Welcome the CFNE's Third Sector Report

Third Sector Trends is a study of the voluntary sector in local context. As such, it includes all types of registered organisations with income below £25m but excludes major charities with income above £25m as they tend to work on a wider national or international level and their inclusion would skew local level findings.  There are about 205,000 registered organisations in England and Wales, but they are not evenly spread across English regions and Wales. The number of third sector organisations (TSOs) per thousand resident population varies from just 2.6 per thousand in North East England to 4.2 per thousand in South West England.  Income is not evenly distributed. Micro organisations form 36% of the third sector, but they receive less than 1% of sector income. By contrast, the largest organisations command 74% of sector income, but only constitute 5% of organisations.

How income sources are valued 

Third Sector Trends explores how income sources are valued by TSOs (Figure 1). Time-series analysis shows how perceptions of the value of income sources have changed in relative terms since 2010.  Perceptions of the value of grant funding have changed since 2010, reflecting a shift away from narratives about ‘grant dependency’ in policy circles. Income from subscriptions and investments have bounced back in recent years.  The perceived value of self-generated earned income and contributions in kind have changed little in recent years; however, importance attached to income from the delivery of contracts has fallen heavily since 2022.  While there is a marketplace for loaning money to voluntary organisations for social investment purposes, few regard such income as an important element in their financial portfolio and, the signs are that this has decreased further in 2025. 

Contracts

Political enthusiasm to involve voluntary organisations in the delivery of public services under contract remains strong and government has produced new guidelines to smooth procurement processes and set targets for the engagement of voluntary organisations (and small and medium-sized businesses) in this field. Despite this and previous government efforts to incentivise and help prepare voluntary organisations to engage in the delivery of public services under contract, interest continues to decline steeply.  Amongst the biggest voluntary organisations, 64% remained involved between 2016 and 2019. That commitment collapsed during the Covid-19 pandemic to 54% and has fallen since to 50% in 2025. A decade ago, 23% of voluntary organisations were ‘ambivalent’ about getting involved in public service contracts due to lack of information, the need for support or perception of barriers to engagement; only 14% feel that way now – indicating a hardening of opposition to contract working.  In 2022, the main reason why voluntary organisations were withdrawing from this field of work is that contract values were too low to meet the cost of delivery (especially in a context of rising costs and difficulties in retaining and recruiting staff). These problems have been exacerbated in 2025 with hikes in the National Minimum Wage and employers’ National Insurance contributions.