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Charity sector’s annual income now exceeds £75 billion

A new report from Charity Financials finds that the sector generated £75.3 billion in the last financial year, growing from £71 billion in 2015-16…

Charity sector’s annual income now exceeds £75 billion

Charity Financials has launched the latest instalment of its flagship Charity Income Spotlight report, now in its fifth year, which analyses the financial performance of the UK’s top 5,000 charities.

The report, sponsored by Charles Stanley, finds that despite a challenging economic outlook, the charity sector has grown its income by a substantial £4 billion in just one financial year, which represents an annual growth of 5.7%.

According to the figures, the sector on average generated £206 million every day in 2016-17; an increase of £11 million on 2015-16’s figure of £195 million.

Since 2012-13, the sector’s income has grown by 9.1%, 7.6%, 5.6% and 5.7% for the latest financial period to £75.3 billion. Although the sector has experienced positive change year-on-year, the rate of increase has been declining until the latest year where a minor increase of 0.1% was observed.

A polarised sector

Although this overall picture is positive, the report finds that that the sector is becoming even more polarised, with the biggest charitable organisations making up just 0.7% of the sector’s population but generating a substantial 62.6% of the total income.

The UK’s largest 1.3% of charities collectively generate nearly £55 billion annually and the remaining 98.7% generate just £20 billion, suggesting that while the sector is densely populated, the mega charities generate the lion share of the income.

Most charitable organisations are small, locally-based operations. Those with less than £250,000 annual income make up 81% of the charitable population, but generate just 6.2% of the total revenue. There are nearly 14,000 registered organisations which did not generate any income in 2016-17.

Other key findings of the Charity Income Spotlight report include:

• 10 years ago, the sector generated £3 billion surplus, but in the last financial year, this fell to £0.5 billion
• Growth of the sector is primarily from the largest organisations (those with income exceeding £10 million), which increased their income by more than 10% in 2016-17
• Even if growth falls by 1% a year, the sector would still increase its annual income to £94 billion by 2023
• The biggest charities generate £1.7 billion annual surplus; but the sector as whole generated just £0.5 billion annual surplus
• Small charities are on a knife edge, struggling to stay afloat into the next financial year

To download the full report, click here.