Funding Crisis Leaves £3.2bn Scots Voluntary Sector ‘On Wire’

Scotland’s £3.2bn voluntary sector is “on the wire” following a shortfall in funding from local authorities and a decrease in public donations.

A new study of the country’s 45,000 voluntary bodies and charities has revealed that Scotland’s most vulnerable people are relying increasingly on the burgeoning voluntary sector, but that its financial sustainability is under threat.

The study by the Scottish Council for Voluntary Organisations (SCVO), the umbrella body for the country’s voluntary sector, shows that the sector’s income rose from £2.63bn in 2004 to £3.2bn last year, and that it now employs more people than the NHS.

However, organisations are being forced to spend more than they receive from local authorities and other funders. The figures also show that although there are 1.2 million volunteers in Scotland, the amount of money people are willing to donate to charities has fallen. On average, 1.6% of Scottish household expenditure, or £6.30 per household per week, was donated during 2004-2006 – down from 1.9%, or £7.20, in 2003-2005.

The report states: “Unfortunately, the gap between income and expenditure has narrowed to its smallest in years, just £24m or 0.7% of income. So while the annual income suggests that the volume of activity now carried out by voluntary organisations is at an all-time high, the sector is on the wire.

“This tallies with the growing concern that in many cases voluntary organisations are only being given public money if they take on much more work than they are being paid to do, and are therefore dipping substantially into assets in order to subsidise these activities.”

The report comes just months after The Herald revealed charities are subsidising the public sector by up to £130m a year. Leading charities such as Barnardo’s, Capability Scotland and Quarriers are being forced to use their own funds to pay for services they provide for the state. As a result, a number of voluntary organisations say they are being forced to cut services.

More than 70% of voluntary organisations which provide services such as social work, nursing or care services, are not recouping the full cost of the service from local authorities.

Martin Sime, chief executive of SCVO, said: “The voluntary sector continues to grow and deliver more services for the people of Scotland. As a sector it is now a major employer and the biggest player in care and social housing sectors. But this research clearly amplifies the need to address the structural and funding weaknesses that undermine all of those who work and volunteer to make our country a better place.

“We need a fresh start in our relations with Scottish and local government in order to improve the sustainability and performance of the third sector. The signs are encouraging that the full potential of the sector to contribute effectively are understood. This isn’t just about more money, it’s about how the sector and government can work together better. It could and should be a win/win situation.”