Earlier this month I attended the launch of the latest Third Sector Trends in England and Wales report, led by Professor Tony Chapman at Durham University’s St Chad’s College, and funded by Community Foundation North East and others. With over 8,600 responses, it is one of the most robust surveys of the voluntary sector in England and Wales. Here are my three takeaways.

The sector is more resilient than we give it credit for

We hear a lot about the crisis in the voluntary sector. We hear less about its resilience.

A higher proportion of charities now own their own property than in previous survey years. 45% have not had to draw on their reserves at all. 84% expect their income to increase or stay stable. These are not the numbers of a sector on its knees.

Tony Chapman made a point at the launch that stayed with me: a very high proportion of businesses fail in their first year, whereas very few charities close. One of the main reasons, he argued, is that charities do not borrow money. The lack of borrowing can sometimes hold charities back, but it is also what keeps organisations standing when the economy turns.

None of this means that the many challenges charities face don’t exist. Costs are up, demand is up, and staffing remains a challenge across the board. But the sector has a capacity to absorb shocks and keep delivering that rarely gets the attention it deserves.

Charities are walking away from public sector contracts 

Across every income band, the proportion of charities bidding for and delivering public sector contracts is at its lowest level since the survey began. Among larger organisations (£5m–£25m income), the figure has fallen from 64% in 2019 to 50% in 2025. This should be ringing alarm bells in Westminster and in local government.

Part of the explanation is straightforward: many organisations have concluded that public contracts cost more to win and manage than they return. But there is something else going on too. 38% of voluntary organisations have not yet recovered their volunteer numbers to pre-pandemic levels. The sector has lost around 400,000 regular volunteers since 2022. Fewer volunteers means less capacity - and less ability to do what charities have long been quietly expected to do: subsidise public service delivery with volunteers, donated income and below-cost running that would not be possible in any other sector. That has been a scandal hiding in plain sight for years. The reduction in contract bidding may simply be organisations recognising what the figures have always shown.

More long-term, unrestricted funding from grant makers, but the pressure to ‘innovate’ is back

Grants remain the most valuable or joint most valuable source of income for charities of every size, regardless of how large they are. For all the talk of diversifying income, the grant relationship remains central. And on that front, there is genuine progress to report.

56% of charities now report receiving unrestricted income - up from 46% in 2019, but down from 60% in 2022, when funders were getting emergency no-strings money out the door quickly. Many organisations look back on that period positively for exactly that reason. The proportion receiving what the report calls ‘a long-term investment in their work’ has reached 40%, its highest level. Funders deserve credit for both.

The complication is the return of innovation demands. 62% of charities are now being asked by funders to be ‘innovative’ - up from 50% in 2022, and heading back towards the 74% recorded in 2019. The pandemic period brought some relief here too: with funders focused on keeping organisations afloat, the pressure to repackage frontline work as something new and exciting eased off. Now it is climbing again.

For organisations delivering essential services, being asked to be innovative can be exhausting. It means relabelling the same vital work differently for each funder. The sector would benefit from a more honest conversation about what innovation actually means, and whether it is always the right ask of organisations that are, first and foremost, trying to keep the lights on.

What should we take from all this?

Taken together, these findings describe a sector that is more stable than the headlines suggest, but quietly withdrawing from public contracts - and doing so for understandable reasons. The same sector is receiving better quality funding than it was five years ago, while still being asked to dress up essential work as innovation.

The government has a chance to respond to this. The Civil Society Covenant is an opportunity to reset the relationship between the state and the voluntary sector on more honest terms - one that recognises what charities actually contribute, rather than what commissioners find convenient to measure. This report gives them the evidence to do it.

The full series is available via Community Foundation North East and St Chad’s College, Durham University. Well worth your time.

Tim Harrison-Byrne