The 2019 edition of the UK Civil Society Almanac has landed – and as every year it is a treasure chest of the most up to date and accurate data about charities. It provides a snapshot of the key facts and figures about charities’ income, expenditure, workforce, etc. – and by doing so every year it helps us identify the emerging trends within the sector.
You can find all the data on the new Almanac website, and a summary of the findings in Lisa’s blog.
The ghost of policy past
As valuable as the Almanac is, its data dates back an average of two years – something that unfortunately cannot be avoided due to the timing of filing charity accounts. So the figures in this year’s Almanac relate to the year 2016-2017.
It’s therefore worth looking back to what was happening then, to better understand why the data is what it is.
And the period covered by this edition of the Almanac started with nothing less than the EU referendum, and the decision of our country to leave the EU. This caused immediate economic disruption which inevitably had an impact also on many charities.
It was a huge additional – and for many unexpected – challenge for charities, as they continued to experience the effects of the previous year’s departmental cuts and to deal with the changes happening to local government.
We can now see that the knock-on effect for charities was significant. Many preventative and specialist services were lost, as councils had to focus on their statutory obligations. And the remaining services were commissioned through a smaller number of larger contracts, coupled with an expectation on providers to reduce their unit costs. Public service contracts continued to become inaccessible to all but the largest organisations in most areas.
As income from government plateaued, there was also a slight dip in income from the public for the first time since 2007/08.
The drop in donations was almost inevitable: 2017 was the year during which data protection legislation was a key area for charities: both in terms of complying with a tougher enforcement regime by the Information Commissioner’s Office, and preparing for the arrival of the General Data Protection Regulation (GDPR) in 2018. So charities were focused on reviewing their fundraising practices and doing a lot of internal work to prepare for higher data-protection standards, rather than launching donor-recruitment campaigns.
The drop in earned income from individuals was also predictable: the rise in this source of income had been almost entirely due to fees charged by charities for their services. But this approach is not likely to be replicable or scalable beyond a given point for many charities due to the nature of their beneficiaries or services.
Groundhog Day?
So, this was the political and economic context charities were operating in two years ago – and I think it is fairly reflected in this year’s Almanac figures. Although we don’t yet have the data to back it up, we know from speaking to our members that things have not got any easier.
The economic outlook is not optimistic: a weak pound, high inflation, and lower business investment following the UK’s decision to leave the European Union have continued to hit UK growth. So charities, as well as being directly impacted in their finances, are facing continued demand for their services and support, as the individuals and communities they serve will struggle to make ends meet.
The accumulation of increasing regulatory requirements and restrictions, from data protection to governance, are starting to be felt right across the spectrum – including our larger household-name charities.
And there is a sense that those few certainties that charities have managed to keep hold of are also at risk. Just to give you an example: legacies have continued to grow, showing a 50% increase over the last five years. They are a hugely important source of income for many charities – as well as a demonstration of how charities build lasting relationships with their donors. But earlier this year the Courts and Tribunals Service announced that it would end its current arrangement whereby charities are alerted when money has been left to them in someone’s will. Concerns have been raised that if a replacement system is not put in place promptly, charities could face delays in accessing millions of pounds that has been donated to them. There is also the question about whether legacies can continue to increase, given their dependence on a reducing demographic.
Yet to come
Going forward it will be more important than ever that charities are given certainty, not only with regards to their financial treatment but more widely their relationship with government. There are various opportunities to do this, such as:
- Implementing the recommendations that will be made by the Charity Tax Commission, when it publishes its final report in July.
- Properly consulting on the design and delivery of the Shared Prosperity Fund, reflecting on the principles set out by NCVO on a replacement European Social Fund.
- Taking a strategic approach to the Comprehensive Spending Review next year, and developing a coherent long-term approach to our sector.
So, although the Almanac is no travelling time machine, it certainly gives us one of the strongest evidence bases to identify what key issues we need to be putting our efforts into, to ensure that charities enjoy the financial stability they need.
Elizabeth was head of policy and public services at NCVO until 2020. 
