Impact of the recession – billions wiped from charity balance sheets
June 2010
The recession has had a negative impact on the charitable sector by wiping billions of pounds off the balance sheets of the UK’s largest charities, according to findings from CharityFinancials.com
Nearly 60 per cent of the top 5,000 UK charities experienced a decline in net assets between 2007/08 and 2008/09 following a decade of healthy growth. The drop came to some £10.8bn, although this overall picture of decline was mitigated a little by the charities that had experienced an increase by £3.1bn. Total net assets for the 2009/09 period was therefore £93.2bn; a drop of 7.6 per cent on the same time a year ago. See figure 1.
Mark Pincher, data analyst at CaritasData comments: ‘The impact of the global economic environment on the financial markets was a major contributing factor that resulted in negative revaluations of fixed asset investments. In 2007/08, listed investments for the top 5,000 charities were valued at £46.6bn, but in 2008/09 they fell by 12 per cent to £41.1bn.’ Charities hit the hardest experienced declines of up to 25 per cent .
Figure 2 demonstrates this by featuring the top ten charities that experienced the greatest decline in net assets. The Church Commissioners suffered the most with net assets tumbling by £1.4bn. Other examples include the National Trust and Guys and St Thomas’s Charity, experiencing falls of £248.6m and £133m respectively.
The major grant making trusts in the top 5,000 have also been hit hard by the recession. Net assets for the Garfield Weston Foundation fell by £825.8m , followed by the Leverhulme Trust and the Esmee Fairbairn Foundation which dropped by 276.3m and £212.9m respectively. These organisations hold massive investments to generate dividend income annually, which is then distributed to other charitable organisations. The falls in their investments could massively affect the amounts they give to fundraising charities in the future.
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