Where does your money go when donated to charity?

Despite fewer Brits donating to charity than ever before, those who are making donations are parting with more money. It was reported that over £10 billion was donated to charity in 2018 and in order to keep the general public from showing support, these organisations must now be more transparent about their spending, especially after criticism over a lack of transparency from the House of Lords.

As a charitable member of the public, you give your hard-earned money to a charity to help it reach its end goal and hopefully impact many lives. So, it’s helpful to know your money is being used to contribute to a larger cause—but remember, your donations also help fund organisational costs.

We’ve had a look at some of the UK’s charities for you to see how your money is helping.

How do charities use donations?

Most well-known charities in the UK will spend between 26-87% of their annual income on charitable activities—the proportion of total income spent directly on endeavours helping it achieve its end goal. This isn’t just the money from donations—charities also receive funding from other sources, including government bodies, private foundations, and product sales.

However larger charities should not be penalised for having much more significant running costs as they cannot operate effectively without additional administration and fundraising costs. These other costs, excluding charitable activities, include trading, investment management, and audit costs. However, funding for small charities differs from its larger counterparts, relying on individual donations for 58% of the income and only 15% from governments. For instance, Macmillan Cancer Support spends 73p of every £1 donated on charitable activities, with £75.9 million spent on funding and supporting health and social care professionals. Meanwhile, £2 million was spent on governance costs in 2018.

Of course, where the donations come from and where it’s spent depends on the individual charity. Some will focus more on charitable activities whereas other, larger organisations need to pay more in admin fees.

Mental Health UK

Mental Health UK received £6 million of income in 2017/18, of which £2.5 million (42%) was spent on charitable activities. The money donated is distributed throughout the whole charity, not just towards the mission. Donations have contributed to a handful of projects, including providing mental health support to those in need, raising awareness by distributing guides, and training professionals in giving advice on mental health problems. Donations have also helped launch and fund a mental health and money service with Lloyds Banking Group that is dedicated to helping other people understand, manage, and improve their finances. This also involved creating a helpline that has reached over 500,000 people facing financial issues since 2016, which aims to help the 46% of people in debt who also have a mental health condition.

As well as donations made directly to the organisation from the public, Mental Health UK has also received funding through a variety of businesses, like Pure Gym and lottery companies.

CEDA

Providing learning and social opportunities to disabled people in Devon, CEDA (Community Equality Disability Action) has a smaller annual income than other high-profile charities, at £1.2 million in 2018. A very large proportion (96%) of its income was spent on charitable activities, helping its cause of promoting inclusion and increasing independence. The charity has also been fortunate to receive donations from top organisations, including BBC Children in Need and Arts Council England.

The donations CEDA received has helped support a range of local services, including its adult activity hub which has a sensory room and youth spaces for children and young people. It’s also been able to fund educated session leaders, adaptive sports equipment, and an art studio.

Cancer Research UK

Cancer Research UK receives its income from donations, trading, royalty income from pharmaceuticals, and grant payments. It also ranks as the most valuable charity brand in the UK. Brand value is determined by what a charity is worth in terms of its current and future fundraising. For instance, it looks at how charity branding generates its fundraising income and the strength of the brand.

One of its biggest, most well-known events across the country is Race for Life, which has raised over £547 million to fund life-saving work over the last 20 years. Cancer Research UK also hosts other running events too, which you can get involved with to help fundraise.

Its income during 2018/19 totalled a staggering £672 million, with £546million spent on cancer research, looking into the causes, prevention, and treatment of the disease. Funding also goes towards sharing information to increase knowledge and awareness of cancer for both healthcare professionals and those suffering from cancer. You can give a very small amount and still help fund a much bigger project, such as a research centre or lab equipment.

Diabetes UK

The UK’s leading diabetes charity helps prevent type 2 diabetes, offers support to those affected, and campaigns for an increased awareness of the problems related to the conditions. The donations received help to pay for vital research into finding a much-needed cure. For instance, 39 new research projects were funded in 2018, which included the successful creation of an artificial pancreas. During 2018, with a massive income of £34.8million, the charity revealed it spent £7.7million on research, £6.4million on managing diabetes, and £8million on transforming care. Diabetes UK generally receives income through donations, trading activities, and its partnership with Tesco. It also raises money through various sporting events, including the Swim 22 event in 2018 where 4,800 swimmers fundraised £480,000, as well as walking, rowing, and cycling events.

You can learn more about where charities spend their annual income by reading the yearly reports published on the GOV.UK website.