Restructuring in the charity and not-for-profit sector: A change of perspective?
What is the size of the sector?
There are 168,186 charities registered in England and Wales. 1 The majority (87%, or 145,714) have an annual income below GBP 500,000, with 39% below GBP 10,000. A small minority (1.3%, or 2,263) have an income above GBP 5 million. There are 6,139 registered charities in Northern Ireland 2 and 24,487 in Scotland. 3 This puts the total of charities registered in the UK at just under 200,000. The sector contributed approximately £17.1bn to the UK economy in 2016/17, representing 0.85% of total GDP. To put this amount in context, the contribution of the sector is a little less than the GDP of Honduras (£17.4bn, ranked 107 out of 121 countries), and a little more than the GDP of Cyprus (£16.6bn ranked 110). 4 Just under 870,000 people worked in the voluntary sector in the UK in June 2018, equivalent to 2.7% of the UK workforce. For comparison, the voluntary sector
workforce is just under three-fifths of the size of the NHS workforce, (the single largest employer in the UK with a headcount of around 1.5 million) and more than two and a half times that of Tesco’s workforce (one of the UKs largest employers with 324,000 staff in 2018). 5
What are the common issues that cause financial difficulty?
The Charities Commission reviewed the reasons why charities entered into financial difficulty and identified changes outside of the charities control, such as expiry or withdrawal of grants from local and central government agencies, or the impact of the wider economic climate has had on income, as the principal causes for distress (see Figure 1). 6
Figure 1
23%
Dependency on public funding
23%
Other
14%
Set up/restructure costs
Charities Commission: causes of financial difficulty
13%
Pension scheme
13%
Unplanned overspends
8%
Future funding uncertain
6%
Contingent liabilities
Notes
1 Charity Commission <www.gov.uk/government/publications/charity-register-statistics/recent-charity-register-statistics-charity-commission>, 1 November 2019. 2 Charity Commission Northern Ireland, <www.charitycommissionni.org.uk/charity-search/?pageNumber=1>, 5 March 2019.
3 Office of the Scottish Charity Regulator, www.oscr.org.uk/>, 1 November 2019. 4 UK Civil Society Almanac 2019 <www.data.ncvo.org.uk/impact/>, 18 November 2019. 5 UK Civil Society Almanac 2019 <www.data.ncvo.org.uk/impact/>, 18 November 2019. 6 Charity Commission, <www.charitycommission.blog.gov.uk/2016/09/29/what-to-do-if-your-charity-is-facing-financial- difficulties/>, 1 November 2019.
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