Charity Commission
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Regulator publishes annual return analysis

The 2022 data enables the Commission to look back at the health of the charity sector.

The Charity Commission has today (Thursday 4 April 2024) published new insights compiled from data reported to it by charities. The annual return 2022 represents the most comprehensive data set available on the charity sector, as it is a statutory requirement for charities to provide this to the Commission.  

Combined sector data for financial years ending in 2022 shows that on average larger charities saw both income and expenditure grow, while lower income charities saw expenditure outweighing their income.  

Total gross income for all charities that submitted an annual return increased by 8.48% in comparison to 2021, to £90.3 billion, with total gross expenditure growing 9.19% to £87.4 billion. For approximately 12,000 charities with an annual income above £500,000 the data indicates this was largely driven by a 38% increase in fundraising income, influenced by a relaxation of COVID restrictions. However, those with an income of less than £500,000 observed a 3.24% increase in income, whilst also seeing expenditure rise by 11.6%. 

Smaller charities reported the biggest drop in income from local or national government grants, which across all charities fell from £8.2 billion in 2021 to £7 billion in 2022. The number of charities reporting receiving such grants also fell by 24% between 2021 and 2022 (from 35,474 to 27,001).  

In contrast, almost 6,500 charities provided services via government contracts in 2022 with a value of £9.3 billion – an upward trend for the fourth year running. This represents an increase of 25% from the reported value of £7.4 billion in annual returns for 2018.  

More charities than ever before reported on proxy reserve levels (as their income exceeded £500,000, the trigger for this reporting requirement). However, proxy reserves were broadly level with 2021 figures, at a total of £75 billion for the sector versus £73 billion in 2021.  

Reported volunteer numbers grew overall, but with some significant variation across the sector. Education, environment, conservation and heritage charities reported large increases in volunteer figures, while religious charities, those providing front-line services and those offering support to armed forces personnel faced a decrease in volunteer figures compared to 2021. 

As well as giving insights into individual charities, annual return data enables the Commission to provide insights on the health of the sector overall by looking back at this data in comparison with current conditions.  

A range of sector sources indicate that some conditions have deteriorated since 2022. Financial resilience remains a key risk for the sector and charities continue to report challenging circumstances with rising costs, funding pressures and increased demand. Trustee and volunteer recruitment also are said to be proving more challenging across the sector.  

Helen Stephenson, CEO of the Charity Commission, said: 

Charities are part of the fabric of our communities, and this data from 2022 indicates a very substantial sector with a surprising degree of resilience. 

Since then, the cost-of-living crisis and inflation have amplified demands on charity finances, resulting in a mixed picture across the sector. Some are facing unsustainable demands.  

Publishing data from the annual return allows us to understand how the charity sector continues to evolve and change, and to better understand longer term trends.

Notes to Editors 

  • The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society. 
  • Charities must submit their annual return within 10 months of the end of their financial year. For example, if a charity’s financial year end was 31 December 2022, the deadline is 31 October 2023. Depending on when a charity’s financial year begins and ends, the data reported to the Commission in the 2022 annual return may include data from the 2021 calendar year.  
  • Only charities that complete Part B of the annual return are asked about their level of free reserves. Part A data is completed by all charities with an income over £10,000. Part B data is completed by all charities with an income above £500,000.  
  • The full report of annual return 2022 data can be found here.
Channel website: https://www.gov.uk/government/organisations/charity-commission

Original article link: https://www.gov.uk/government/news/regulator-publishes-annual-return-analysis

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