Working with the government or local councils

Charities are often chosen by the government and local councils to run public services on their behalf, such as children’s services or mental health services.

Charities are awarded a contract to run public services and will normally have to compete with other charities and with private businesses, often big outsourcing companies, to win it.

Charities do this because they think they can run the services well and provide a higher-quality and more caring service than other providers, which is an important way of helping the people they are trying to serve.

The fees that charities get for running these services often only just cover their costs. Sometimes charities even have to subsidise the service from their own money, but they do this if they think it’s important for the people they’re supporting. If charities do make any extra money from the contract, they reinvest it in their cause.

Most charities’ income from government comes from contracts for running services, but some charities get grants instead or as well as contracts. Grants are money that the government or a council gives to a charity to support its work because they believe it’s important. Grants are normally intended to support a certain part of a charity’s work, such as a local health project.

How much income do charities get from government?

• In 2013/14, charities received £15bn from government bodies, of which 81% was earned through contracts or other fees for services.

• The majority of the sector’s income from government comes from relationships with local government, with £7.4bn incoming from councils. Central government and the NHS accounted for £6.8bn, while the remaining £0.9bn came from the EU, international governments and international agencies like the UN.