Enforcement of additional funding by the government within the Third Sector may be like getting blood from a stone.
Using data from CharityFinancials.com we can see that, of the top 500 charitable foundations (grant makers) 303 spent more than they earned during the latest financial year, compared to 250 the year previously. This shows that charitable foundations are finding it increasingly difficult to live up to their current obligations. This is exemplified by the fact that the financial surplus for the top 500 (total income minus total expenditure) was a negative £604.4 million, compared to a positive surplus of £342.9 million previously.
Research using CharityFinancials.com has also shown that the top 500 foundations made grants to the value of £2,107.8m in 2009, a decrease of 2.1% from the previous year.
The number of foundations which reduced their funding shows the extent they have been affected by the economic downturn. Of the top 500, 246 decreased levels of funding in 2009 compared to the previous year. Those that did decrease funding decreased giving from £894 million to £598 million, a decrease of nearly £300 million. This makes the government’s £100 million Transition Fund look like a drop in the ocean.
However, the government’s recent “Giving Green Paper” suggests that foundations should make minimum payouts to charities, as is the case in some other countries.
Government plans for a Big Society sit alongside severe austerity measures to cut the national deficit and these plans include cutting back on the government funding to charity sector.
Within the “Giving Green Paper” the government states that it wants to explore funding opportunities outside of government including charitable foundations which are already a major income source to the charitable sector.
However, this research from CharityFinancials.com has suggested that foundations, heavily dependent on the investment markets have already been badly hit by the current economic climate. So the charitable sector has been hit twice fold following government funding cuts and reduced funding from within the sector.
Mark Pincher, Data Analyst at CaritasData comments: “to suggest that foundations should make a minimum payout suggests that they are holding back on giving. The largest organisations analysed here are in many cases eating into their assets to ensure the delivery of their obligations. To request or enforce additional funding may be like getting blood from a stone. Additionally which parameters could be used to set the minimum payout? Each organisation is different with differing long term aims and objectives and different asset structures. A best fit rule would be extremely difficult to put into practice and an examination on a case by case basis would also require funding. “
For further information, please contact Katy Dunningham: firstname.lastname@example.org,
Tel. 020 7566 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 163,000 charities, using over 200 search criteria. To find out more or to request a demonstration go to 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.