Baltimore: Johns Hopkins Center for Civil Society: Sayer, K (2003) Practical guide to charity accounting. London: Directory of Social Change: Websites Association of Charitable Foundations information on grant-making organisations in the UK: Big Lottery Fund: Charity Commission: Facts and figures on registered charities: 91

108 The UK Voluntary Sector Almanac 2007 Charity Commission s Statement of Recommended Practice (SORP) on accounting practices: GuideStar: Data on charities in England and Wales: HM Revenue and Customs: Statistics on charitable donations and tax relief: Home Office Research Development Statistics (RDS) Directorate on the VCS: Hubs: national partnerships offering free services, information and support to the VCS Finance Hub: Governance Hub: ICT Hub: Performance Hub: Volunteering Hub Workforce Hub: Institute of Fundraising the membership body for UK fundraisers, with information on giving and fundraising: Institute for Volunteering Research: Johns Hopkins University: Comparative Nonprofit Sector Project. The project holds comparative data for 35 countries: National Lottery Commission: NCVO: Research at NCVO: NCVO Sustainable Funding Project: Northern Ireland Council for Voluntary Action (NICVA): Office of the Scottish Charities Regulator: Scottish Council for Voluntary Organisations (SCVO): Third Sector Foresight Project: Provides information about trends affecting the voluntary and community sector: Wales Council for Voluntary Action (WCVA): 92

109 Appendix 5: The authors Appendix 5 The authors Authors Oliver Reichardt leads on NCVO s work on the size and scope of the third sector. As well as the Almanac and related publications he is also looking at the measurement of quality in public service provision. 5 David Kane leads on the quantitative analysis of data for NCVO s work on the size and scope of the third sector. David joined the research team in January 2007 from West Sussex County Council. Karl Wilding is NCVO s Head of Research. His research interests include mapping the changing third sector economy and the relationship between new technologies and voluntary action. He is trustee of the Association for Research in the Voluntary and Community Sector and an Honorary Senior Visiting Fellow at the Centre for Charity Effectiveness, Cass Business School in London. Contributing authors Jenny Clark manages the UK Workforce Hub and NCVO s research on the voluntary and community sector workforce. Current work includes regular analysis of the Labour Force Survey (LFS) to gain a comprehensive understanding of voluntary sector employment. Jenny also leads on research examining skills shortages and skills gaps in the voluntary sector. Annie Collart works on both policy and research within NCVO. Her research work focuses on the balance between the two roles of public service delivery and voice provision in voluntary and community organisations. Her policy role includes work on local government and the Charity Commission. Véronique Jochum leads on NCVO s work on voluntary action and active citizenship. Her current research includes the links between faith, voluntary action and civil renewal. Véronique leads on the team s qualitative research. Greg Piper manages NCVO s individual giving research programme, a partnership with the Charities Aid Foundation (CAF) and the Office for National Statistics (ONS). Greg works jointly with colleagues at the Voluntary Sector Studies Network to organise the Researching the Voluntary Sector Conference. 93

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111 Appendix 6: Acknowledgements Appendix 6 Acknowledgements During the production of the Almanac we have received invaluable support and advice from many sources. The authors are grateful to colleagues from NCVO and other members of the UK Voluntary Sector Research Group who have helped in putting this publication together. We would like to thank the following people for their contributions: National Council for Voluntary Organisations (NCVO): Liz Atkins, Mubeen Bhutta, Emma Moore, Pete Moorey, Philip Pestell, Siobhan Wakely, Michael Wright, Ali Worthy 6 Northern Ireland Council for Voluntary Action (NICVA): Gordon McCullough Scottish Council for Voluntary Organisations (SCVO): Ruchir Shah Wales Council for Voluntary Action (WCVA): Bryan Collis and Constance Adams This seventh edition of the Almanac has also benefited from the following to whom the authors are greatly indebted. They are: John Copps James Ebdon Research Analyst, New Philanthropy Capital Head of Social Protection, UK Centre for the Measurement of Government Activity, Office for National Statistics Dominic Maxwell Office of the Third Sector, Cabinet Office The data extracted from annual reports and accounts used in our analysis are provided by GuideStar UK. We are grateful to all the GuideStar UK staff who have worked with us, in particular Les Hems, Julian Harris, David Brocklebank and Richard Kerr. The chapter on individual giving is based on an annual survey of individual giving run collaboratively by NCVO and the Charities Aid Foundation (CAF). We are grateful to all the CAF staff who worked on this collaboration. 95

112 The UK Voluntary Sector Almanac 2007 Finally, it would not have been possible to produce the Almanac without the continuing support from the Charity Commission for England and Wales, and in particular their provision of access to the Register of Charities. 96

113 This publication can be made available in large print and alternative formats on request. Please contact NCVO on for more information. Your definitive guide to the third sector Now in its seventh edition, the UK Voluntary Sector Almanac provides a comprehensive overview of changes and trends in an increasingly competitive operating environment Using data sources from throughout the UK, the almanac highlights major shifts in the relationship between charities, government and the public, and defines the key trends: diversity and sources of income changing patterns of expenditure growth and development of the workforce the changing nature of volunteering movements in charitable giving With its expert analyis, the Almanac will provide funders, policy-makers, researchers, fundraisers and charity managers with a vital resource for understanding the sector s current operating environment and for forecasting future change. The UK Voluntary Sector Almanac continues to be the sector s most important reference book. Ed Miliband MP, Minister for the Third Sector in the Cabinet Office National Council for Voluntary Organisations Regent s Wharf 8 All Saints Street London N1 9RL T: F: E: ncvo@ncvo-vol.org.uk W: Textphone: Need to know? HelpDesk: or helpdesk@askncvo.org.uk 25 Charity Registration: The paper used for this publication is sourced from sustainable forests.