Trading and enterprise: how small charities earn their income

Overview

Small charities are most likely to earn their income from the public via the sale of goods or services, and least likely to earn their income from government contracts.
Over a five year period there has been a shift in the source of the greatest share of small charities’ income, from earned income to voluntary income.
Over a six year period, small charities have seen the greatest increase in the amount of goods and/or services purchased by the public as a proportion of their total income.
In 2016, the main sources of small charities’ earned income included rent through room hire and workspace (22%) and income from contract delivery (19%).
Small charities were more likely to be discussing social enterprise and social investment in 2020 than in 2017 (although still less likely than large charities).

The smaller the charity, the more likely they are to receive money from the public in exchange for goods or services.
Conversely, the larger the charity, the more likely they are to receive money in exchange for goods or services from the government.
In 2019/20, charities with an income of under £100k received almost three-quarters (72%) of their earned income from the public.

Since 2013/14, small charities have experienced a shift in where they get income from, with the overall trend towards receiving the largest share of their income from voluntary sources (43%).
The share of small charities' income through investments has also increased from 2013/14 (12%) to 2019/20 (16%).

Since 2013/14, the overall amount of goods and/or services bought by the public has increased, regardless of charity size.
Small charities have continued to receive the greatest share of their trading income from the public.

In 2016, over a fifth of small charities reported that they earned income via renting out workspaces or room hire. This was the most common way of earning income for small charities.
The second most common way of earning income was through contract delivery (19%).

Large and major charities were more likely than small charities to be discussing ways to diversify their income at board level through social enterprise and social investment, in 2017 and 2020.
In 2020, a higher proportion of small charities were thinking about diversifying their income through social enterprise or social investment than in 2017 (33% and 27% respectively).

Insights

Explore data on how small charities deliver services on behalf of the public sector

insights

What are small charities’ main funding concerns? How stable are their finances?