Small Charity Sector

Liz Jarvis Excerpts

Tuesday 3rd March 2026 Westminster Hall

[Liz Jarvis (Eastleigh) (LD)]

It is a pleasure to serve under your chairmanship, Sir Roger, and I congratulate the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) on securing this important debate. It has been a pleasure to hear about so many wonderful charities and volunteers.

Small local charities have played an increasing role in the community life of this country and have stepped in to fill critical gaps in public services. They support young people, the elderly and the isolated. They counsel the bereaved, look after abandoned animals and reach people in crisis when statutory services cannot. A thriving voluntary sector is essential.

Small charities in my constituency—including Pavilion on the Park, the Eastleigh Basics Bank, Fledge, the Asian Welfare and Cultural Association, St Francis Animal Welfare and 1Community—all do fantastic work, and I am incredibly proud of the contribution they make every day, the commitment of all their volunteers and staff, and the work they do to strengthen the bonds in our community. However, as we have heard, small charities are facing huge challenges.

[Helen Maguire (Epsom and Ewell) (LD)]

Will my hon. Friend give way?

[Sir Roger Gale (in the Chair)]

Order. I am terribly sorry; I appreciate that there are conflicting demands on Members, but the hon. Lady must be aware that if a Member comes in late, it is quite straightforward: no intervention.

[Liz Jarvis]

Decades of real-terms funding cuts, a cost of living squeeze on donations, rising operating costs, and the Government’s decision to increase employer national insurance contributions without exempting the charitable sector have piled pressure on organisations that are already struggling.

Small charities account for the overwhelming majority of the sector by number. Micro and small charities are defined as those with incomes under £10,000 and between £10,000 and £100,000 respectively, and they make up over 80% of all registered charities. Charities with incomes under £1 million represent 96% of the entire sector. By contrast, the UK’s largest charities—those with incomes over £10 million—make up less than 1% of the sector by number, yet account for the majority of total income.

Given the vital community work that small charities carry out, it is concerning that the majority of donations are given to bigger rather than smaller charities, which do not have the resources and superior brand recognition of bigger organisations. Small local charities do not have the financial runway and resilience built into their operations to weather storms.

The demand for charitable services is rising sharply, with the proportion of people receiving food, medical or financial support from charities having tripled in five years. However, around 42% of charities spent more than they received, and well over half are now running deficits. More charities are closing, and most of those closures are among organisations with incomes below £1 million. Nearly a third of voluntary organisations now describe themselves as vulnerable or struggling. Many expect to freeze recruitment and make redundancies as a direct consequence of financial pressure.

I urge the Minister to reduce the financial burden faced by small charities. What more can be done to supercharge philanthropy across the UK? How can we unlock billions in unclaimed gift aid and dormant funds and explore match-funding mechanisms, which can significantly increase donations? We should ensure that small and medium-sized charities can engage meaningfully in tenders, grant applications and policy consultations, rather than being crowded out by larger organisations.

Small veterans charities, including Veterans Dementia Support UK in my constituency, are not immune to the challenges facing the sector. The CEO of Veterans Aid has warned that if these specialist organisations disappear, the Government will lose the very partners they depend on to keep veterans from falling into crisis. I hope the Minister will reflect carefully on that.

The fact is that more charities are closing at a time when increasing numbers of people depend on their services. If we continue on this course, we risk losing an essential pillar of the social fabric that holds our communities together. It is absolutely crucial to ensure that small charities are supported in the UK. They are embedded in their local communities and are often their beneficiaries’ only lifeline. The Government must take all necessary steps to ensure they can maximise their impact for the people and communities who depend on them.