Charities in precarious position
Over 500 of the top 5000 charities may use up their resources in under a year if government funding is cut.
Latest data from CharityFinancials.com (http://www.charityfinancials.com) has shown that, with government plans to cut spending by £83 billion, charities reliant on government and local authority funding to carry out their charitable activities may find themselves in a very precarious position if cuts are directed at the sector.
According to CharityFinancials.com, around 1,500 of the top 5,000 charities received funding worth in excess of £5.9 billion from the previous government. Aggregate funding grew under Labour from £4.4 billon to £5.9 billion from 2004/5 to 2008/09. With some charities heavily dependent on public funding, any cuts would place a heavy burden on many organisations to seek alternative sources of revenue.
An analysis of charities which received government funding shows that many charities do not have sufficient resources to exist for very long if funding were to be reduced or taken away. A simple calculation which looks at the total amount of annual expenditure in relation to the assets of the organisation (asset cover), shows that of those 1,500 which received funding, 556 would use up the value of their present resources within one year if the rate of expenditure remains the same.
As the chart below shows, the analysis found that of those that would use up their resources in under a year, 104 charities had government income representing over 50% of their total. If any cuts were made this could have drastic consequences on the charitable activities they carry out, not to mention the existence of the charities themselves.
This research only covers the largest 5000 charities and does not take into account the many thousands of local community projects which are also dependent on local authority funding.
|The number of charities where asset cover is less than 1 year www.charityfinancials.com|
|Current expenditure levels would last||Where government funding is more than 50% of total income||Where government funding is less than 50% of total income||Total|
|under 1 month||13||41||54|
|between 1 and 2 months||6||42||48|
|between 2 and 3 months||13||36||49|
|between 3 and 4 months||10||39||49|
|between 4 and 5 months||6||52||58|
|between 5 and 6 months||4||41||45|
|between 6 and 7 months||11||47||58|
|between 7 and 8 months||10||40||50|
|between 8 and 9 months||9||25||34|
|between 9 and 10 months||5||24||29|
|between 10 and 11 months||8||38||46|
|between 11 and 12 months||9||27||36|
For further information, please contact Katy Dunningham: firstname.lastname@example.org,
Tel. 020 7565 8201
Notes to Editors:
Powered by the CaritasData database and containing detailed financial breakdowns for the UK’s largest charities, CharityFinancials is an advanced online tool that enables users to interact and manipulate the latest financial information for 169,000 charities, using over 200 search criteria. To find out more or to request a demonstration visit www.charityfinancials.com.
CaritasData provides in-depth financial data and analysis on the UK’s charities and other not-for-profit organisations, including universities, further education colleges, independent schools and housing associations. CaritasData defines the charitable marketplace through a range of data products, financial websites and magazines providing essential knowledge and insight on the charitable environment. For further information, visit www.charitiesdirect.com.