Charities are worth £5bn to Scotland’s economy

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Scotland’s third sector income has reached almost £5bn for the first time, proving how vital charities are to economic recovery.

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18th February 2014 by Susan Smith 0 Comments

Scotland’s third sector income has reached almost £5bn for the first time, proving how vital charities are to economic recovery.

The growth, which bucked the overall economic trend in 2012/2013 means that the value of the sector in Scotland has doubled in just a decade.

An increase in the value of grant-giving trusts run by philanthropists, such as EuroMillions winners Colin and Christine Weir, appears to be responsible for the majority of the growth.

Housing associations also experienced a boom year up to April 2013, with an overall 8% increase in income.

However, in a year in which the UK economy as a whole flatlined, the rest of the Scottish charity sector experienced a modest scale increase of just 0.8%.

Worryingly, over 40% of smaller charities and a third of organisations with incomes above £1m continued to spend more than they earned in 2012/13. 

These figures show that the third sector is absolutely vital to Scotland’s social and economic wellbeing

This means that they are using savings built up during better times to subsidise services for people in need.

John Downie, director of public affairs for the Scottish Council for Voluntary Organisations (SCVO), said the overall picture shows the growing importance of charities in public life.

“These figures show that the third sector is absolutely vital to Scotland’s social and economic wellbeing. The growth of the charity sector reflects the bigger role it is playing in public services, such as health and social care, as well as in housing, culture, and community and social development.

“These figures paint a complex picture for the third sector, however, and it is not all rosy. Continuing high-levels of demand for services is putting pressure on two in five organisations to use cash reserves to help more people. 

“This is not sustainable and unless the sector can access more funding and support many vulnerable people may lose out in the coming years.” 

A growth in income to trusts and foundations suggests an increase in the amount wealthy people are giving to charity as well an increase in large-scale fundraising initiatives.

The Wood Family Trust, set up by Aberdonian businessman Sir Ian Wood, saw its income increase by 87% to £53.2m in 2012, while lottery based People’s Postcode Trust saw a 189% increase in income to £9.4m. 

Foundation Scotland’s Resilient Scotland fund, worth £15m, the STV Appeal, which raised £3.3m, and the Weir Charitable Trust, which launched with £5.3m, were some of the new funds set up.

Since the recession of 2008, the third sector, which now employs twice as many as Scotland’s energy sector, has seen its income grow from £4bn to £4.9bn. 

Sir Ian Wood, chairman of the Wood Family Trust, said that more professional approaches from charities encourage philanthropists to give more. 

“Charities are slicker than ever before when it comes to profiling the underlying issues that necessitate their funds and action. 

“Clever communications campaigns are undoubtedly attracting increased philanthropic giving to a variety of charitable programmes.”

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