Many people assume charities rely mostly on government funding to operate. Though in reality, this just isn’t the case. Whilst charities in the UK can receive some grants from the government, most charitable organisations get the bulk of their funding from three main sources: individuals, corporate giving, and foundation grants.
Statistics show that despite the perception that government support keeps charities afloat, the vast majority of nonprofit funding is generated through charitable giving from individuals, businesses, and foundations. According to CAF (Charities Aid Foundation) data, individual donations make up the largest slice of the pie, providing billions of pounds per year to charities across the country. Whilst corporate giving and foundation grants make up smaller portions, they also supply vital funding that allows charities to serve communities, advance their causes and provide assistance to those in need.
So, whilst state funding offers useful supplementary income, it’s private philanthropy from engaged citizens, companies and foundations that enables most charities to continue their good work.
Individual donations are the lifeblood of non-profit organisations. These can range from small gifts from average people to large donations from wealthy individuals. Many charities seek these donations through appeals, social media campaigns, and fundraising events with some individuals taking it upon themselves to perform a sponsored activity or start a giving campaign independently.
Even though the number of people giving to charity has decreased by almost a quarter in the last decade, UK citizens still donated a whopping £11.3 billion to charity in 2020. No matter how small, individual donations really do make a difference to these non-profits, and without them, many charities that we rely on would no longer be able to function.
Corporate giving is another significant source of revenue for nonprofits. Companies often have philanthropic budgets to donate to causes aligned with their values and interests. The benefits of these donations are mutual, as by assisting these charities in staying afloat, the company becomes eligible for corporate gift aid and demonstrates its community values to potential customers. They may also sponsor events, match employee donations, or donate products and services as part of this.
Whilst corporate giving has traditionally been a major lifeline in the upkeep of charitable services, a report by the Charities Aid Foundation found that these donations are on the decline – shrinking by over a quarter compared to figures in 2013.
Trusts and Foundations
Trusts and foundations are the third major source of funding for UK charities, with over 8,000 charitable foundations and grant-making trusts in Britain providing vital monetary donations to non-profit causes. In 2020, UK foundations gave approximately £3.7 billion in grants to charities and non-government organisations working on specific issues or within particular regions.
When deciding where to direct their philanthropic grants, trusts and foundations often have precise criteria that charitable causes must meet to be eligible. Larger national foundations may provide grants upwards of £500,000 to charities running impactful projects nationwide, while local foundations tend to grant smaller amounts focused on causes within a particular city or region. Though the application process is highly competitive, securing foundation grants provides an important income stream for some UK charities doing vital work for their communities.
Charities in the UK rely primarily on generous donations from caring individuals, corporate philanthropy, and grants from charitable foundations and trusts. While government funding provides some assistance, the bulk of charity income comes from these three main sources.
Even in times of economic uncertainty, it’s crucial that those who can, continue to donate to causes close to their hearts. Finding ways to give back and support impactful nonprofits is one of the most effective ways we can create positive change in society, and donations make a difference no matter how small.
If you’re thinking about contributing to charity and making your mark, a good place to start is by looking up reputable organisations working on causes that you care about and consider setting up a monthly direct debit or making a one-off gift. By donating money, volunteering time, and spreading awareness, we all have the power to keep these critical organisations alive.