Charity numbers fall leaving ‘big society’ pledge under threat

Official register records fall of over 1,600 charities in coalition’s first year, with mergers seeing a 150% increase David Cameron’s pledge to bring more charities into the public sector through his “big society” initiative risks collapsing before it has begun, charity leaders have warned, as Guardian research reveals the total number of registered charities operating in the UK fell by more than 1,600 in the coalition’s first year. More than 8,000 charities have been removed from the official register, held by the Charity Commission, since May 2010, and only 6,400 new charities have been founded in their place. A commission spokeswoman said the number of charities on the register generally remained constant each year. The commission has seen a 150% increase in the number of cases its mergers unit has dealt with since 2009, driven in part by charities adapting to straitened economic circumstances. Charity bosses fear the reduction in the total number of charities is a portent of a contraction in the sector, which is only just beginning to be felt as billions of pounds in statutory support are cut. The number of charities fell by more than 700 in March alone, just before the first round of grant reductions resulting from drastic local authority budget cuts. Bringing in charities to provide public services to “tackle our most deep-rooted social problems” is a cornerstone of Cameron’s big society project, relaunched for the third time last month , but charity leaders have warned cuts in charitable grants could kill off the proposals. “The big society doesn’t come for free,” said Emily Holzhausen, policy director of Carers UK . “Community projects do need resources to get off the ground. If those aren’t there, or are even removed, it’s a real worry. Public grants make up a core part of many charities’ funding. Charities losing that part of their funding are often no longer viable, which affects services to some of the most vulnerable communities in the country. Anecdotally, we’ve heard of several organisations that now no longer exist. This research seems to back that up.” Holzhausen said cuts to charity grants could often be particularly devastating to vulnerable communities as charities supplement their statutory income with cash from donations and other sources, extra money which can be irrevocably lost if public core funding is withdrawn. The sector’s growing reliance on such funding is highlighted by an analysis of figures published by the Charities Aid Foundation (CAF), which reveals voluntary income – money from donations and similar sources – is falling at the UK’s largest 1,000 charities. Charities’ latest accounts, which cover 2010 and some of 2009, showed charitable incomes were beginning to recover from the hit many had taken during the depths of the recession, with an average above-inflation rise of 6.8%. But one in four charities’ incomes were already experiencing a year-on-year fall before the budget cuts, with voluntary donations experiencing a particular squeeze. They fell from an average of 35% of total income to 32.5%, making the sector more reliant on income from endowments and public sector grants, and leaving it especially vulnerable to cuts. Jane Arnott, senior advisory manager for CAF, said voluntary income was under pressure due to the tough economic climate. “Unemployment and inflation have the most obvious impact on charitable giving,” she said. “The income of public sector workers is frozen, while those in the private sector got around 3% this year. With inflation at 4.5%, incomes are under pressure. In this climate, charities may see voluntary income falling by more than they expected. “We are seeing more charities coming to us that have traditionally relied on income from donations and grants from trusts and local authorities looking to diversify.” She said “corporate support and high net worth individuals” remained as the “streams were not yet exhausted”. The figures reflect long-running trends in charitable giving, with recent research by the University of Bristol and Cass Business School having tracked 30 years of data to establish that fewer households than a generation ago donate. Also troubling for those trying to foster a giving culture in British society is the apathy of the young: older people are substantially more likely to donate and the share of donations from over 60s rose from 33% to 44% between 1978 and 2009. The Charity Commission said it was unable to provide a breakdown of the reasons behind removals from the charity register but pointed out it had become more systematic about removing inactive charities. Martin Brookes, of New Philanthropy Capital, suggested mergers were likely to be important. “Healthy companies merge when they spot synergies between their work, but charities do so to balance the books when they run out of money. Already this year, we have seen the youth charity Fairbridge, an organisation once praised by David Cameron, being swallowed up by the Prince’s Trust, a development which should worry anyone who cares about its valuable work.” Charities Voluntary sector Communities James Ball guardian.co.uk

Posted by on June 5, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.