Research and analysis

Annual Return 2023 analysis report

Published 10 July 2025

Applies to England and Wales

The figures below are collated from information sent to us by charities for financial years ending between January 2023 and December 2023 (“Annual Return 2023”).

For this period, 108,759 charities were required to submit the Charity Annual Return and by the end of 2024 101,494 had done so.

Register of charities

The number of applications we receive to become a registered charity varies from year to year. Each application we receive is individually assessed against the legal framework for charitable status.

At the end of December 2023 the number of charities registered with the Commission was similar to that at the end of 2022, with 136 fewer in total. Charities applying to be added to the register have balanced with those that requested removal for a range of reasons or that merged with other charities.  

Register of charities	2022	2023
Number of charities	169,029	168,893

Finances

Total gross income increased by 6.8% compared to 2022 returns, to £96.43 billion, while total gross expenditure grew at a faster rate, 9.6%, ending the year at £95.73 billion. This reflects further broadening and deepening of the positive societal impact of charities, as they expend increased resources to deliver their charitable aims. However, the gap between income and expenditure had narrowed to the smallest margin in five years.

Distribution of income and expenditure

Most charities that submit an annual return (91.67%) had an income of less than £1 million, 86.51% had £500,000 or less, while very few – just 2.68% – had income of £5 million or more.

Three in five charities (62%) had an income less than £100k, and collectively received £2.02 billion, 2.1% of the sector’s overall income and 2.5% of overall expenditure at £2.34 billion.

Meanwhile, larger charities – those with an income above £500,000 (13.49% of registered charities) – collectively accounted for £88.8 billion, 92.10% of total gross income and £87.7 billion, 91.6% of the sector’s total gross expenditure. These charities also saw the most growth in total gross income at 6.6% compared with the annual returns for 2022, while charities with income below this bracket saw an increase of 4.2%.

Just 2.68% of annual return submissions were for charities with an income of £5million or more. These 2,715 charities had a total gross income of £72.6 billion, which was 75.3% sector total gross income, and a total gross expenditure of £71.6 billion, which was 74.8% of sector total gross expenditure.

Total gross income by income band breakdowns

Income Band	Charities	% Charities	Total Gross Income
Under 10k	7,975	7.86%	£22,765,634
Between 10k and 25k	25,024	24.66%	£413,060,485
Between 25k and 100k	29,610	29.17%	£1,585,506,013
Between 100k and 250k	17,077	16.76%	£2,707,317,999
Between 250k and 500k	8,181	8.06%	£2,889,398,224
Between 500k and 1m	5,240	5.16%	£3,714,515,577
Between 1m and 5m	5,742	5.66%	£72,613,084,191
Total	101,494	100.00%	£96,431,497,342

Total gross expenditure by income band breakdowns

Income Band	Charities	% Charities	Total Gross Expenditure
Under 10k	7,975	7.86%	£43,529,630
Between 10k and 25k	25,024	24.66%	£500,023,209
Between 25k and 100k	29,610	29.17%	£1,799,289,015
Between 100k and 250k	17,007	16.76%	£2,783,265,107
Between 250k and 500k	8,181	8.06%	£2,907,915,498
Between 500k and 1m	5,240	5.16%	£3,712,686,205
Between 1m and 5m	5,742	5.66%	£12,410,445,814
Total	101,494	100.00%	£95,730,720,963

Financial resilience

The gap between income and expenditure narrowed in 2023 to the smallest it has been in five years. The gap was £701 million at the end of 2023, down from £3 billion at the end of 2022 and an average (mean) of £2.87 billion across the previous 4 year-ends.

Difference in sector Income and Expenditure by annual return cycle

AR19	£2,300,000,000
AR20	£2,900,000,000
AR21	£3,300,000,000
AR22	£3,000,000,000
AR23	£701,000,000

While more than half of charities (55.1%) had more income than expenditure, indicating some level of financial resilience, around 2 in 5 charities (42.6%) had expenditure that exceeded income, indicating an ongoing downturn in operational sustainability for some charities. The remaining 2.3% of charities reported the same figure for income and expenditure.

Charities with income at £100k or less reported higher spending than income more often than the sector overall, at around 1 in 3 (38%) charities in this income band. This income bracket also had a significantly higher proportion of annual returns that reported breaking even – expenditure matching income (24.2%) – whereas in all other income brackets less than 1% of charities reported this.

Proportion of charities per income band by income to expenditure comparison

Income Band	Expenditure less than Income	Expenditure equal to Income	Expenditure greater than Income
Under 10k	37.66%	24.16%	38.18%
Between 10k and 25k	55.76%	0.68%	43.56%
Between 25k and 100k	55.59%	0.42%	43.99%
Between 100k and 250k	57.14%	0.25%	42.61%
Between 250k and 500k	57.94%	0.28%	41.78%
Between 500k and 1m	59.98%	0.29%	39.73%
Between 1m and 5m	56.97%	0.26%	42.77%
Over 5m	60.04%	0.18%	39.78%
Total	55.09%	2.30%	42.61%

Proportion of charities per income band by income to expenditure comparison

Income Band	Total Gross Income	Total Gross Expenditure	Difference income & expenditure	Expenditure less than income	Expenditure equal to income	Expenditure greater than income
Under 10k	£22,765,634	£43,529,630	-£20,763,996	37.66%	24.16%	38.18%
Between 10k and 25k	£413,060,485	£500,023,209	-£86,962,724	55.79%	0.65%	43.56%
Between 25k and 100k	£1,585,506,013	£1,799,289,015	-£213,783,002	55.59%	0.42%	43.99%
Between 100k and 250k	£2,707,317,999	£2,783,265,107	-£75,947,108	57.14%	0.25%	42.61%
Between 250k and 500k	£2,889,398,224	£2,907,915,498	-£18,517,274	57.94%	0.28%	41.78%
Between 500k and 1m	£3,714,515,577	£3,712,686,205	£1,829,372	59.98%	0.29%	39.73%
Between 1m and 5m	£72,613,084,191	£12,410,445,814	£75,403,405	56.97%	0.26%	42.77%
Over 5m	£72,613,084,191	£71,573,566,485	£1,039,517,706	60.04%	0.18%	39.78%
Total	£96,431,497,342	£95,730,720,963	£700,776,379	55.09%	2.30%	42.61%

Funds and reserves

Only charities with an income of £500,000 or more are asked about what funds they held in the Annual Return. Of these eligible charities, 13.43% reported any type of fund and the amount held averaged a total of £18.8 million per charity. Unrestricted funds were the more prevalent type of fund (58.96%) followed by endowment funds (30.19%) then restricted funds (10.85%).

Reserves are a charity’s funds that are freely available for it to spend on its charitable purposes, not tied up in fixed assets or restricted funds, and are held to help it operate effectively, including to meet unexpected costs. 

Only charities with an income of £500,000 or more are asked about their level of reserves in the Annual Return. This represents 7.9% of registered charities, but as not all eligible charities included a reserves value in their annual return, the data represents 6.1% of registered charities. Reserves stayed level at £75 billion in 2023 the same as the £75 billion recorded in 2022, and up from £73 billion in 2021.

While some charities were able to build up reserves, such as those benefiting from an increase in the value of investments, others reported a need to draw down on their reserves, including those that faced an ongoing impact on income due to Covid restrictions in the preceding two years.

Income streams

Overall, around half of charity income is generated by charitable activities (48.5%) such as charging fees for services or supplying services to government, a third derived from donations and legacies (32.6%), 9.9% came from trading activities and the remainder was generated from investments (5.4%), which includes owning premises, and from other sources (3.6%).

Proportion of income breakdown types by income band

Income Band	Charitable activities	Donations & legacies	Investments	Other trading activities	Other
Under 10k	10.62%	55.48%	5.09%	22.53%	6.28%
Between 10k and 25k	12.41%	34.91%	10.57%	32.20%	9.92%
Between 25k and 100k	9.39%	43.92%	9.96%	28.44%	8.28%
Between 100k and 250k	7.87%	46.25%	8.36%	33.65%	4.96%
Between 250k and 500k	6.79%	46.25%	8.36%	33.65%	4.936%
Between 500k and 1m	40.32%	43.48%	7.05%	5.32%	3.82%
Between 1m and 5m	48.87%	34.43%	6.73%	7.17%	2.8%
Over 5m	52.92%	30.40%	4.74%	8.53%	3.41%
Total	11.11%	42.38%	30.51%	12.65%	3.35%

Donations and legacies

Donations and legacies totalled £31.4bn – almost a third (32.6%) of all charity income. Charities in income bands under £500,000 had the greatest proportion of their income from this source, which made up more than half of the income (55.5%) of the smallest charities (those with income less than £10,000). Almost half (49.7%) of charities with an income of £100k or more reported donations from a corporate donor. A lower proportion reported having related party donations (42.8%).

Legacies, including endowments, were an income stream for 3,242 charities and had a reported value of £3.74 billion.

Charitable activities

Income from charitable activities had a total value of £46.68 billion – just under half of all charity income. This was reported as an income stream by 34,790 charities. Those with more than £500,000 get the most income from their charitable activities, ranging between 40% to 50% of income. Charities with an income of £5 million or greater had the highest proportion of income from charitable activities, at more than half (52.3%).

Trading

‘Other trading activities’ was the second biggest source of income across charities with income below £1 million. In this annual return other trading had a total value of £9.54 billion, and a mean average income of £186,027 across the 51,261 charities that reported this income.

Separately, 5,263 charities (5.19% of eligible charities) reported having a trading subsidiary. While these are spread across all income bands, more than half of these (57%) are charities with income of £1 million or above.

Government contracts and grants

Charities may obtain central or local government contracts to provide services in keeping with their charitable purposes, for example the provision of social care. Meanwhile, some charities apply for and are awarded government grants that help them to further their charitable aims.

Just under a fifth of the charities that filed an annual return (19.8%, 20,076) received government grants and fewer reported having these grants in 2023 than in 2022 (27,001).

In 2023, twice as many charities with an income over £500,000 (37.2%) had government grants income compared to charities with an income under £500,000 (17.1%).

More charities (7.1%, 7,199) reported having income from delivering government contracts than in 2022 (6,490).The average value reported per charity has reduced since 2022.

Just over five times more charities with an income over £500,000 (25.0%) received this income than charities with an income under £500,000 (4.3%).

Proportion of charities with government contracts by income band (under/over £500k)

Income band	Government Contract: Yes	Government Contract: No	Total
Income under £500k	4.30%	95.70%	100%
Income over £500k	24.99%	75.01%	100%

Contracts and grants from local/central government	2022	2023
Number of charities that said they had government contracts	6,490	7,199
Number of charities that said they received government grants	27,001	20,076

Grant awarding charities

There are 31,427 grant making charities, with around two thirds stating that grant making is their main activity (62.85%, 19,751 charities).

Other charities are the predominant recipient of grants from grant-making charities, with 20,732 charities awarding such grants totalling £11.8 billion in 2023.

Grants made outside the charity sectors are made by fewer charities (10,079) at a total of £3.9 billion.

Grants made to individuals were offered by 12,317 charities, averaging a total of £103,000 awarded per charity, with an overall value of £1.2billion.

Grant awarding charities	2023
Number of charities that said they awarded grants	31,427
Number of charities that said it is their main activity	19,751
Number of charities that received grants from another charity	20,736

Expenditure

Only charities with an income of £500,000 or more are asked about the breakdown of their expenditure in the Annual Return, which is placed in three categories in the annual return: charitable activities, raising funds and other. There were no significant differences in the proportion of each category of expenditure reported across the £500,000+ income bands.

Charitable activities accounted for the majority of expenditure: £88.26 in every £100 spent by eligible charities was on charitable activities. This had a total value of £77.41 billion, reported across 13,582 charities.

Less than 9% of the amount spent on charitable activities went to raising more funds – £8.48 for every £100 spent by charities. Raising funds was reported expenditure by 8,640 charities with a collective value of £7.44 billion.

The smallest proportion of expenditure was allocated to ‘other’, at £3.26 per £100. This was also reported by the lower number of charities (2,281) and had a value of £2.86 billion.

People

All charities were asked for information about employee numbers for the first time in the 2023 Annual Return to enable a better understanding of the labour market in the sector.

On average across the sector there were 3.5 volunteers to every 1 paid worker supporting charities in 2023, demonstrating the reach and value of volunteering to the sector. Just under half of charities reported they had paid workers of some contract type (48.59%) while a greater proportion reported volunteers helped them deliver their charitable work, around 70% in 2023.

Employees

Just under half of charities (48.59%) had engaged people in paid work in three categories of employment type (permanent, fixed-term or self-employed), totalling 1.8 million people across nearly 50,000 charities, averaging 36 people per charity.

The majority of charity employees were on permanent contracts (1.2 million people working in 38.86% of the charities with employees), a mean average of 30 employees per charity with employees.

There were a further 190,000 people in fixed-term contracts across 12,899 charities (21.71% of charities with employees, a mean average of 14.77 employees per charity declaring this).

Across 18,470 charities there were 380,000 self-employed people (18.20% of charities with employees), a mean average of 20.63 people per charity declaring this).

The majority of employees were deployed in the UK with just 5.21% of charity employees (92,795 people) working overseas. The 1.7% of charities employing people outside of the UK were predominantly the highest income charities (£5m+) – 89.26% employees working overseas were at charities with income over £5m.

Volunteers

Reported volunteer numbers in 2023 were similar to those in the previous year despite the restrictions of Covid impacting volunteer activity more deeply in 2022, with 6.22m volunteers in 2023 compared to 6.19m in 2022. The total number of volunteers reported increased again in 2023, as it did in 2022.

Volunteers	2022	2023
Number of volunteers declared by charities	6.19m	6.22m

Trusteeships

Trusteeships, which are predominantly a voluntary role, reached 922,797 across the 169,684 registered charities by the end of the 2023 reporting year.

Trustee benefits

Across registered charities that submitted an annual report, a small minority reported payment to trustees for any reason. In certain circumstances, when allowed for in the charity’s governing document, trustees can be paid for performing that role, or another role in the running of the charity.

Fewer than 1 in 10 charities reported they offer any type of trustee benefits (9.49% of charities), and of those, the least common benefit is being paid for being a trustee. No charity adopts all of the possible benefits and there is no particular trend in which are offered by charities across income bands.

payment for services	6.04%
resignation to take up employment at the charity	1.73%
payment for other benefit	1.56%
payment for another role (not acting as trustee)	1.53%
payment for acting as trustee	0.69%