The size and scope of the voluntary addiction sector in England and Wales

Transcription

1 The size and scope of the voluntary addiction sector in England and Wales July 2012 Prepared for Action on Addiction by NCVO Research 1 Introduction This report outlines a profile of those voluntary organisations that work with addiction in England and Wales. The report is based on data from the Charity Commission's register of charities, and covers information on the organisation's geography, activities and finances. Detailed financial information is only available for a subset of charities those with incomes above 500,000. The data is based on the latest available version of the Charity Commission register (May 2012), while financial information is generally from the financial year (as charities have a grace period before having to submit their financial information to the Commission). 2 Defining the addiction sector within the voluntary sector The first step in producing this report was to come up with a consistent definition of what constitutes the "addiction" sector within the voluntary sector. To do this, a series of key word searches were performed on the name and objects of an organisation. Key words were drawn up based on relevance to the subject matter. The first step was to apply the general charities definition. This definition excludes certain groups of organisations from the full population of registered charities, to come up with a set of charities that better matches what a member of the public might consider a charity. The general charities definition was developed for national accounts purposes by the Office for National Statistics in the 1990s, and excludes groups such as Independent Schools, Universities, NHS charities, governmentowned charities, housing associations and places of worship. After applying the general charities definition, the addiction sector was then refined by keyword searches on the name and charitable objects, as recorded by the Charity Commission. To take account of the wide variety of organisations that operate in this area, two definitions were constructed a "core" addiction sector, and a "wider" sector. This split between a core and wider sector takes account of those organisations that see people with addiction problems as one of their beneficiary groups, but not necessarily the main one. Examples of organisations operating in the "wider" addiction sector include Equinox Care 1, a care charity that provide housing, mental health and addiction services and Circle Support 2, a charity providing

2 support services as part of the Circle housing group. The data does not allow the proportion of their activities that are related to addiction to be found, but generally less than half of these organisation's activities are related to addiction. were included within the core definition if one of the keywords appeared in their name, or if the "addict" keyword appeared in their charitable objects. were included in the wider definition if any of the other keywords appeared in their charitable objects. The following keywords were used (keywords were used with "wildcard" characters, meaning that "addict" would also match "addiction" and "addicted") : addict alcohol drug substance smoking narcotic Using keywords to classify organisations will always be an imperfect exercise, resulting in some organisations being wrongly included and some being wrongly excluded. Keywords need to be picked with care in order to avoid double meanings and ambiguity. Constructing definitions such as this will always be a subjective exercise, however, and so keyword searching offers a consistent way of including or excluding organisations. After feedback from Action on Addiction, a number of charities (including Crime Reduction Initiatives and Cranstoun) were manually included in the core sector as they were not picked up using the keywords. From examination of the types of organisations selected by the keywords, it appeared that "substance misuse" (captured by the "substance" keyword) was often used by organisations in their charitable objects when they had a range of beneficiaries including those with addiction problems. For addiction apart from substance and alcohol addiction, the "addiction" keyword was generally sufficient to capture those organisations. 3 The size of the addiction voluntary sector Applying the definitions above to the latest version of the Charity Commission register shows a vibrant sector with 373 charities in the "core" addiction sector, and 358 in the wider sector. The core sector has a combined expenditure of 409m in 2010/11, with an income of 420m, while the wider sector has an income of 308m and expenditure of 295m. In total, this means the addiction sector has total expenditure of 704m, roughly 2% of the total voluntary sector in England and Wales (although a direct comparison is not possible as figures are not available for the whole voluntary sector for 2010/11). As with the voluntary sector as a whole, a small number of organisations account for a large proportion of the economic activity in both the core and wider addiction sectors. Just eight organisations account for 48% of the expenditure of the core addiction sector, while the smallest 300 charities in the sector account for 13% of expenditure. Figure 3 shows the ten largest organisations (by income) included within the core addiction sector. 2

3 Figure 1 - Size of voluntary addiction sector, by income band, 2010/11 Core Wider Income Expenditure Income Expenditure Income band Under 10k k to 100k k to 1m m to 10m Over 10m Total Figure 2 - Income distribution in core and wider addition sectors, 2010/11 (%) Figure 3 - Ten largest organisations in the core voluntary addiction sector by income, 2010/11 ( millions) Name Income ( m) Crime Reduction Initiatives 69.0 Addaction 44.9 Phoenix House 26.1 KCA(UK)

4 Westminster Drug Project 13.6 Cranstoun 10.6 Rehabilitation for Addicted Prisoners Trust 10.2 Compass - Services to Tackle Problem Drug Use 10.1 ARP Charitable Services 8.9 ADS (Addiction Dependency Solutions) The geography of the addiction voluntary sector The organisations within the addiction sector are distributed across England and Wales. Information from the Charity Commission only allows organisations to be placed based on their registered address, which may not reflect their full area of activity. This is particularly true for larger national organisations, which are predominately based in London and the South East, but with activities and services provided across the country. The data also allows for organisations to be broken down by whether they operate in a local or regional area, at a national scale or overseas. 23% of the organisations in the core addiction sector are based in London, accounting for 40% of its expenditure (although as discussed above, not all of this expenditure will be spent in London as it also includes national organisations). The large majority of activity takes place in England, with organisations based in Wales accounting for only 5% of expenditure. Figure 4 - Voluntary addiction sector, by region, 2010/11 Core Wider Region Income Expenditure Income Expenditure East Midlands East of England London North East North West South East South West West Midlands Yorks and Humber England Wales Total Looking at the scale that these organisations operate at, the majority of the expenditure (53%) in the core addiction sector is by organisations that work at a national scale. However, local organisations make up the majority of the number of organisations, with two-thirds (67%) of core addiction sector organisations working at a local or regional scale. 4

5 Figure 5 - Voluntary addiction sector, by area of operation, 2010/11 Core Wider Area of operation Income Expenditure Income Expenditure Local National National and overseas Overseas Total The activities of the addiction voluntary sector The data provides a number of different ways to examine the activities of the voluntary addiction sector. The first is using the International Classification of Non-profit Organisations (ICNPO), an international classification that was designed to integrate with national account statistics that has been applied to the Charity Commission register by NCVO. This classification allocates one category to each organisation, so allows the sector to be divided into specific subsectors. As might be expected, the bulk of the voluntary addiction sector falls into the "social services" category. Health and "law and advocacy" (which includes advice services and similar) are also common within the core and wider sectors. Grant-making foundations do not feature strongly in the core addiction sector, but do in the wider sector suggesting there is a small but significant base of independent funders that fund work with addiction. Figure 6 - Voluntary addiction sector, by ICNPO category, 2010/11 Core Wider ICNPO Category Income Expenditure Income Expenditure Social Services Health Law and advocacy Housing Religion Grant-making foundations Other categories Total A further way to examine the activities of the sector is through the classification that organisations provide to the Charity Commission. These classifications fall into three sections: who are the beneficiaries (children, the elderly, other charities, etc), what do they do to help them (provide services, make grants, etc), and what area of the sector do they operate in (health, education, 5

6 environment, etc). Each organisation can select more than one option from each category, covering the range of activities they undertake. As the area category is covered in the ICNPO classification above, here we will look at the beneficiary and activity categories. 5.1 Beneficiaries The first classification is the beneficiaries that organisations work with. Half of all organisations (50% for the core addiction sector) work with children and young people, reflecting the concentration of addiction problems in these groups. "Other defined groups" is also a popular choice, and could reflect organisations concentrating on those with addiction problems (as there is no direct choice for this in the list of possible beneficiaries). A minority of organisations (12% of the core addiction sector) work specifically with people of a particular ethnic or racial origin. Figure 7 - Voluntary addiction sector, by beneficiary group, 2010/ Activities The second category is activity what the organisation does to meet the needs of its beneficiaries. The most popular two categories selected here are providing services (78% of core addiction sector organisations) and provide advocacy, advice and information (71% of core organisations). There is also a large overlap between these activities three quarters of those organisations that provide services also provide advice, advocacy and information. 6

7 Figure 8 - Voluntary addiction sector, by activity type, 2010/ Addiction activity The organisations can also be classified by their activity within the addiction field. While there is no addiction-specific classification within the Charity Commission data, it is possible to explore the specific issues covered within the sector using the same keyword searching methods used to define the sector. The searching concentrated on five different areas, each with a number of keywords: alcohol, drugs, substance, gambling and smoking. Substance was kept separate as it is commonly used and covers a wide variety of cases. The results show that drug addiction and alcohol addiction are the most common addictions that organisations work with, with 68% of core addiction organisations working with drug addiction, and 57% of core organisations working with alcohol abuse. Again, there is significant overlap between these categories. 7

8 Figure 9 - Voluntary addiction sector, by addiction area, 2010/11 6 The finances of the addiction voluntary sector The data allows exploration of the finances of the addiction voluntary sector over time, and a look at the breakdown of income, expenditure and assets for the largest organisations. Figure 10 shows the income of organisations in the wider and core addiction sectors over time. It appears that the path of income growth over the period has been steadily upwards, mirroring the trend shown in the voluntary sector as a whole. Much of the growth in the voluntary sector over that period was driven by increasing income from individuals and contracting with government, we might expect the latter to be an important driver of growth in the addiction sector. 8

9 Figure 10 - Income of voluntary addiction sector, m (cash terms), to Organisations with an income greater than 500,000 have to submit more detailed financial data to the Charity Commission, with details of their income, expenditure, assets and staff. This allows us to produce some indication of the breakdown of the sector's finances, with the important caveat that these only apply to the largest organisations. 6.1 Income The first breakdown is organisation's income. Income is broken down by type whether the income is earned through fundraising, voluntary (donations and grants), earned through charitable activities (contracts and fees for services) or made through investments. The data does not allow for the source of income to be found: there is no information on whether the income is from government, individuals, other charities or other sources. Figure 11 shows the income breakdown for charities in the core and wider addiction sectors, compared to the voluntary sector as a whole. The data for the voluntary sector as a whole is taken from NCVO s UK Civil Society Almanac 2012, and applies to the whole of the UK and is based on the previous financial year (2009/10), so caution is recommended when comparisons are taken. The data suggests that core addiction organisations are heavily focussed on service delivery, with 89% of their income coming through income that is earned through carrying out charitable activities. A breakdown of the source of this income is not provided, but it is likely that the vast majority of this income would be from contracts and fees from statutory bodies. The wider sector is also reliant on earned charitable income, but to a slightly lower degree. The small proportion of voluntary income (8% for the core sector, 26% for the wider sector) compared to the voluntary sector as a whole 9

10 (37%) suggests that grants and donations are not an important source of income. Income from investments is very small compared to the sector as a whole, suggesting the sector does not have a large asset base (see "Assets, funds and reserves" below). Because a large proportion of the sector's income is received by the largest organisations, these figures are skewed by their activities. Data for the eight core organisations with incomes above 10 million shows that these organisations are even more focussed on service delivery activities, with 98% of their income coming from charitable activities. Smaller organisations therefore make up the bulk of fundraising and donation activity in the core sector. Figure 11 - Income breakdown for voluntary addiction sector, 2010/11, for organisations with incomes above 500,000 10

11 6.2 Expenditure Figure 12 - Expenditure breakdown for voluntary addiction sector, 2010/11, for organisations with incomes above 500,000 Expenditure is broken down into charitable expenditure either spent directly or through making grants, spending on raising funds and expenditure on governance. The low level of voluntary and fundraised income is reflected in the fact that both core addiction sector spends only 1% on raising income, while the wider sector spends only 2%. The overwhelming majority of expenditure goes on direct charitable expenditure spending on services and advocacy for beneficiaries. Another way of looking at expenditure is to look at the "support costs" of an organisation. These costs include central office functions (HR, IT, finance, etc) and are defined as costs which, while necessary to deliver an activity, do not themselves produce the activity. These costs therefore appear across all the categories shown in the figure above, but can also be separated out. Core sector organisations spend 49 million on support costs, 13% of their total expenditure. For wider sector organisations the figure is 47 million, 18% of expenditure. 6.3 Assets, funds and reserves The data shows that the largest organisations in the core addiction sector have net assets of 140 million, while the wider sector has assets of 221 million. In the core sector, the majority of assets are "current assets", cash in the bank that can be easily accessed and used for on-going operations, rather than "fixed assets" or "investment assets", which are longer term investments. Another way of looking at assets is as funds. Funds are broken down into restricted (the money must be set aside for a particular purpose) and unrestricted (the money can be spent on any of the charity's activities). Restricted income usually indicates restrictions placed by an external funder, for example a grant from a statutory body. One quarter (27%) of the funds of core organisations are restricted to a particular purpose, higher than for UK voluntary organisations as a whole (12%). 11

12 The final way to look at the asset base of these organisations is through reserves. This is the organisations own measure of how much of its income is readily available (held in reserve) rather than locked away in property or as a long term investment). It is generally seen as a measure of the resilience of organisations, and can be expressed as the number of month's expenditure covered by the reserves. Core sector organisations with incomes over 500,000 report reserves of 70 million, equivalent to just 2.2 months' expenditure. Wider sector organisations perform slightly better, with reserves of 96 million representing 4.3 months' expenditure. These figures are low compared to the UK voluntary sector as a whole, where the average is 7.4 months for "operating" organisations 3. This suggests that voluntary addiction sector organisations have a low asset base compared to the sector as a whole, and may therefore be vulnerable to changes in the availability of funding streams, for example cuts to public spending. Figure 13 - Assets, funds and reserves of voluntary addiction sector organisations, 2010/11, for organisations with incomes above 500,000 Core Wider Total Investment assets Tangible fixed assets Fixed assets Current Assets Liabilities Total assets Endowment funds Restricted funds Unrestricted funds Total funds Reserves Reserves (months expenditure) Workforce The final data item in the supplementary data for organisations with incomes greater than 500,000 is the number of staff. This is presented as the number of full-time equivalent employees at the end of the financial year. The number of staff working for core addiction sector organisations (with incomes over 500,000) in 2010/11 was 9,100, while 8,900 worked for wider sector organisations. There is no direct data on what activities these staff members undertake. A crude estimate of staff activities can be produced by applying the proportions found in the expenditure section above. However, this will not take into account the varying levels of staff activity need in each expenditure category; for example expenditure on grants needs much fewer staff than direct charitable expenditure. The findings above suggest that 13% of core organisation's expenditure is on support costs this would suggest that around 1,200 of their staff work in these roles

13 The data also contains estimates of the number of volunteers that these organisations have, although these figures should be treated with caution as this field is often only partially completed. However, the estimates suggest that core organisations have 3,300 volunteers, while wider addiction sector organisations have 1,