Glossary of Terms

A yearly report that registered charities must submit to the Charity Commission, containing financial information, governance details, and confirmation of eligibility to operate. Required for charities with income over £10,000.

The mean annual growth rate of income over a specified time period (usually 3 years) assuming steady growth. Smooths out year-to-year fluctuations to show the underlying growth trend. Calculated as: ((End Value ÷ Start Value)^(1/Years) - 1) × 100.

A charity that is also a company limited by guarantee. Must register with both the Charity Commission and Companies House. Provides limited liability protection for trustees/directors.

The percentage of a charity's total expenditure that goes directly to charitable activities (as opposed to fundraising or governance). Calculated as: (Charitable Activities Expenditure ÷ Total Expenditure) × 100. Higher ratios generally indicate money is being spent on the cause.

The regulator for charities in England and Wales. It registers charities, ensures they're operating properly, and maintains the public register of charities that CharityLens uses as a data source.

A legal structure for charities that provides limited liability for trustees. CIOs only need to register with the Charity Commission (not Companies House) and are subject only to charity law.

The proportion of a charity's total assets that are financed by liabilities (debt). Calculated as: (Total Liabilities ÷ Total Assets) × 100. Lower ratios indicate a stronger financial position with less reliance on borrowed funds.

A measure of how much of each pound raised is retained after fundraising costs. Calculated as: ((Total Income - Fundraising Costs) ÷ Total Income) × 100. Higher percentages indicate more efficient fundraising.

Expenditure on the general running of the charity, as opposed to direct charitable work. Includes costs of trustee meetings, audits, legal and professional fees, and strategic planning.

A charity whose primary activity is giving grants (financial awards) to other organisations or individuals, rather than delivering services directly. Examples include trusts and foundations.

A measure of income concentration. Calculated by squaring the percentage share of each income source and summing them. Ranges from 0 to 10,000. Lower scores indicate more diversified income. Below 2,500 is considered diversified; above 5,000 is highly concentrated.

A classification of charities based on their annual income. CharityLens uses: Micro (<£10k), Small (£10k-£100k), Medium (£100k-£1M), Large (£1M-£10M), Major (£10M-£100M), Super-Major (>£100M). Used for peer comparisons.

A measure of how much a charity's income fluctuates year to year. Calculated as the coefficient of variation (standard deviation divided by mean) of annual income. Higher volatility indicates less predictable funding.

Total assets minus total liabilities. Represents the overall value of the charity if all debts were paid. Also known as 'total funds' or 'net worth'.

A charity that delivers services or programmes directly to beneficiaries, rather than primarily making grants. Most charities are operating charities.

Comparing a charity's metrics against other charities in the same income band to understand relative performance. CharityLens calculates percentile rankings showing how a charity compares to similar-sized organisations.

A unique identification number assigned to a charity when it registers with the Charity Commission. This number is used to look up charities on the official register and on CharityLens.

Funds held by a charity that are not designated for a specific purpose and can be used flexibly. Often referred to as 'free reserves' or 'unrestricted funds'. Reserves provide a financial buffer against income fluctuations or unexpected costs.

Donations or grants given to a charity for a specific purpose as defined by the donor. These funds cannot be used for general purposes and must be spent according to the donor's wishes.

Total income divided by the number of employees. A measure of operational efficiency and staffing levels relative to the charity's size. Useful for comparing charities of similar types.

The number of months a charity could continue operating using its reserves if all income stopped. Calculated by dividing total reserves by monthly operating expenditure. Provides insight into financial resilience.

All money spent by a charity during the financial year on charitable activities, fundraising, governance, and support costs.

The sum of all money received by a charity during the financial year, including donations, grants, trading income, investment income, and any other sources of funds.

A volunteer board member who has overall control of a charity and is responsible for making sure it's doing what it was set up to do. Trustees are usually unpaid and have legal duties including acting in the charity's best interests.

Funds that a charity can use for any purpose that furthers its charitable objectives. These provide the most flexibility and form the basis of the charity's reserves.

Current assets minus current liabilities. A measure of short-term liquidity that shows whether a charity can meet its immediate financial obligations. Positive working capital indicates good short-term financial health.