National Third Sector Trends

The Voluntary and Community Sector in England and Wales is not small; it has an income and expenditure of over £60bn per year and employs over a million people. It makes a massive contribution to communities and the economy, and needs to be properly recognised, valued and supported. 

Exploring regional figures in relation to the size of their population is enlightening; we know that in some regions charitable organisations tend to be more numerous, but on average smaller, than in others: 

Additional analysis compared organisational size to deprivation level of the local community (based on the Indices of Multiple Deprivation 2019 rank of the postcode where the charity is registered). This showed a clear correlation: there are more charitable organisations per capita in the more affluent areas, but they are smaller, including a high number of self-sustaining community groups. By contrast, charities in poorer communities tend to be larger, more focused on tackling social need, and are more likely to employ staff. 

Analysing these figures in relation to population is a really helpful way of gauging the way these variations impact the sector. 

For example, the North East in particular has fewer charitable organisations per capita than other regions, but because there are fewer micro-organisations and more large organisations, it is less of an outlier when it comes to income and employment indicators, whilst this is the inverse for the East Midlands. 

This is highlighted in the table below. You can sort the data by column by clicking on the title. 

Trend data indicates most organisations continue to work in partnership, but this peaked in 2019, and as opposed to rates rebounding after Covid, it is now in a downward trend. This is interesting, as we would have expected it to have "bounced back" like many other indicators, and does seem to reflect a change in culture within the sector in relation to partnership working.

This could be linked to the ongoing pressures organisations have faced following the pandemic, particularly during the cost of living crisis, prioritising frontline work over sector connection; it could also reflect a weakening of infrastructure and fewer opportunities to connect as resource has been lost from Local Authorities and their funding for Local Infrastructure Organisations. But it could also reflect a "reassertion of independence" by some organisations who have concluded working in partnership is not necessary or beneficial for them. 

Within the data there are clear patterns of who is working in partnership and who is operating in a more "ruggedly independent" way; when analysed in relation to organisational size, levels of deprivation and spatial reach, we can see that:

Those organisations with a spatial reach across one or more Local Authorities or across a region are the most likely to be working in partnership; this figure falls for national and international charities: 

Relationships between charitable organisations and the local public sector are in many places vitally important. Charitable organisations are at the forefront of meeting social needs in communities, often delivering, or contributing to, the local public sector achieving its goals of protecting vulnerable people and improving wellbeing. Charitable organisations are also trusted in communities and are often the connection between public services and people within communities, especially those deemed "hard to reach". 

But this relationship is complicated, and, according to the survey, more strained than it has been in previous iterations of the study. The trajectory over time shows that organisations still feel valued, but less informed and involved than they did in previous years: 

Instability in the environment that the local public sector has been operating in – changes of government, austerity, Covid and the cost of living crisis has undoubtedly had an impact here. But it lays down the challenge for the new Civil Society Covenant to "turn the tide" and deliver in a meaningful way to rebuild trust and connection between the sectors, in order to provide the charity sector with more support and certainty, and to improve the lives of people in communities.

A new question introduced to the survey in 2025 explores the views and experiences organisations have of devolution, and whether it has had a positive or negative impact on their interaction with the public sector. The data shows a very mixed picture. 

More attuned analysis indicates this is very policy-responsive, i.e. those in areas where devolution is more well-established and where a greater political emphasis has been placed on engagement with the charitable sector have had more positive responses to this question. 

We can also see a significant exodus from organisations bidding for or delivering contracts – even amongst the largest organisations; in fact, that is where the fall is most pronounced. This is a particularly important finding of the research, suggesting charitable organisations no longer feel contract delivery is a reliable source of income. 

To a degree this is unsurprising - we know squeezes on contract values and pressure to "do more for less", alongside short contracts, tight turnarounds for mobilisation and onerous tendering processes have had a substantial effect on delivery organisations, but seeing the stark figures raises a huge question for local government and national policy. If government genuinely believes the sector has to play a role in delivering services and reaching vulnerable people in communities, it needs to work quickly to improve the commissioning experience and rebuild trust. 

Questions asked in the survey about influencing and campaigning indicate most organisations would say they “steer clear of politics”; however, a substantial proportion do engage with policy-making at a local level.

Meanwhile, bigger organisations tend to be the most pro-active at both “campaigning” and “lobbying” to improve policy and the lives of their members and beneficiaries: 

The vast majority of organisations have more than one type of income stream, reflecting widespread practice of diversification to reduce risk. Overall however, grants remain the most important source of income across all sizes of organisation. 

In the survey, respondents were asked to assess a range of different income streams as being "Most Important", "Important", "Somewhat Important" or "Not Important"; the graph below shows percentages of organisations responding "Most Important" or "Important" for each income source, stratified by the size of the organisation by turnover: 

If we look at the change over time, we can see that across all organisations the relative importance of contracts has fallen substantially, but importance of several other sources of income, most notably grants, is increasing: 

Exploring the age of organisations, an interesting pattern emerges about reliance on different sources of income: as organisations get older, they become less reliant on grants and contracts, whilst investment income becomes much more important: 

Most organisations report at least some part of their income coming from “earnings”. This is likely to include charging for services, such as training and expertise, or charging for room hire and use of facilities. 

The change over time shows an increase in the proportion of organisations reporting no earned income. 

However, it is notable that organisations in the poorest areas are the most likely to have a proportion of earned income.

This may be explained by the fact these organisations are often bigger and have more staff and assets, and may therefore be earning income through streams like room hire and training. It does though give pause for thought as to whether those organisations are being forced to charge for services to those least able to afford it, in order to balance the books, and how philanthropy might be able to do more in this space to ensure all services and opportunities are available for those who would most benefit, regardless of their ability to pay.  

The overall trend suggests support from business for charitable organisations, in all its forms, is falling: 

Financial support has bounced back since Covid but is still below the 2019 level. 

Nuanced analysis here however shows a fascinating picture.

It should be of some concern to us that the importance of financial support from business is falling among smaller organisations but growing among larger ones. This suggests a shift towards more “corporate partnerships” with support hoovered up by organisations with fundraising capacity, and who offer “quid pro quo” in terms of brand visibility for business as a corporate charity of the year or similar. 

However, encouragingly, it also appears business is focusing support more in the areas it is needed; analysis by IMD shows support has fallen in wealthier areas but held steady in the most deprived neighbourhoods where it makes the most difference. 

Grants are most important to charitable organisations in the poorest neighbourhoods, reflecting limitations on other sources of income, and there is a direct correlation that the more affluent the area the less important grants are. 

Third Sector Trends analysis of 360 Giving data about distribution of grants also shows over 54% of grants between 2019 and 2024 were made to organisations in the poorest 40% of neighbourhoods. 

Survey responses indicate changing relationships with grant-making bodies; in this data there is a clear “blip” during the pandemic but to a significant degree it appears that things have “returned to normal”. There is potentially some emerging trend within the data of a shift towards more unrestricted and longer-term investment from grant-makers, which will potentially have a really beneficial impact on charitable organisations, but it won’t be possible to confirm this trend until the next iteration of the survey, planned for 2028. 

There has however been a clear resurgence post-Covid of funders seeking for grantees to be “innovative”. Whilst innovation flows organically from communities, making this a “requirement” for funding can be an unhelpful distraction from the essential day-to-day work these organisations undertake. 

Overall, the charitable sector is continuing to grow in terms of the workforce, with the continuing trend that the number of organisations that have increased their workforce, both part-time and full-time staff, exceeds the number of organisations that have seen their workforce reduce: 

However, recruitment and retention of staff is a clear challenge for the sector; organisations are more likely to report this has become harder in the last two years than report it has become easier: 

An important piece of evidence from the 2025 study is that across the sector levels of investment in workplace development remain low, and in fact have fallen since 2022.

Whilst facing high need for their work and ongoing challenges of securing investment and balancing budgets means charitable organisations undoubtedly need to prioritise how they spend money, if employers are not willing to invest in training and supporting their staff, it is unlikely that challenges around recruitment and retention will change.

Ongoing support for the sector, through infrastructure like Local Infrastructure Organisations that are able to provide training, qualifications, mentoring and other professional development, is critically important. 

Volunteers add an enormous amount of value to communities.

Statistical modelling undertaken as part of the Third Sector Trends research study has been able to calculate the number of regular volunteers and estimate the number of volunteering hours contributed in each region. For the purposes of this analysis, a regular volunteer is defined as someone who volunteers on average around 6 hours per month.

By attributing the value of the national minimum wage to those volunteering hours, the analysis has been able to calculate a proxy financial value of regular volunteering in England and Wales to the economy of over £5bn each year. This data is set out in the table below. You can sort the data by column by clicking on the title. 

Despite this “slow recovery”, the change over time analysis on the importance organisations place on regular volunteers indicate their contribution is more important than ever: 

This is particularly the case for smaller organisations and those who do not employ staff; larger organisations are far less reliant on volunteers. 

Organisations in the most deprived communities are also less likely to be heavily reliant on volunteers than those in more affluent ones, again perhaps reflecting the higher proportion of larger, staff-reliant organisations in those areas; even here though, over 80% say they rely on and could not keep going without regular volunteers.  

This aspect of organisational wellbeing is one that it will be important to continue to monitor. If responses merely indicate slow recovery as organisations reactivate the processes of recruiting, training and onboarding regular volunteers, then it is likely we will return to pre-pandemic levels. 

However, it is possible that we are beginning to see a longer and more sustained fall off in volunteering driven by more significant demographic and economic changes affecting families and communities. If this is the case, over the longer term it will have a huge impact on the charitable sector and organisations may well be forced to rethink and reorientate how they operate in order to continue their work. Engaging new generations in volunteering is something that may be a space for wider policy consideration. 

Trustees are the bedrock of the charitable sector. And the overall data indicates that trusteeships are holding steady; reviewed over time since 2016, most organisations have said their numbers of trustees have stayed the same, whilst roughly equivalent numbers have increased and reduced the number of trustees on their boards, but there is no major cause for concern in this trend. 

However, similarly to the picture with paid staff, more organisations report it is becoming harder to recruit and retain trustees than who report it is becoming easier.

There is the possibility that perceptions of things becoming harder is essentially a proxy for a continuing reality that finding board members with the skills and qualities organisations need is an ongoing challenge. However it may also reflect increasing competition for resource; the number of registered charities continues to grow, and with this the demand for trustees.

It is notable within the analysis that the largest organisations report significantly less difficulty in this area than small and medium sized organisations. Having the resource and critically the profile and reputation to attract highly skilled board members creates a considerable imbalance within the sector with smaller community groups far more likely to say they are struggling to find new trustees. Anecdotally we believe there is a risk for many smaller groups and organisations that they may not be able to sustain their work, not for financial reasons but because there is no-one to keep things going. 

Analysing the data over time paints a very mixed picture of characteristics of chairs and chief officers; there does appear to be a reduction in the involvement of people who report having disabilities, which should be of concern, but also an increase in the number of women in the most senior roles. The number of leaders who are not degree educated has fallen, and the proportion of minority ethnic chairs has fallen whilst the proportion of minority ethnic CEOs has risen. 

It is difficult to interpret any particular trends or contributing factors within this mixed picture, but it is something that we will continue to monitor. 

One thing to potentially celebrate is the reduction in the proportion of charity chairs who are retired. Whilst retirees remain a vital backbone of the charity sector as trustees and volunteers, there is some reassurance that a pipeline of younger people are stepping into trustee roles and chairships, as this provides confidence that there is healthier succession, countering the risk of parts of the sector simply "dying out". 

There is a clear benefit of work to connect people of all ages and backgrounds, including younger people and professionals with charitable organisations in need of trustees, like the Trustee Match scheme run by Community Foundation North East.

In addition to low levels of investment in staff through direct training and workforce development, analysis of the survey responses also uncovers a worrying pattern of under-investment in charities in other aspects of organisational development, including critical strategic work like business planning, management of staff and volunteers and training for trustees. 

It’s also notable that when organisations do prioritise issues for investment, they almost always put income generation at the top of their list. 

Whilst it is clearly the case that financial stability and the bottom-line is of critical importance to the sector, there is a risk other vital skills and investment are being overlooked.

Taken together, the data paints a picture of a sector prioritising immediacy and caught up in a scarcity mindset which means it believes it cannot afford to invest in itself. There is a relatively low level of trust in Local Infrastructure Organisations to deliver the support organisations want and need, although this varies significantly by region, as does the relationship with the local private sector to access advice and support around professional skills like finance and HR.

The sector clearly has a very strong "DIY" culture. It is important to acknowledge many organisations are very small, with no staff and limited amounts of money they are managing, and therefore are genuinely unlikely to really need any more professional input. Nevertheless, there is a note of caution in these findings that ensuring the work of charitable organisations remains safe, legal and effective is critical, and access to the right expertise at the right time, through a strengthened infrastructure network and from other stakeholders needs to be given appropriate consideration.

Overall this longitudinal data provides a picture of a reasonably 'steady state' within the sector. Given that the time period covered includes the period of austerity in the 2010s, a global pandemic and cost of living crisis, it is remarkable that the sector has proved as resilient as it has, and is a testament to its great strength. 

In terms of actual income change, there is a clear and substantial blip for 2022 – the ‘Covid edition’, but this has rectified, and overall, it appears more organisations are seeing their income increase than fall: 

However, more nuanced analysis undertaken as part of the study has been able to isolate a proportion of charitable organisations determined to be struggling financially - defined as those who have seen a significant decline in their income in the next two years and have been relying on reserves to cover core costs. Conversely, we could also identify those who are thriving financially - whose income has increased and who are either not using their reserves or investing them in new developments. This analysis highlights one area that should be of concern to the sector. Organisations operating in the poorest communities are most likely to be struggling; those in the wealthiest are most likely to be thriving. 

Moreover, when analysed in relation to the characteristics of the beneficiaries they serve, those organisations focused on supporting vulnerable groups were disproportionately likely to be struggling financially. 

This should redouble the efforts of funders, donors and policymakers to strengthen the resilience of those critical organisations. 

Charity leaders are broadly optimistic about the future with the vast majority believing support and resources will stay the same or increase in the next two years.