Total third sector income rose by 3.3% during 2006/07, driven by an increase in earned income from government contracts, according to the National Council for Voluntary Organisations (NCVO) Almanac 2009.

Earned income in 2006/07 was £17bn, or 51% of the sector’s income, while voluntary income was £13.6bn, or 41% of the £33.2bn total income. Both continue to rise in real terms, but earned income, largely government contracts, has been rising more quickly than voluntary income, which includes grants, donations and legacies.

Additionally, charities are becoming more entrepreneurial in response to the changing landscape around them.

“It is vitally important that we do not underestimate the immense contribution the whole of civil society makes to the quality of peoples’ lives, to their local communities and to the UK economy”, said Stuart Etherington, chief executive of NCVO.

The government has made a response to calls from third sector leaders for support during the recession, but it remains to be seen how effective this will be.

The Almanac reported that three quarters of the UK’s 171,000 charities receive no funding from the government. However, it cited: “A number of indicators suggest that the sector approached the downturn in a stronger position than previous recessions.”

A possible contributor is the increase in individual donations. The Almanac cites data from UK Giving 2008, which estimated that 56% of adults – almost 28m people - gave to charity each month in 2007/08, and that the average donation increased to £33 per donor whilst the median gift by donors each month was £11. In 2006/07, 54% of adults gave to charity each month with an average donation of £29 and a median monthly gift of £10.

A cumulative increase of 24% in the sector’s paid workforce in the past 10 years saw it reach 634,000 in 2006. The sector’s income has increased by 46% in five years from £22.8 bn in 2001/2002.

For more details, or to order the Almanac, which costs £30 to NCVO members and £125 to non-members, visit the NCVO website.