There has been a 24% drop in charities receiving government grants, the Charity Commission has reported using annual returns data from between 2021 and 2022.

Smaller charities reported the biggest drop in income from local or national government grants, which across all charities fell from £8.2bn in 2021 to £7bn in 2022.

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

Income changes

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 £90.3bn, with total gross expenditure growing 9.19% to £87.4bn.

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%.

Volunteering

The analysis found that 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.

Charity Commission CEO Helen Stephenson 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."

---