Polarisation of the VCS

The sector is becoming more polarised – the number of charities with incomes of over £1 million grew almost 20% in the year 2005/06. 75% of the total income of the sector is now generated by 2.5% of organisations. This is partly due to ‘major charities’ who together generate over 42% of the sector’s income. The majority of organisations (over 85%) have incomes of less than £100,000 and generate less than 7% of the sector’s total income. [1] Public spending cuts due to the recession may also impact on this, potentially driving further polarisation in the future.

What are the implications?

  • Changes to levels and sources of VCS income, leading to a ‘squeeze in the middle’ for medium sized organisations
  • Potentially increasing power and influence of 'major charities' to government
  • An increase in collaborative working, particularly between large and small VCOs to minimise growing polarisation
  • Efficiency drives leading to procurement practices that favour larger contracts will produce fewer preferred suppliers leading to further polarisation

Moving forward

In a changing more polarised sector, you may wish to think about your strategic position in relation to other players.

  • Do you want to stay small and cover niche markets, or work towards targeting high volumes of clients to benefit from economies of scale?

If working in collaboration becomes essential to secure funding in the future.

  • Do you need to reconsider your strategic position in relation to other players in your area?
  • What questions does your organisation need to consider before entering into a partnership with another organisation? (e.g. you may want to think about differences in organisational life cycles, cultures and aims).

Efficiency drives are likely to push purchasers towards awarding fewer, bigger contracts.

  • How can your organisation develop its negotiating skills to improve your discussions with funders and potential funders in order to secure funding in a more competitive environment?
  • Do you have good systems in place to assess your outcomes, and the broader value you create (social, economic and environmental)?
  • Can you diversify your income sources or work in partnership with other organisations?

Being clear about what you offer commissioners could put you at a competitive advantage. VCOs that are able to demonstrate the lasting benefits and distinctive value of what they do are more likely to secure funding.

  • Does your organisation need to improve how it assesses and demonstrates the changes it makes?
  • What strategies can your organisation put in place now to manage potential future changes in funding?

Want to know more?

Third sector faces the big divide

Published by: The Guardian – a left of centre newspaper

Date: 2007

Format: Web

What is it? An article examining the growing income gap between the largest charities and the sector, using statistics from the UK Voluntary Sector Almanac 2007 (NCVO).

How useful is this? A useful source of statistics and discussion of their implications.  This article looks at the growth of a charity ‘elite’ in terms of income, examining the role of brands and economies of scale in attracting funding, as well as the role of Government funding.  It highlights reliance on earned income and the value of government contracts as important areas for future debate.

Other comments:

The UK Civil Society Almanac 2009 - Executive Summary

Published by: NCVO

Date: 2009


What is it? A summary of the key findings from the 2008 Almanac providing an overview of the changing nature of civil society.

How useful is this? A good source of statistics on the voluntary sector including details of large compared to small organisations and discussion of other organisations within civil society.

Other comments: The full 2009 edition with comprehensive statistical analysis of the VCS is available for purchase.

Exceptional pressures will alter the face of the voluntary sector

Published by: Third Sector Magazine

Date: 2009

Format: Web page

What is it? Article examining which charities are under particular pressure due to the recession.

How useful is this?  This article examines how the recession could affect the VCS, arguing that it is likely to create further polarisation between major charities and small community groups, primarily due to public spending cuts, and changes in contracting and procurement practices. 

Other comments:


  1. UK Civil Society Almanac 2009 [back]



Last updated at 14:47 Mon 17/Jan/11.


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