#CharityFact 4: Armed forces charities’ income is mostly independent of the government

There are many myths and misconceptions about charities. Unfortunately, armed forces charities are no exception. At the Directory of Social Change (DSC), we believe you need two things to combat this: you need to know the facts and you need the evidence to back them up.

That’s why we’re bringing together the facts in short, weekly instalments. These facts are based on our new research, funded by Forces in Mind Trust.

This week, we’re looking at #CharityFact number four: Armed forces charities’ income is mostly independent of the government.

How do armed forces charities get income from the government?

There are two mechanisms through which charities can receive income from the government.

The first is through grants. A grant moves funds permanenetly from the government to a charity, in order to achieve a policy or public interest need.

Alternatively, charities can receive money from the government through contracts. This is when the government pays for the specific service(s) delivered by a charity.

The main difference is that grants are focused on outcomes and impacts, whereas contracts are focused on the service being paid for.

How widespread is income from the government?

The most recent data shows that about one in every five armed forces charities receive income from the government.

To be more precise, 18% received income only through government grants. Meanwhile, 1% received income only from government contracts. And 2% received income through both.

How crucial is income from the government?

So, a small but not trivial proportion of armed forces charities receive income from the government.

But, depending how much these grants and contracts are worth, this could be an important source of income for the sector overall. What does the data show?

The evidence shows that 10.5% of income in the armed forces charity sector comes from government grants. Put differently, that’s about 10p in every £1.

In terms of government contracts, the data shows that this makes up 6.4% of total income. Or, around 6p in every £1.

Is it the same across the armed forces charity sector?

We’ve looked at the sector overall, but you might be wondering how similar the situation is for different types of armed forces charities.

To help build a picture of this, we can use the interactive data below. On the charts, income from government grants is shown in orange, whilst contracts are shown in green. All other income is purple.

If you click through the different charity types, you might notice that the combined income of heritage charities – which preserve armed forces history and carry out remembrance activities – has the greatest proportion from government grants, at 31.8%.

Thinking about government contracts in relation to total income, this is highest among service funds, at 24.5%. These charities provide facilities, services and/or grants to improve the morale and wellbeing of Service personnel and their families.

Associations and association branches are types of charities focused on social gatherings and membership activities to maintain and foster comradeship. These charities receive very little of their total income from government grants – and none from government contracts.

What to make of this?

Most armed forces charities don’t receive any income – through grants or contracts – from the government. Only around 22% do.

For the sector overall, income from government accounts for less than 20p in every £1. But this varies substantially between armed forces charities providing different types of support.

It’s important to note, however, that where charities do receive income from the government, this can be crucial to their ability to support their beneficiaries.

Find out more

Don’t forget to download the full report for free. You can also share our accessible infographic with those in need of the facts.

Read the sequel to this article: #CharityFact 5: Armed forces charities do their work with little income.