What the data tells us about the small charity landscape

We refresh the data on SmallCharitiesData.org whenever possible and review the combination of data sources together and over a period of time to get a better understanding of the landscape for small charities and the trends that emerge.

Here are some of our key findings from our most recent refresh.

Small charities make up the majority of the voluntary sector

Small charities, those with an income under £1million a year, make up 96% of the voluntary sector in the UK. This figure will likely be familiar to most people reading this as we’ve been quoting it for some years as have our peers across the sector. That’s because this figure has largely remained the same since 2013.

Despite making up the majority of the voluntary sector, these 159,041 small and local charities only receive 17% of the overall sector’s income. That’s £9.9bn of £58.7bn. 

This gap in share of income is widening. In 2013/14 small charities’ share of sector income was 20%, by 2019/20 it’s down three percentage points. In comparison, the largest charities, those with an income over £100m, keep growing, despite making up less than 1% of the sector

Declining income amidst increased demand

Just over half (51%) of small charities’ total income comes from the general public. 

Whilst income from the general public has gone up slightly in the years leading up to the pandemic (2018/19), many of the charities we support at the Foundation have reported individual giving figures dropping due to people not being able to donate because of the heightened cost of living.

There has been an increase of demands on our personal donor base due to the cost-of- living crisis, which has a ripple effect on their disposable income for giving. - Small charity supported by the Foundation.

There has been a major decrease in donations from many of our sources such as Food share as well as most local shops who have been supporting us. - Small charity supported by the Foundation.

The second largest is from Government which makes up a fifth (21%) of small charities’ total income. Yet this has been declining year on year on the lead up to the pandemic. 

We’ve heard from charities we partner with that this decline in income has led to charities having to cut back on services:

A second challenge that we face is potentially losing two staff members (and in one case this would also mean losing a whole service) due to not being able to secure funding for their roles. - Small charity supported by the Foundation, Feb 2023

This comes at a time when more and more people are turning to charities for help. Some charities have resorted to developing lighter touch interventions to provide some support for people who are stuck on waiting lists:

We understand that clients need support while they are on our waiting list, since it had grown to over 2 years. We are therefore offering pre-counselling groups all year round, running two per week, so that they can benefit in the meantime from 8 weeks of a different therapeutic intervention - Small charity supported by the Foundation.

The situation in Wales

Only 5% of small charities work in Wales, the second smallest regional proportion in England and Wales. They receive just 4% of overall annual income.  

Yet Wales has the highest poverty rate among the four nations in the UK, with almost 1 in 4 people living in poverty with 13% of Welsh households either sometimes or often struggling to afford everyday items.

More can be done

We know that small and local charities are vital to our communities, and never more so than at times of crisis.

Yet this data paints a bleak picture of the future of small and local charities. As more people are pushed into hardship, particularly people already facing complex issues and barriers, we need to ensure that small and local charities have the support and resources they need to do what they do best.

There’s been significant support and recognition of small charities right across the sector and beyond this Small Charities Week, and more than 1000 people have signed a letter calling on the PM to recognise the vital role small charities play in our communities.

If we are to really recognise the importance of small charities we need long term change to support them including:

• Providing longer term, flexible and unrestricted funding that works for charities
• Put social value at the heart of commissioning and procurement of public services and ensure funding arrangements are uprated to reflect inflation
• Ensure local authorities have sufficient resources to fund and deliver services
• Improve the social security system to meet people’s needs

As Small Charity Week 2023 wraps up we want to encourage everyone that’s shared their time, resources and expertise and shouted about the value of small and local charities to keep up the same momentum next week, next month, next year until we start to see the change that we need.