The UK charity sector’s income shrank for the first time in eight years following the Covid-19 outbreak, according to new research, with smaller charities most affected.
NCVO’s latest charity sector overview shows a 14% drop in money from the general public and a 15% fall in investment income led to a 3% overall decrease in 2020-21.
Voluntary sector income declined from £58.7bn in 2019-20 to £56.9bn in 2020-21, according to the UK Civil Society Almanac 2023 published today.
Smaller charities bore the brunt of the decline, with their income dropping while larger charities’ revenue rose.
Meanwhile, the number of charities decreased by 1% overall to 163,959, similar to 2018-19 levels.
The number of charities with an income of more than £10m declined for the first time in 2020-21 from 846 to 804.
But longer-term, charities with an income of less than £100,000 have declined as a proportion of the sector, from 88% in 2000-01 to 80% each year since 2018-19.
Government income increase
The decrease in overall income in 2020-21 was driven by a 14% decrease in money from the general public during the year following the Covid-19 outbreak.
However, at £26.5bn, this still made up the greatest proportion of total income (47%) and was 70% higher than the level seen in 2000-01 (£15.5bn).
Investment income to the sector also declined by 15% to £4.5bn during the year.
Most other sources of income increased, most notably government income (up 6% to £16.8bn).
Small charities most affected by funding decline
Charities with an income below £1m saw funding fall by £4.6bn compared with 2019-20, while larger organisations saw their revenue rise by £4.5bn.
Sarah Vibert, chief executive of NCVO, said: “Our data reveals a grim picture of the sector post-pandemic finances – with income dropping for the first time in years.
“This has been particularly felt by smaller charities, who despite the continued goodwill and generosity of the public, saw a significant income reduction. This left them extremely vulnerable to the cost-of-living crisis, and many simply couldn’t weather this storm.
“We are now facing the long-covid effect. Each day we see smaller voluntary sector organisations make tough decisions to scale back, cut services or shut their doors for good.
“Charities, and the communities they support, need and deserve a more sustainable future if we’re going to make any progress in addressing inequalities across the country.”
Editor's note: This article was updated after NCVO published a revised figure for 2019-20 overall income
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