Charity Commission data seems to show a growing sector in which big charities have ever more of the pie. David Ainsworth looks into whether this is correct.
The Charity Commission has published some data on the total size of the charity sector, and on the proportion of charity income which accrues to the biggest charities.
It shows two main things.
First, the registered charity sector is growing much faster than the wider economy, at least over the last decade. The sector has grown 77 per cent, compared to a decade ago. That's 33 per cent in real terms, correcting for inflation, and 20 per cent more than the UK economy as a whole.
Second, the proportion of the sector’s income going to charities with incomes over £10m appears to have grown steadily over the same period, according to Charity Commission annual figures.
So what’s going on? Is the sector really growing that fast, and are big charities really getting richer and richer?
How much has the sector as a whole grown?
The fact the sector is growing so fast sounds pretty interesting. The last decade is often seen as a tough one for charities, so how come Commission stats show the sector has been growing rapidly?
First, the regulator’s numbers doesn’t tell us about the voluntary sector, only registered charities. That includes many housing associations, universities and independent schools, and excludes many real charitable bodies which are exempt or excepted from Commission regulation – as well as all charities in Scotland and Northern Ireland.
NCVO’s UK Civil Society Almanac, which excludes schools, universities and housing associations, tells the opposite story. It shows almost a decade of real terms stagnation in what we would consider “our” sector – voluntary organisations – after a decade of rapid growth, driven by increased public sector commissioning.
Are big charities are growing faster than others?
At first glance it looks that way.
The annual summary of income going to charities with income over £10m, shows that 1,191 charities – those with incomes over £10m – received 61.2 per cent of the sector’s income. Ten years ago the figure was just 48.7 per cent.
The figures aren’t as clear as that, though.
Because the Commission just counts the number of charities earning over £10m and adds up the income of all of them, this isn’t a like-for-like comparison.
Inflation over the last decade has pushed more and more charities into the over £10m bracket. A decade ago there were only 627, compared to now. So if we really want an accurate comparison, we have to compare the same number of charities. We need to work out what the 564 charities that have crossed the £10m threshold were worth a decade ago.
We can roughly estimate that. If the 627 charities worth over £10m a decade ago had all grown proportionately, then the other 564 which are now worth over £10m would have to now be worth an average of £17.5m each. That means that if they had all grown proportionately as well, they would have had to be worth roughly £10m a decade ago. Obviously that can’t be the case.
So big charities definitely have got bigger.
Organic growth or new entry?
The biggest charities might have been inflated not by organic growth, but by new entrants to the register. The figures could also be skewed because some charities have merged and others have gone under.
New entrants appear fairly common. Of the charities in our haysmacintyre / Charity Finance 100 Index – constructed from Commission data – ten were not on the register a decade ago. Approximately £1bn of additional funding has appeared in one way or another in the list of the largest 100 charities.
Our own index is not comprehensive either, however. It excludes a number of charities which are deemed to be government-controlled, or are seen as just consolidating other peoples’ money into their accounts. A glance at the Charity Commission’s list of largest charities reveals that three of them which do not appear , worth over £2.3bn, were not on the register a decade ago.
Since 2006 a lot of very big charities have appeared on the register, mostly parachuted in from government. Welsh universities now sit on the register. The Canal and River Trust and English Heritage have appeared in the list of the hundred largest charities. And a number of education charities have seen significant growth because they have taken on new academies and free schools.
From Charity Finance magazine
So existing charities haven’t really grown?
If the charity sector had grown proportionately to inflation over the last decade, it would now have a total annual income of £54.8bn, instead of £73.1bn. But how much of this is down to organic growth, and how much is new entrants on the register?
It seems like that it’s substantially the latter, if just 13 charities can account for £3.3bn between them.
But that’s not all it is. The charities in our indexes since 2006 – only about 250 organisations – grew by £7bn by themselves – a rise of around 58 per cent, over a decade.
So it seems likely that most of the growth is accounted for by a handful of big new charities and a handful of huge success stories, many of them not part of the core voluntary sector.
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