Charity Funding Market Assessment 2005
Key Note Publications Ltd, September 2005
In 2005, two major pieces of legislation that will radically alter the way charities are administered are to come into effect. The first is the Charities Bill, the report stage of which is provisionally scheduled for 12th October 2005, and the second is the Community Interest Company (CIC) Regulations 2005.
The main objective of the Charities Bill is to build public confidence in charity giving by tightening regulation. This Bill affects England and Wales, as charity law is devolved in Scotland and Northern Ireland. Scotland introduced its own Charities and Trustee Investment (Scotland) Bill in November 2004.
The definition of a charitable organisation is also changing, with a responsibility to show interests in public benefit, the definition of which is being considerably widened. However, a further development in organisations serving the community is the creation of a new legal entity —the CIC. From July 2005, new companies may register as CICs with Companies House in the usual business forms — as a private company, limited either by shares or by guarantee, or as a public limited company (PLC) but with restrictions on the way funds may be distributed. While not enjoying the same kind of tax breaks as charities, regulation of CICs is intended to be lighter than that of charities. However, the restrictions include capped dividends to shareholders and `asset locks', which ensure that profits are distributed not to members but rather to the community.
Both of these measures — along with the `make poverty history' emphasis taken by the Prime Minister to the G8 Summit in July 2005 — indicate that the current Government places a great deal of importance on creating strong frameworks for giving for both governments and individuals.
However, research commissioned exclusively for this report shows that the percentage of the population making donations to charity has dropped considerably. In 2003, 80% of the adult population had given to charity in the previous 12 months. In 2005, this figure had dropped to 66%. Furthermore, this figure could be much lower if those giving only to the tsunami appeal were discounted. There are also fewer responding to television appeals: just 22% of respondents agreed that they usually make a donation in response to a television appeal in 2005, compared with almost half in 2003.
Charities, especially charity umbrella organisations such as Charities Aid Foundation (CAF), are doing all that they can to make giving as easy as possible for donors and to provide as much reassurance that their donations are being spent wisely. The research shows, however, that these are not particular issues for donors — they know how to give.
This research supports the sector's own findings, that is to say charities are increasingly targeting the commercial sector to maintain the levels of funding they need, as well as working more closely with government, especially those charities working in the social services sector. This is the future for the industry. Incomes overall have shown yearly increases to the point where the sector is now worth almost £37.1bn (June 2005).
Executive Summary
1. Introduction
REPORT FOCUS
DEFINITION
2. Strategic Overview
THE CHARITIES BILL
Structural Reforms
Public Collections
Exempt Charities
Excepted Charities
COMMUNITY INTEREST COMPANIES
Community Development Finance Institutions
DELIVERY OF PUBLIC AND SOCIAL SERVICES
MARKET DYNAMICS AND SEGMENTATION
Market Sectors
Total Industry Value and Growth
Table 1: Income of Registered Main Charities in England and Wales (number, % and £m), June 2005
Table 2: Number of Registered Main Charities in England and Wales by Income Bracket, December 2000-2004
Table 3: Total Incomes of Registered Main Charities in England and Wales by Income Bracket (£m), December 2000-2004
Table 4: UK's Top Ten Causes by Number of Charities in Top 500 and by Voluntary Income (number and £m), 2003/2004
DISTRIBUTION
Table 5: Source of Income to the Charities Aid Foundation Top 500 Charities by Type (£m and %), 2003/2004
COMPETITIVE STRUCTURE
Table 6: Top 20 Charities in England and Wales by Income (£), Years Ending 31st December 2003 and 2004
Table 7: Income Composition of the Major Charity Subsectors by Type (% of income), 2002/2003
Table 8: Impact of the 2004 Asian Tsunami on Specific Fundraising Activities (% of respondents), 2005
ADVERTISING
Table 9: Main Media Advertising Expenditure on UK Charity by Sector (£000), Years Ending March 2004 and 2005
Table 10: Main Media Advertising Expenditure of Charities with Expenditure Exceeding £1m (£000), Year Ending March 2005
THE CONSUMER
Awards
Business in the Community Awards for Excellence
The Charities Aid Foundation Companies and Communities Awards
Outstanding CCI Programme — Deutsche Bank
Innovation — CCI With A Difference — Whitbread
CCI Online Reporting — mm02
The Charity Awards
The Queen's Award for Voluntary Service
The Third Sector Excellence Awards
The UK Charity Awards
Industry Associations and Umbrella Organisations
Association of Charitable Foundations
Association of Chief Executives of Voluntary Organisations
Association of Fundraising Consultants
Charities Aid Foundation
The Charity Finance Directors' Group
Directory of Social Change
Disasters Emergency Committee
The National Council for Voluntary Organisations
The Institute of Fundraising
National Association of Councils for Voluntary Service
MARKET FORECASTS
Table 11: Forecast Income of Registered Main Charities in England and Wales by Income Bracket (£bn), 2005-2009
3. Fundraising Charities
BACKGROUND
The Givers
Table 12: Profile of People Giving To Charity by Average Monthly Donation and Proportion Giving to Charity (£ and %) 2003
MARKET SIZE
Voluntary Income
Table 13: Top Ten Charities in the UK by Voluntary and Total Income (£m and %), 2003/2004
Table 14: Voluntary Income and Legacy Growth (%), 2000-2004
Table 15: Charities' Voluntary Income as a Percentage of Government Expenditure by Sector, 2002/2003 and 2003/2004
Strategic Funding
Table 16: Projections of UK Strategic Funding to NACVS Members by Source (£ and %), 2003/2004
Table 17: Strategic Funding of Full NACVS Members by Local Authorities per Region in England (£), 2003/2004
Table 18: Total Local Authority Project Funding in Each Region (£), 2002/2003-2003/2004
CONSUMER TRENDS
The Non-Givers
WAYS OF GIVING
Table 19: Ways of Giving — Research Findings of NCVO and CAF (%), 2003
Internet Giving
Non-Cash Gifts
Regional Variations
Table 20: Regional Variations in Charitable Giving by Proportion and Amount (% and £), National Giving Week 2004
Charity Fashion
MARKETING ACTIVITY
BBC Children in Need Appeal
Charity Flowers Direct
Comic Relief/Red Nose Day
Make Poverty History/Live 8
National Giving Week
The Tsunami Appeal
The Year of the Volunteer
4. Grant-Making Trusts
BACKGROUND
MARKET SIZE
Table 21: The Trust Universe — Types (£m and %), 2002/2003
CONSUMER TRENDS
a) Belief in the Cause
b) Being a Catalyst for Change
c) Self-Actualisation
d) Duty and Responsibility
e) Relationships
MARKETING
DISTRIBUTION
Table 22: The Trust Universe — Funding Preferences (% of total expenditure), 2002/2003
Government Department Grants
Department for Education and Skills
Department of Health
Home Office
Office of the Deputy Prime Minister
Government Offices for the Regions
Department for International Development
Lottery Funding Distribution
Community Foundations
5. Corporate Funding and Financing
BACKGROUND
TAX INCENTIVES
Money
Secondment of Employees
Gifts of Shares or Securities
Land or Buildings
Equipment or Trading Stock (Gifts in Kind)
MARKET SIZE
Table 23: Top Ten Corporate Donors by Percentage of Pre-Tax Profit Donated and Total Worldwide Community Investment (% and £m), 2003/2004
CONSUMER TRENDS
Cause Related Marketing
Corporate Charitable Foundations
Advantages and Disadvantages of Creating Corporate Foundations
Option — Donation to Existing Charity
Option — Charity Bank Account
Option — Trust
Option — Company Limited by Guarantee
Volunteering
MARKETING AND PROMOTION
DISTRIBUTION
Employer-Supported Volunteering
Payroll Giving
Matched Giving
6. An International Perspective
OVERVIEW
MARKET DEVELOPMENTS
COMPETITOR ENVIRONMENT
Table 24: Percentage of Non-Governmental Organisations Working On Activity Types, 2004
Decentralisation
SECTOR ISSUES
7. PEST Analysis
POLITICAL FACTORS
ECONOMIC FACTORS
SOCIAL FACTORS
TECHNOLICAL FACTORS
8. Consumer Dynamics
OVERVIEW
Table 25: Attitudes Towards Charity Giving — Summary of Findings (% of respondents), 2003 and 2005
DONATING TO CHARITY
I Have Donated To Charity In The Past 6 Months (S1)/I Donate To Charity By Direct Debit Or Standing Order (S2)
Table 26: Regular Donors (% of respondents), 2005
I Have Bought A National Lottery (Lotto) Ticket In The Past Month (S3)/I Usually Make A Donation To Television Appeals Such As Comic Relief (S4)
Table 27: Responses to Popular Appeals (% of respondents), 2005
AD HOC DONORS
I Gave To The Tsunami Appeal, But Nothing Else This Year (S5)/I Don't Really Think About What Charities I Support — If It Appeals To Me At The Time, I Give Money, Whether Through A Television Appeal Or Putting Money In A Tin (S6)
Table 28: Ad Hoc Donors (% of respondents), 2005
SPONSORSHIP AND FUNDRAISING
I Have Sponsored People Who Undertake Activities For Charity In The Past Year (S7)/I Have Raised Funds For Charity Within The Past Year (S8)
Table 29: Volunteer Fundraising (% of respondents), 2005
REASONS FOR NOT GIVING
Charity Begins At Home — My Family And I Need All My Spare Cash (S9)/Charities Don't Need As Much Money From The Public Now That They Get Money From The National Lottery (S10)
Table 30: Reasons for Not Giving (1) (% of respondents), 2005
I Would Give More To Charity If I Knew The Money Reached The End Cause (S11)/I Would Give More To Charity If I Knew How To Give (S12)
Table 31: Reasons for Not Giving (2) (% of respondents), 2005
ATTITUDES TOWARDS EXPENDITURE
Charities Spend Money More Efficiently Than The Government Would (S13)/Charities Spend Too Much On Advertising (S14)
Table 32: Attitudes Towards Expenditure (% of respondents), 2005
9. Company Profiles
INTRODUCTION
ACTIONAID
Introduction
Charity Objectives
Services and Products
Marketing
Funding
Partnerships and Networks
Staff
Financial Information
Table 33: Financial Information for ActionAid (£), Years Ending 31st December 2002 and 2003
Future Plans
BEATBULLYING LTD
Introduction
Charity Objectives
Services and Products
Marketing
Funding
Partnerships and Networks
Staff
Financial Information
Table 34: Financial Information for Beatbullying Ltd (£), Year Ending 31st July 2004
Future Plans
BREAKTHROUGH BREAST CANCER
Introduction
Charity Objectives
Services and Products
Marketing
Funding
Partnerships and Networks
Staff
Financial Information
Table 35: Financial Information for Breakthrough Breast Cancer (£), Years Ending 31st July 2003 and 2004
Future Plans
CHARITIES AID FOUNDATION
Introduction
Charity Objectives
Services and Products
Marketing
Funding
Partnerships and Networks
Staff
Financial Information
Table 36: Financial Information for Charities Aid Foundation (£), Years Ending 30th April 2003 and 2004
Future Plans
THE FAIRTRADE FOUNDATION
Introduction
Charity Objectives
Services and Products
Marketing
Funding
Partnerships and Networks
Staff
Financial Information
Table 37: Financial Information for The Fairtrade Foundation (£), Years Ending 31st March 2002 and 31st December 2003
Future Plans
THE VODAFONE GROUP FOUNDATION
Introduction
Charity Objectives
Projects
Partnerships and Networks
Staff
Financial Information
Table 38: Financial Information for The Vodafone Group Foundation (£), Years Ending 31st March 2003 and 2004
Future Plans
10. The Future
OVERVIEW
Table 39: Forecast Income of Registered Main Charities in England and Wales by Income Bracket (£bn), 2005-2009
11. Consumer Confidence
METHODOLOGY
THE WILLINGNESS TO BORROW
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant May 2003 Prices (£ and £bn), May 2003, November 2004, February 2005 and May 2005
Consumers Willing to Borrow
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), May 2003, November 2004, February 2005 and May 2005
THE WILLINGNESS TO SPEND FROM SAVINGS
Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant May 2003 Prices (£ and £bn), May 2003, November 2004, February 2005 and May 2005
Table D: The Average Amounts Adults Are Confident Spending To Purchase Expensive Items (£ and %), May 2003, November 2004, February 2005 and May 2005
12. Further Sources
Umbrella and Trade Organisations
Publications
General Sources
Government Sources
Other Sources
Bonnier Information Sources
- Actionaid
- Beatbullying Ltd
- Breakthrough Breast Cancer
- Charities Aid Foundation
- The Fairtrade Foundation
- The Vodafone Group Foundation
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