Income dependence and diversification of UK charities at the onset of Covid-19

There is considerable public concern about the effects of Covid-19, and its social and economic consequences, on the financial position of UK charities.

The effects are likely to vary depending on the funding mix of charities, and on their reliance on particular income sources.

TSRC, along with partners at the Universities of Stirling and Southampton, is investigating the financial impacts of Covid-19, supported by ESRC under UK Research and Innovation’s Covid-19 funding stream.

Our latest briefing paper, considers the extent to which charities are reliant on particular income streams. If they are, and if large unexpected changes take place in those streams, charities may be highly vulnerable financially.

We find that many charities are highly reliant on a single source of income for at least half of their revenues. Nearly half of organisations get at least 50% of their income from “charitable activities”, a broad term which encapsulates sales of goods and services, and contracts for delivering public services. About 3 in 10 organisations receive over 90% of their income from such sources.

Charities established relatively recently (in the last ten years) are much more likely than others to have a single dominant revenue stream; three-fifths of those get at least 90% of revenues from one stream.

Voluntary sources of income – donations, income from fundraising, trading activities such as charity shops – are fields which have been particularly affected by Covid as people are unable to attend events or premises. Just over one-sixth of charities receive at least 90% of their income from such sources and one-third get over 50% in this way.

We will be launching the findings at an event on Tuesday 23 March and a recording of that event will be available shortly afterwards.