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UK Civil Society Almanac 2019: the state of the UK's voluntary sector

The NCVO's UK Civil Society Almanac provides a unique insight into the UK non-profit sector's finances, staff and more. Cazenove Charities is a proud sponsor of the publication

10/07/2019

Amy Browne

Amy Browne

Portfolio Manager

Cazenove Charities

The National Council for Voluntary Organisations’ (NCVO) UK Civil Society Almanac is a comprehensive source of information about the Charity sector’s finances and staff. It uses data from the past 23 years and draws out a number of interesting themes about the state of the voluntary sector relevant to every charity, no matter what size or mission.

Cazenove Charities is delighted to sponsor the Almanac. As the largest manager of Charity investments in the UK with more than 900 non-profit clients, we have a unique insight into the sector’s finances, particularly in relation to their investments. As anyone involved in overseeing the finances of a charity will know, the key to long-term success is ensuring operational efficiency and careful management of future spending. To this end, what can we learn from this year’s Civil Society Almanac?

Main takeaways:

Assets

  • Net assets grew by 4% in 2016/17, marking a record high
  • Growth was mainly down to strong investment performance, up by 7%. This is similar to the average growth rate of 6% in the last four years
  • Pensions liabilities were up by 55%, leading to a total pension deficit of £3.2bn for the sector. However, significant growth in investments meant that net assets were still up overall

Value_of_investments.PNG

Investments now make up a record 78% of the sector’s overall asset base.

Source: NCVO/TSRC, Charity Commission

Income

  • Total income went up by 2% in 2016/17 to £50.6bn, a slightly lower increase than in the last three years when income grew between 3% and 6%
  • The public (45%) and government (31%) remain the largest income sources, but both of them plateaued in 2016/17
  • Growth in total income was due to increases in grants and in investment income

Income_sources_over_time.PNG

Overall growth in income was driven by grants and investments, while income from the public and government plateaued.

Source: NCVO/TSRC, Charity Commission

Charity size (see appendix for definitions)

  • There are 166,854 voluntary organisations in the UK. While the total number has remained fairly stable, the number with more than £100m has grown from 45 to 51, accounting for 0.03% of organisations and for 22% of the sector’s total income
  • The growth in the income of super-major organisations can be explained by their increased number but also their strategies and decision-making. For example, they include:
    • former government institutions (Canal & River Trust),
    • growth through mergers (Change, Grow, Live),
    • centralised funds that were previously held internationally (Save the Children International),
    • receipts of large one-off gifts (Power to Change Trust, Steve Morgan Foundations).
  • In 2016/17, more than half of the sector’s income was generated by major and super-major voluntary organisations. Their share of the sector’s income has almost continuously grown from 38% in 2000/01 to 53% in 2016/17.

Income_profile_by_charity.PNG

Investment income represents 8% of total income, with micro and small charities relying on it the most (15%). Major charities depend primarily on the public and government, with a combined 82% of their income coming from those two sources alone.

Source: NCVO/TSRC, Charity Commission

 

Summary

Investments generate a small but significant share of the sector’s overall income. While charities continue to rely primarily on the public and government for the majority of their income, we have seen that support from these two areas has plateaued. In a climate of political uncertainty, it is not clear what impact the next government may have on the shape of public and private finances. Careful management of investments can provide an independent source of funds, helping to insulate organisations from oscillations in other income.

What can we do?

  • Think beyond immediate political noise, and put a long-term strategy in place. What are your objectives? The main risks facing your charity? How can you mitigate them?
  • Keep income as stable as possible and diversify your income stream
  • Think of ways to reduce income volatility; leasing a property, for example, or investing in a vehicle that can smooth the income stream over a number of years
  • Be mindful that both assets and income fall in a recession. Diversify your base to shield your finances from the most dramatic swings
  • Plan your spending and use the data in the 2019 Almanac to inspire long-term thinking

For more information and insights https://data.ncvo.org.uk/

Appendix

Income bands

Within the Almanac, voluntary organisations are divided into six groups based on their income.

Income_bands.PNG

Author

Amy Browne

Amy Browne

Portfolio Manager

Cazenove Charities

Amy joined the Charities team at Cazenove Capital as a Portfolio Manager in 2016. Previously at GAM and Sarasin & Partners, Amy has nine years of investment experience working as a portfolio manager for charities, private clients and institutions. Amy holds the Investment Management Certificate, the PC Investment Advice & Management Certificate and the Investment Advice Diploma in Securities. She holds a BA (Hons) 1st Class in History from the University of York.

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Limited 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped and monitored. 

Contact Cazenove Charities

Achieving your charity's investment objectives takes time and thought. To find out how we can help you please contact:

Kate Rogers

Kate Rogers

Co-head of Charities kate.rogers@cazenovecapital.com
Alex Baily

Alex Baily

Co-head of Charities alex.baily@cazenovecapital.com