Financial resilience, income dependence and organisational survival in UK charities

Green, Elizabeth; Ritchie, Felix; Bradley, Peter; Parry, Glenn

Abstract

The financial well-being of the charity sector has important social implications. Numerous studies have analysed whether the concentration of income in a few sources increases financial vulnerability. However, few studies have systematically considered whether the type of income (grants, donation, fund-raising activities) affects the survival prospects of the charity. We extend the literature by (a) explicitly modelling the composition of sources of income, (b) allowing for short-term volatility as well as long-term survival and (c) testing alternative specifications in a nested form. We show that the usual association between income concentration per se and financial vulnerability is a specification error. Greater vulnerability is associated with dependence on grant funding, not overall concentration. Previous studies showing that concentration of income per se is problematic are picking up a proxy effect. We also show that the volatility of income streams may be an important factor in the survival of charities, but that this also varies between income sources.

Citation

Green, E., Ritchie, F., Bradley, P., & Parry, G. (2021). Financial resilience, income dependence and organisational survival in UK charities. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 32, 992–1008. https://doi.org/10.1007/s11266-020-00311-9

• Journal Article Type: Article
• Acceptance Date: Dec 22, 2020
• Online Publication Date: Jan 27, 2021
• Publication Date: 2021-10
• Deposit Date: Jan 8, 2021
• Publicly Available Date: Jan 28, 2022
• Journal: Voluntas
• Print ISSN: 0957-8765
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 32
• Pages: 992–1008
• DOI: https://doi.org/10.1007/s11266-020-00311-9
• Keywords: charity, nonprofit, financial resilience, funding
• Public URL: https://uwe-repository.worktribe.com/output/6975797