Charities Financial Outsourcing Funding

Income and Volunteering Challenges in the UK Charity Sector: A 2023 Guide

Challenges Facing Not For Profit Organisations | Challenges Facing Charities in 2023 | Third Sector Challenges

In a world increasingly characterised by economic uncertainty, the charity sector plays an integral role in providing support and relief to various segments of society. However, charities in the UK today face significant challenges, notably in terms of income generation and volunteer recruitment and retention.
This article aims to shed light on these challenges, their implications, and potential strategies for overcoming them.

Income Challenges in the Charity Sector

In the past few years, charities have grappled with various economic hurdles affecting income generation. Two main areas of concern have emerged: a decrease in public funding and increasing competition for donations.

  1. Reduction in Public Funding:
    Public funding has traditionally been a critical source of income for charities. However, recent years have witnessed a gradual reduction in this funding due to government austerity measures and budget cuts. This situation has led to a significant resource gap for many charities
  2. Increasing Competition for Donations:
    With over 168,850 charities in the UK, competition for donations has become fierce. Economic downturns and the COVID-19 pandemic’s financial aftermath have also made people more cautious about discretionary spending, affecting charities’ donation income.

The charity sector is facing a number of challenges, including declining income which by end of 2023/2024 is expected to fall in real-terms by £2.2bn according to think-tank, Pro Bono Economics. This is due to a number of factors, including:

  • The economic downturn:
    The economic downturn has led to a decline in donations and government funding. According to Charities Aid Foundation UK Giving Report 2023, the level of participation in charitable activities in 2022 was 84%. However, participation levels have not returned to pre-pandemic levels of 88% in 2019.

  • The rise of online giving:
    The rise of online giving has made it easier for people to donate to charities, but it has also led to a decline in donations to traditional charities. A study by the Charities Aid Foundation found that online giving accounted for 26% of all charitable donations in the UK in 2022.

  • The increasing cost of living:
    The increasing cost of living has made it harder for people to donate to charities. According to Charities Aid Foundation, across 2022, more than two thirds of people indicated they would need to cut spending to manage their bills. This includes 17% who said they would likely cut their charitable donations.

The Volunteer Dilemma: Recruitment and Retention

Alongside income challenges, charities also face issues concerning volunteer management. Volunteers are the backbone of many charities, and challenges in recruiting and retaining them can severely impact a charity’s operations.

Charities often struggle to find volunteers with the required skills or time commitment. The recruitment process can be lengthy and expensive, adding to the operational strain on charities.

According to the Charity Aid Foundation UK Giving Report 2023. There has been a sustained reduction in volunteering levels. In 2022, an average of 7% reported volunteering for a charity. Whereas, pre-pandemic, this figure in 2019 was 9%.

The Community Life Survey 2021-2022 by the Department for Culture, Media and Support estimates that there are 4 million fewer people participating in regular formal volunteering than in 2019/20.

Keeping volunteers engaged and motivated is equally challenging. Lack of career progression, inadequate support, or recognition can lead to volunteer fatigue, resulting in high turnover rates.

  1. The increasing demands on people’s time:
    People are increasingly busy with work, family, and other commitments, leaving less time to volunteer. According to a study by the National Council for Voluntary Organisations, the average person in the UK spends 16 hours per week on non-work activities.

  2. The lack of recognition for volunteering:
    Volunteering is often seen as unpaid work, which makes it less attractive to potential volunteers. One study showed that only 28% of people believe volunteering is valued by society.

Strategies for Overcoming These Challenges

Opportunities for charities

While these challenges are significant, they are not insurmountable. Here are some potential strategies for charities to consider:

Income Diversification:
Charities should seek to diversify their income sources to reduce vulnerability to fluctuations in any single income stream. This strategy might involve exploring corporate partnerships, earned income, grants, individual giving, and fundraising events. The advent of online crowdfunding campaigns can also help expand income sources.

Effective Communication and Transparency:
To stand out amidst the competition, charities must effectively communicate their mission, impact, and needs. A compelling narrative can capture potential donors’ attention and persuade them to contribute. Regular updates about fund usage can foster trust, encouraging repeat donations and volunteer commitment.

Strategic Volunteer Management:
It’s vital to have a comprehensive volunteer management strategy. This involves defining clear roles, ensuring adequate training is provided, and recognizing volunteers’ contributions regularly. By offering flexible volunteering opportunities, charities can also attract individuals who cannot make long-term commitments to their organisation.

You should also make it as easy as possible for people to volunteer and show them your appreciation. In order to do this, you might want to consider sending them thank-you notes, holding an event to thank them, or even offering a small reward, such as a gift card, as a way to show that they are valued by your organisation.

Embracing Digitalisation:
Digital platforms can be invaluable for income generation and volunteer recruitment. Charities can leverage online donation platforms, social media, and digital marketing techniques to broaden their reach, attract donations, and recruit volunteers.

Partnerships and Collaborations:
Collaborating with other charities can reduce competition, improve service delivery, and reduce costs. Shared fundraising events or joint marketing campaigns can mutually benefit participating charities.

Harnessing the Power of Data:
Charities can use data to drive decision-making, assess the effectiveness of their strategies, and tailor their fundraising appeals. Effective use of data can enhance donor engagement, improve volunteer management, and optimise resources.

Addressing the Challenges Head-On

Charities can counter the challenges of declining income and volunteer shortage by diversifying income streams, reducing costs, marketing their services effectively, and empowering volunteers through training and support. Furthermore, adopting a creative approach to fundraising and making it easy and rewarding for people to volunteer can significantly mitigate these challenges.

The UK charity sector faces considerable trials, but they also represent opportunities for adaptation, innovation, and growth. By understanding these challenges and implementing effective strategies, charities can ensure their resilience and continue to make a positive impact on society.

At AccountsPro, we understand the unique financial and operational challenges and complexities that charities face, which is why we partner with them to provide solutions that optimise efficiency and resources for our client base. Our dedicated team is committed to providing expert advice and guidance to charities, foundations and non-profit organisations.

One of the ways we help clients optimise their income is through providing outsourced finance solutions. We save our clients up to 80% of their overhead costs by outsourcing their finance department to us. If you would like to discuss this option, please contact us at: or visit this page to find out more about our financial outsourcing services.



    Email us
    Schedule call

    Book a free consultation today