Umbrella body NCVO has reported a significant increase in its income after it received a £5m “back payment” from the Charities Aid Foundation (CAF).
NCVO’s income rose to £12.3m in the year to March 2024, from £7.13m in the previous 12 months, its latest financial accounts show.
“The main reason for this increase is the receipt of funds of £5m from Charities Aid Foundation recognising an underpayment in the previous years of a contractual agreement,” the accounts read.
“We are continuing to negotiate this contract moving forward so we can support even more charities, in more ways.”
£1.4m paid ‘in respect of’ 2023-24
CAF was formed 100 years ago as a project of the organisation that became NCVO, before becoming independent in 1974, with an agreement to make an annual payment to the umbrella body.
NCVO chief executive Sarah Elliott said: “In May 2021, CAF reduced the amount it paid to NCVO.
“The amount of £5m is in relation to this reduction and is a back payment to cover that period.
“These backdated funds will enable NCVO to invest where it really matters, helping us progress our work and make an even bigger impact for the sector.”
Elliott added that part of the £5m payment would “enable us to make up for the use of reserves in previous years when we were underpaid by CAF”.
In its most recently published accounts, CAF notes the £5m payment to NCVO “for the period 1 May 2021 to 30 April 2024 as part of our ongoing commitment, which is payable in support of their representation of the interests of charities”.
“This follows a review of the terms of CAF’s products and services. £1.4m was paid in respect of the year ended 30 April 2024,” it adds.
Reduction in payments from 2021
According to its previous accounts, NCVO received £1.77m from CAF in 2020-21, a similar amount to the year before.
However, this amount reduced to £955,000 in 2021-22 before falling again to £741,000 in 2022-23.
In the umbrella body’s accounts for 2021-22, it said trustees would “work with CAF to understand CAF's explanation for making reduced payments to NCVO and to assess those amounts”.
“We are hopeful that we will reach a common understanding soon,” the accounts read.
However, its documents for 2022-23 read: “We are continuing to explore with CAF the reasons for the decline in this historic income stream.”
A CAF spokesperson said the previous reduction in payments followed a review of its products and services.
“The Charities Aid Foundation is proud to have promoted NCVO’s important work since our establishment as an independent charity in 1974, including through £11.8m of financial support in the last five years,” a spokesperson said.
“We look forward to continuing to work together to support charities long into the future.”
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