The falling income of the UK's largest development charities

For a decade or more, NGOs in the United Kingdom benefited from a positive funding environment, as the government ramped up spending on development. But in November 2020 then-U.K. Chancellor of the Exchequer and now Prime Minister Rishi Sunak announced his government would be lowering the amount spent on official development assistance from 0.7% to 0.5% of the gross national income. Since then, the U.K. — one of the five largest aid funders in the world — has seen billions in aid cuts across different sectors and geographies. Among the affected are organizations receiving millions in grants and contracts from the government. Devex conducted an analysis of the largest of the U.K. NGOs to see how the budget cuts — among other factors — had affected their income. The analysis found that following the cuts, the largest NGOs had lower incomes in real terms than they had five years ago. All figures were adjusted to 2021 constant prices. This allowed us to analyze the data with respect to changes in inflation rates. The overall income has been declining in the last 5 years We looked at five years of data shared with the U.K. Charity Commission and analyzed 28 organizations with incomes over £50 million (around $64.1 million). Of those, 14 reported lower revenue in their most recent filing — for either 2021 or 2022 — than five years before — either 2017 or 2018. If we only look at the difference in income between 2020 and 2021, this goes up to 18 organizations. The total income of all NGOs analyzed, in the most recent period we have details for, was £4.9 billion, compared with £5.4 billion five years before. This represents a 9.8% fall. World Vision UK’s income was reduced by nearly half in the last five years — from £100.4 million in 2017 to £52.8 million in 2021. This was heavily driven by less money from donations and legacies, which included core funding from the U.K. government. Save the Children UK’s income also dipped significantly — from £437.9 million in 2017 to £240.4 million in 2021, or a 45.1% decrease. The steady decline in government grants over the last five years largely contributed to this. From nearly £150 million in 2017, funding from the U.K. government went down to just £40.5 million in 2021. Christian Aid’s total revenue decreased by 41.5% — from £124.1 million in 2018 to £72.6 million in 2022. This was due to lower income from donations and legacies and charitable activities — a term in U.K. nonprofit accounts that refers to money paid for services, often government contracts, as explained in more detail below. Of the 13 organizations with available data for 2022, eight organizations recorded a year-on-year drop in their total income. This includes Christian Aid, with a 16% decrease, the Catholic Agency for Overseas Development, or CAFOD, with a 10.7% decrease, and The British Council, with a 10.2% decrease. The effect of UK aid cuts The total revenue from the U.K. government was increasing before the early days of the pandemic and the aid budget cuts. From £704.2 million in 2018, the total government grants and contracts to these organizations increased to £790 million in 2020. It then plummeted to £574.6 million in 2021 — a 27.3% year-on-year decrease. Of the 23 organizations that received money from the U.K. government in 2020, 13 organizations received less in 2021. Meanwhile, two organizations — Depaul International and Relief International UK — did not receive new funding. The HALO Trust got the biggest reduction — from £34.9 million in 2020 to £12.7 million in 2021, or a 63.6% decrease. World Vision UK followed — from £17.1 million to £8.3 million, or a 51.8% decrease. The British Red Cross also saw a decline — from £123.4 million to £66.5 million, or a 46.1% decrease. In monetary terms, The British Council had the biggest dip, worth £72.6 million — from £285.7 million in 2020 to £213.1 million in 2021. Although the U.K.’s ODA increased from £11.9 billion in 2021 to £12.8 billion in 2022, a big portion of this, worth £3.7 billion, or 28.9%, went to domestic refugee costs. With its ODA still at around 0.5% of its GNI — along with the increasing costs of housing refugees — the decrease in government funding to these organizations is expected to continue in the coming years. What about the other sources of income? Charities in the U.K. report their income under five categories, based on where the money came from: • Donations and legacies, which include endowments, contribution from the public, and core government funding not earmarked for a specific program. • Charitable activities, which include payment for goods and services for a program. A large part of this is grants and contracts from the U.K. government but it also includes other sources, most notably the European Union, which five years ago provided significant funds to U.K. charities, but is now a relatively minor funder. Separate figures on the Charity Commission website provide exact numbers on grants and contracts from the U.K. government. • Other trading activities, which include fundraising events, as well as income from U.K. charities’ significant network of thrift stores. • Investments, which include income from assets, and dividends. • Other sources of income. As mentioned above, based on their most recent filings, the organizations we analyzed generated a total of £4.9 billion in income. Donations and legacies accounted for £3.1 billion, or 62.4%. This represents a 5.8% increase from the £2.9 billion these organizations received five years before. Charitable activities ranked next, with £1.7 billion or 34% of the total — 28.5% less than what the £2.3 billion these organizations received five years before. Other trading activities followed, with £135.4 million, or 2.8% of the total — 19.1% less than in the £167.5 million received five years before. INGOs also generated £33 million from other sources, accounting for 0.7 % of the total. This is 16.7% more than the £28.2 million they received five years before. Lastly, income from investments amounted to £9 million, or 0.2% of the total. This represents a 40.1% dip from the £15 million they received five years before. These figures show an increasing reliance on donated money, which comes largely but not entirely from individuals. These funds have continued to rise, while other sources have fallen away. A total of 22 organizations recorded less income from investment within a five-year period, including The British Council, which went down by £1.6 million, and the Gatsby Charitable Foundation, which went down by £1.3 million. Meanwhile, 16 organizations also generated income through other trading activities. Among them, nine organizations saw a decline over the five-year period. Oxfam saw the biggest dip, from £98.9 million to £83.6 million. Save the Children Fund ranked next, from £13.6 million to £7.1 million, then the British Red Cross, from £34.4 million to £28.5 million. Some organizations weathered the crises A total of 15 organizations were able to increase their revenues within the aforementioned five-year period. The Disasters Emergency Committee, or DEC, saw the biggest growth of 731.6% — from £30.5 million in 2018 to £254 million in 2022. DEC is an umbrella group of U.K. charities that raises donations from the public for emergencies and relief aid. The increase was driven by a £222.4 million (£206 million in 2021 constant prices) contribution to the DEC Ukraine Humanitarian Appeal. The Against Malaria Foundation ranked next, with a 229.9% increase — from £27.9 million in 2018 to £92.2 million in 2022. Like DEC, this money came almost entirely from public sponsorships and donations, worth £90.4 million. If we only look at the growth between 2020 to 2021, just 10 organizations saw an increase. Aside from DEC and the Against Malaria Foundation, the other eight charities were Amanat Charity Trust, CAFOD, Depaul International, Islamic Relief Worldwide, Plan International UK, Save the Children International, The HALO Trust, and UNICEF UK. These organizations are generally less dependent on U.K. government funding. Amanat Charity Trust has not received money from the U.K. government since 2017. The HALO Trust, which received significantly less money from the U.K. government in 2021, recorded an increase in charitable activities and other sources of income. Government grants accounted for just 27% of income at Plan International UK — which also increased its charitable activities from 2020. For the rest, contributions from the U.K. government accounted for less than 20% of their total income in both 2020 and 2021. How we analyzed the data In this analysis, we looked into financial data reported to the U.K. Charity Commission. We found 39 organizations that classify their work as international with annual revenue of at least £50 million, as reported in their most recent financial reports — which cover fiscal years ending in either 2021 or 2022. However, we excluded 11 organizations from the analysis for a number of reasons. Four religious organizations do not spend the majority of their funds on international aid and development: The Watch Tower Bible and Tract Society of Britain, International Bible Students Association, Elim Foursquare Gospel Alliance, and Ahmadiyya Muslim Jamaat International. Three organizations are primarily focused on domestic activities: The Salvation Army, Age UK, and the Masonic Charitable Foundation. Two organizations are donor-advised funds: Achisomoch Aid Company and the Master Charitable Trust. Two organizations with incomplete data were also excluded: Big Win Philanthropy, which only reported significant income in its 2021 figures; and CARE International UK, which reported late for two consecutive fiscal years, and now faces “material uncertainty” over its future. Some of the data was preliminary and might slightly differ from the final figures in the annual reports. 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