First year of Big Society marked by a fall in charity numbers: does it matter?

A new job at NCVO and all that comes with it has meant I haven’t blogged for quite a long time, but I’ve been awakened from my blogging slumber by a report in the Guardian (06/06/12) that the number of charities fell by 1,600 in the year to since May 2010, whilst mergers doubled. This took place during The Big Society Episode One: The Cuts. So, is this some of the first tangible evidence that cuts in public spending are having an impact on the sector, as the article suggests? Whilst I remain deeply worried about the impact of the cuts on the voluntary sector and our beneficiaries I’m not so sure this is evidence.

A quick look at charity births, deaths and marriages in more detail will help. First, the Charity Commission register contains many organisations that are essentially inactive: this is usually given away by the fact that they haven’t submitted an annual return for three years or that if they have made a return they have reported zero income. For our last Almanac, we estimated over 10,000 had no income.

The Commission regularly removes these from the register – and changes in the number of removals – what you might call the death rate – are more a reflection of how much work the Commission does to remove charities from the register. In the mid-1990s the Commission had a couple of years where they made a real effort to remove inactive charities from the register as the chart below shows (look at the bars pointing downwards for removals). So, the number of charity deaths this year is nothing unusual…and if anything, much lower than the previous year.

charity_numbers

What also makes a difference to the net number of charities on the register is the number of new additions, or ‘charity births’. The Guardian article notes ‘only 6,400’ new charities have been added. I don’t know about you, but in the midst of a horrible economic climate I’m surprised there are so many new organisations bubbling up from the grassroots…though as the chart shows, I shouldnt be: it’s a pretty constant picture. In fact, the number of new charities is greater than in 2007 and 2008. We are now of course getting into territory about whether there are too many charities (I personally don’t think there are, although duplication exists and needs to be addressed) and whether it is easy enough to set up (and close down) a charity. For the policy people amongst you, Lord Hodgson’s red tape review had a few words to say on this.

charity_numbers2

The final point made in the Guardian article is that the number of mergers (charity marriages?) has doubled. This isnt necessarily a bad thing, though as any merger consultant will tell you, merging from a position of weakness, which cuts and recession have undoubtedly brought upon some organisations, is not good for your beneficiaries. However, a sense of perspective is again necessary: Our Almanac reported that between 2007-09 there were 441 charity mergers – 0.3% of the sector. So a doubling does not represent a fundamental restructuring.

Finally, it is worth noting that the Charity Commission register is today showing that the income of registered charities for March 2011 is £55 billion. (This is much more than we report in the Almanac as it contains charities we exclude, such as the British Council). This is an increase of £2.4 billion on the figure for March 2010. There’s an awful lot going on behind this figure – and it absolutely does not imply everything is fine in the voluntary sector world. But it might perhaps highlight that changes in public funding will create winners and losers amongst charities; and that the majority of charities have no direct financial relationship with government.

I don’t think today’s figures are unusual. The death of the voluntary sector, as was also predicted during the recession, is too early to call.

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Karl Wilding Karl Wilding, Director of Public Policy and Volunteering, leads NCVO's volunteering, policy, research and campaigning work in the UK and internationally. With lead responsibility for shaping the external environment for the voluntary sector, he blogs about the big issues facing voluntary organisations.

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