Financial Sustainability

The most urgent challenge will only be solved through greater financial stability, which, by far, is the most important challenge small charities and community groups are facing. Figure 1 shows that over the four years since June 2013, the average income generation for respondents to the Small Charity Index has remained static and not risen in line with the increased demand for services.

  • Voluntary income has remained relatively static with only 1 per cent growth (Small Charity Index, June 2013 to May 2017). This finding is supported by research carried out by CAF in their Giving Survey which calculated the total amount of voluntary income given to charity in 2016 to be £9.7 billion, a figure that has seen little or no movement over the previous four years(1).  If small charities are to increase their share of the voluntary income pie they will need to become more skilled at securing this type of income.
  • Statutory income has declined by 11 per cent (Small Charity Index, June 2013 to May 2017) and will continue to decline as Local Authorities continue to anticipate funding cuts for front-line services. LGiU’s report stated that three quarters of local councils had little or no confidence in the sustainability of local government finances and more than one in 10 believed they were in danger of failing to meet legal requirements to deliver core services (2).  Small charities are still well placed to receive income to deliver local services to do this they will have to clearly demonstrate, through measurable outcomes that they
  • Earned income is growing with an improvement of 11 per cent (Small Charity Index, June 2013 to May 2017). However, the number of charities developing this type of funding is small, we estimate less than 20% of small charities and community groups are exploring or developing earned income streams.

It is vital that small charities and community groups build financial sustainability and that they do this as a matter of urgency.  Developing a mixed income economy is crucial.

(1) CAF (2017) UK Giving Report []
Total voluntary income for 2012/13: £10.4 billion; 2013/14: £10.1 billion; 2014/15: £9.6 billion; 2015/16: £9.7 billion.

(2) LGiU and MJ (2017) 2017 State of Local Government Finance []