Charity sector: insights from the Annual Return 2022

The Charity Commission has published collated information from charities’ Annual Returns for financial years ending between January and December 2022.

The report provides an overview of the sector’s performance, as well as some interesting trends.

Robust Participation

The report reveals an encouraging level of participation, with 91.6% of registered charities filing an annual return in 2022. This high level of engagement is encouraging and highlights the sector’s commitment to transparency and accountability following some bad news stories in previous years.

Financial Growth and Challenges

A notable finding of the 2022 return is the increase in both income and expenditure, the highest increase since 2019 as the sector recovered from the challenges posed by the COVID-19 pandemic.

The highest growth area to large charities income came from fundraising, again likely to be due to a relaxing of COVID-19 restrictions, but also, charities are becoming aware of the challenging market and are looking to bolster their own reserves, a trend I expect to continue.

Of the charities that submitted an annual return, 62.6% have an income of less than £100,000. While larger charities with incomes exceeding £500,000 experienced growth, these smaller charities faced challenges in maintaining operational sustainability. Their income only rose marginally (0.84%) but expenditure rose considerably (8.95%). This highlights the start of the cost-of-living crisis in the UK, rising inflation and these charities continue to feel the pinch and a heightened cost base of providing their services.

Government Contracts and Grants

The report also sheds light onto the evolving landscape of government funding within the charitable sector. While income from government contracts increased, reaching £9.3 billion, the value of government grants decreased from £8.2 billion in 2021 to £7.0 billion in 2022. Charities are now more than ever looking to form strategic partnerships to gain contracts rather than being reliant upon grants, giving them stability in a difficult market.

Volunteer Engagement

Volunteers form the backbone of many charitable organizations, contributing their time, skills, and passion to advance various causes. The report indicates an overall increase in volunteer numbers in 2022, reflecting the sector’s continued reliance on volunteer support. Significant variations were observed across different charitable sub-sectors with environmental and cultural organisations seeing an uptake in participation. Whilst others such as religious charities and armed forces saw a decrease. Overall, there were over six million reported volunteer numbers over the period.

The report shows that the charity sector, has like most business, faced difficulties during and after the pandemic. It’s interesting to see how those driving these organisations have embraced the importance to diversify their income streams to ensure long term sustainability.

Finally, it is encouraging to see the continued support of the British public through volunteering to enable the sector to drive positive social change and collective well-being across the UK.

A full copy of the report can be found here.

If you’d like to speak to our team about anything in this article, please get in touch.