The latest Charity Shops Survey for 2015 has shown the slowest growth in the charity retail sector in more than a decade.
The survey, published by Charity Finance and Fundraising Magazine, also shows that income rose by 2.6 per cent last year, while profits were up just 1.4 per cent.
This small growth in profit is the smallest in more than a decade, with charities enjoying average annual profit growth of up to 14.3 per cent since 2006.
The biggest decline in profits was as a result of the drop in the price of recycled clothing, or rag, which fell sharply in 2014, and is continuing to fall further this year.
In fact Income from rag fell 13 per cent year-on-year, and there are suggestions that charities are giving up on door to door collections as a result.
Income from other donated goods also rose modestly during 2014. However, income from gift aid rose considerably, along with online sales and sales of new, bought-in goods.
Charities’ expenditure rose by 2.9 per cent in the last year, just slightly more than income, with staff costs increasing by 5.6 per cent and rent by less than 1 per cent.
Another issue maybe that shop numbers continue to rise increasing competition on the High Street. Last year the number of charity shops rose by 1.7 per cent – the 12th consecutive year in which the number of shops has increased.
Andrew Hind, outgoing editor of Charity Finance, said the past decade had shown that shops had their best years when times were difficult and that as the economy recovers, a slowdown should be expected.
“Firstly shops are a wonderful source of unrestricted income at a time when such funds are like gold dust for most charities,” he said. “Then there is the fact that there is an inverse correlation between shops profit and the wider economy.
“When times are tight and both voluntary donations and government funding are under pressure or in decline, people are spending more on second hand goods in charity shops. This is a priceless commodity from the perspective of any charity fundraising or finance director.
“So as the British economy emerges from the doldrums of the last six years, it is perhaps not surprising that the results from charity shops trading are less hot than they have been in recent times.”
Many charities may have become reliant on shops as their primary source of income, but as fundraising trends change it may be time for organisations to reconsider their business model.
At Nicklin we have helped a number of charities restructure their organisation’s fundraising to make the most of trends in the market and have provided them with services to maximise profit and turnover. If you would like to know more, please contact us.