Spending outstripping income among two in five charities, regulator warns

Income is failing to keep pace with spending among two in five charities, figures released by the Charity Commission show.

Its analysis of figures drawn from annual returns for the financial year ending 2024 also show that small charities are particularly struggling.

The Commission found that one in four charities with an annual income of £10,000 or less reported only breaking even, compared to less than 1% for those in other income bands.

The sector also had 139,725 fewer staff in 2024 compared to returns submitted the previous year. In 2024, 1.6m people were employed across almost 50,000 charities.

The ratio of volunteers to staff members is also up, from 3.5:1 in 2023 to 3.8:1 in 2024. Seven in ten charities say that volunteers helped them deliver charitable work in 2024, with more than 6 million volunteers reported.

Despite the figures showing further indications of “the ongoing financial squeeze” facing charities, they also show that overall spending on charitable work is up, says the regulator.

During 2024 charities spent £100bn on delivering societal impact, an above inflation increase of 5.4% on the previous year. Nine tenths of this benefitted communities in the UK, while around a tenth, £11 billion, helped those overseas.

“Charities across England and Wales continue to make a huge impact and this analysis of charities’ annual returns underlines their significant social and economic contribution at a local, national and global level,” said Charity Commission chief executive David Holdsworth.

“But charity leaders up and down both countries continue to tell us they are under considerable financial pressures. This has an ongoing impact on their ability to deliver, which is felt keenly is by the communities they serve.”

He added: “One of the most important things trustees can do is plan and act on any ‘early warning indicators’ to help manage their finances whilst they still have a range of options.

The Commission is urging trustees to use its online finance toolkit, which includes a financial health checker.