Number of small charities

Just under 18,000 Scottish charities are small charities, with annual turnovers under £100k. Small charities account for over three-quarters of the Scottish charity sector.

However, despite the huge impact these thousands of charities have on communities across Scotland their economic footprint is small - they account for only 4% of the sector’s income and paid staff.

-

-

Growth trends over last decade

The number of small charities has fallen slightly in recent years, in part due to a clean up of dormant charities from the OSCR charity register, but primarily due to a shift as the income of many small-to-mid-sized charities has increased and tipped them into a higher income band.

This is due in large part to inflation. For example, a 'small' charity with a turnover of £80,000 in 2019 would have a turnover of over £100,000 in 2025 if its income increased in line with inflation.

-

Small charities' income and expenditure trends

• The combined income of small charities has seen little growth in the last 6 years, sitting at around £340m in 2019 and 2025, with a small dip in income during Covid. (This in part reflects that many of the charities who did see significant income growth over that period will have moved up into a higher income band.)
• Small charities’ combined expenditure rose to £437m in 2025 - £100m more than their income for 2025.
• Large charities saw increases in both income and expenditure over the same time frame

-

-

Surpluses and deficits

Smaller charities are slightly more likely than larger ones to end the year in deficit with over 4 in 10 ending 2025 in deficit.  More positively, we have seen a small improvement in the proportion of charities ending the year in deficit – see Micro and Small deficit trends below:

• Small charities have a different income mix to larger charities.

-

-

As we can see in the chart above, small charities rely heavily on income from the general public – this include things like donations, fundraising income, sales and charges for services including membership fees.

While these income streams have mainly recovered from a large slump during Covid, donations and fundraising remain a challenge - fewer people now donate to charity, in a large part due the cost of living.

Income from grant-making trusts, the lottery and private sector are also important income sources for smaller charities.

Support from grant-making foundations is a core income source for many smaller organisations, but we know from funders and fundraisers that the competition for grants is very high just now.

Only 30% of small charities received funding from the public sector in 2023, usually in the form of grants (not contracts). Small charities receive only a very small portion of public sector funds, highlighting the ongoing need for small and accessible grants programmes, alongside encouraging and facilitating the participation of smaller third sector organisations in procurement and tendering.

For more on income sources and income trends see https://scvo.scot/research/stats-funding.

-

Main challenges

• Smaller charities face most of the same challenges as larger organisations, but often experience them more acutely in some areas

The Scottish Third Sector Tracker’s latest wave in Autumn 2025 received responses from 663 organisations just over half of which were smaller organisations with incomes under £100k, giving us a good insight into their top current issues and challenges.

The chart below shows the top 3 challenges, split by organisation size.

-

Donations and fundraised income are a key source of funding for smaller charities, and ‘difficulty fundraising’ is one of the top three challenge for 43% of smaller charities – ten percentage points higher than larger charities.

Smaller charities are far less likely to employ paid staff, and rely heavily on volunteers, including over 100,000 trustees. It’s therefore not surprising that volunteer (including trustee) shortages are a top issue for many – but at 52% the figure experiencing volunteer shortages is concerningly high.  Concerns for staff and volunteer wellbeing are also a concern for almost 1 in 5 smaller charities.  Skills shortages are an issue for around 1 in 10 smaller charities.

While rising costs and inflation are more of a challenge for larger charities, they are still a top issue for a third of smaller charities.

6% of smaller charities report that they have not faced any challenges in the last 6 months, underscoring that smaller charities are often very resilient and effective despite their apparent lack of resources on paper.

-

Delivering services

Despite the many challenges facing smaller charities, size seems to make little difference when it comes to delivering planned services. The majority of small charities report delivering everything they had planned to, with many even having the capacity to do more than originally planned.

-

-

Resilience and sustainability

Size has a small impact on confidence around the future - smaller charities are slightly more likely than larger charities to say they are ‘not very confident’ or ‘not at all confident’ that they will still be around in a year’s time.

However, the majority of small charities are very or quite confident they will still be operating in 12 months’ time:

There has been a small shift in where paid staff are employed. There has been a slight increase in the number of paid staff employed by larger charities, and slight decrease in the number employed by smaller charities. The number of paid staff employed by smaller charities fell by 3,000 between 2019 and 2025, from just over 8,250 to just over 5,250.

-

Based on our recent 2025 Scottish Voluntary Sector Workforce Survey over 2 in 5 respondents from smaller charities were employed part-time, in contrast to larger charities where only 1 in 5 worked part-time.

Around 1 in 3 respondents from smaller charities have a non‑permanent contract – higher than the 1 in 4 seen in larger charities, and a far higher proportion than in other sectors. Non-permanent contracts tend to exacerbate concerns about job security and these worries can impact negatively on job satisfaction.

Despite this, employees in smaller charities show high levels of job satisfaction, are in the main satisfied with flexibility of work place and time, are happy with management and generally feel they have access to training opportunities, although for 2 in 3 respondents this is only ‘to some extent’.  

Respondents from smaller charities are also more likely to agree that their organisation feels ‘open, inclusive and welcoming”.

However, small charities typically lack access to dedicated HR support and due to their size often cannot offer paid staff the same levels of benefits and support structures as larger charities.