New analysis provides fresh way of classifying charities

nfpSynergy, the research consultancy for non-profits, has launched a new way of classifying charities.

The six different classifications are based on an archetype analysis of the income and expenditure types in charities. It allows charities, donors and others to understand what the benchmark is for each type of charity, and so make sure that judgements are made based on norms of income and expenditure for similar charities.

The company says that, at present, using ‘average’ figures for the whole sector is like comparing apples, oranges and bananas by reference to the ‘typical’ fruit.

The analysis looks at the accounts of over 2,500 charities with an income of over £5m and suggests there are six different types of income/expenditure model or archetype. While a charity can be a mix of archetypes most have a dominant one. The six types starting with the largest category by number are:

  • Contractors/service providers
  • Linked trusts
  • Traders
  • Investment trusts.
  • Fundraisers
  • Legacy fundraisers

Joe Saxton from nfpSynergy said: “For some time it’s been clear that the sector is not homogenous. It’s made up of a number of different types of charities who make their living by securing their income, and spending it in different ways.

“Our analysis demonstrates just how different these charities are, both financially and in terms of staff numbers, highest salary and percentage charitable income and expenditure. We think this work will begin to help people see not one sector, but six who while sharing a legal form, differ greatly in the way they make their money and spend it.”

Further information on the analysis can be found in a full report, which can be downloaded here.

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