What are the trends in income from government?

Overview

  • In 2018/19, government remained the second largest income source for the sector, behind the public. Income from government stands at £15.8bn and makes up 28% of the sector’s total income, slightly down from 29% the year before.
  • Income from government includes income from:
    • central government departments
    • local authorities
    • devolved and regional government
    • the EU and international governments
    • town and parish councils
    • NHS trusts
    • a range of non-departmental public bodies (NDPBs).
  • The income from government generally goes directly from the government body to the voluntary organisation. There are sometimes more complex arrangements such as subcontracting, match funding and direct payments to the beneficiaries, but this is much more difficult to identify in the data.
  • Although this income represents a significant amount for the voluntary sector, it accounts for less than 2% of total government spending.

Over time

  • There was a 2% decrease in the amount of government funding for the voluntary sector between 2017/18 and 2018/19.
  • As a proportion of the sector’s total income, income from government has fallen continuously since 2008/09. It made up 37% of the total income in 2008/09 and dropped to 28% in 2018/19.
  • Looking at longer-term trends, income from government grew significantly from 2000/01 to a peak in 2009/10. The peak was followed by relatively steady reductions after that point (with the exception of 2013/14).

There was a slight fall in the amount of government funding for the sector in the year to 2018/19, after a few years of relative stability

By source

  • In 2018/19, there were small decreases in both central government funding and local government funding. Compared to 2017/18, income from central government fell 1% by (£63m) to £7.3bn. This follows three years of slight increases since 2015/16. Income from local government fell by £18m to £7.5bn (a fall of less than 1%).
  • UK-based charities also receive funding from European and international governments, although these amounts are relatively small at around 7% of government income. In 2018/19, the sector’s income from these European and international governments fell drastically by £1.1bn (-18%).

There has been a small decline in funding from both central and local government, as well as a much more drastic fall in funding from European and international governments

By size

  • Smaller organisations received a considerably lower proportion of their income from government than other income bands. In 2018/19, micro and small organisations – those with an income below £100,000 – received 12% of their income from government. This compares to 26%-34% for larger organisations (those with an annual income of £1m or more).
  • Larger organisations received the vast majority of all funding received from government by the sector with 87% in 2018/19, or £46.2bn. By comparison, micro and small organisations received just 2% or £2.2bn.

Larger organisations receive much more income from government than smaller ones

By subsector

  • Voluntary organisations in the social services subsector receive the most income from government (£5.4bn), or 43% of their total income. This is followed by health which receives £2.2bn or 35% of its total income, and international with £1.5bn or 25% of its total income.
  • Some subsectors also receive high proportions of income from government, although they received smaller amounts in cash terms. For instance, income from government made up 57% of total income for employment and training organisations, 45% for playgroups and nurseries  and 44% for law and advocacy organisations.
  • Organisations in the research subsector saw a drastic 32% fall in income received from government while religious organisations also saw a fall of 19%,  although as relatively small subsectors they are prone to large annual fluctuations. The much larger international subsector saw a substantial drop of £1.8bn from the year before (a fall of 18%). A major exception to this was employment and training, which saw a substantial 34% increase on the year before.

The social services sector in particular receives a large amount of funding from government, both in absolute terms and as a proportion of income

Putting it into context

Income fluctuations

Fluctuations in income from government for the sector have historically been in line with departmental spending, with public spending cuts often happening at the beginning of spending cycles.

This year’s Almanac data covered the third year of the 2015 spending review period, which set out £18bn of cuts to departmental spending by 2020. The continuing small reductions in overall funding from government in the previous year is consistent with those spending review reductions.

Income distribution

The continuing uneven distribution of income from government across different-sized voluntary organisations reflects the trend towards the commissioning of large-scale contracts.

Major organisations, which receive the largest proportion of income from government, are more likely to have the resources and capacity to bid and deliver large scale public service contracts.

More data and research