Third sector organisations continue to report uncertainty around their funding and future service provision.

Last year, the ALLIANCE published our “Stretched to the Limit” report, investigating the impacts of the cost of living crisis on our organisational members. Our report found that the majority of member organisations who responded to our survey, as well as attendees at our annual conference workshop, were facing pressures including increased demand for services, reductions in grant funding and higher bills, whilst almost half were unable to offer their employees pay uplifts.

In advance of the new financial year, we conducted a short follow up survey between 18 and 25 March 2024 of our organisational members to get a sense of their current financial circumstances, particularly in light of the extremely difficult public funding situation in the Scottish Budget. We asked members to tell us whether they had funding agreed for the coming year, and whether they felt financially secure:

  • 33% of respondents said their funding for the year ahead had not yet been agreed, and that they were financially insecure.
  • 26% said their funding had not yet been agreed, but they were financially secure.
  • 26% said their funding had been agreed, and they were financially secure.
  • 15% said their funding had been agreed, but they were financially insecure.
  • Overall, 59% said their funding for the coming year had not yet been agreed, versus 41% who said it had.
  • Overall, 51% described their finances as secure versus 49% who said they were insecure.

These findings emphasise that there continues to be significant financial pressure on the third sector, with half of respondents describing their finances as insecure, and a majority reporting that they hadn’t yet had funding agreed for the coming year. Long delays to finding out the outcome of funding applications, as well as opening applications and making decisions at short notice, are having a serious impact on the ability of organisations to plan ahead.

One organisation that hasn’t yet had confirmed funding and had insecure finances told us “we are noticing that more grants awarded through Scottish Government and Local Authorities are confirmed later in the financial year and have a very short time scale in which to apply, deliver and report on. Whilst we appreciate (and need) this funding, it is putting additional pressure on staff – particularly part time workers – to achieve outcomes and provide robust monitoring information.”

Even organisations with agreed and secure finances noted concerns around the timescales for confirming funding, with one saying “we are still awaiting confirmation on some continuation funding which may cause us problems as the next financial year progresses if it was reduced or stopped” and another that “some commissioned services are not yet confirmed due to budgets not being approved until the end of March.”

A number of responses also talked about needing to access more and smaller sources of funding. One organisation said that “on the whole, we are having to apply to more funding bodies and are receiving reduced awards which means more in our portfolio in order to stay afloat.” Another issue impacting on the ability to secure funding, that funders often like to see new ideas and projects, was noted by one organisation offering a long-running service, stating that “long term, large grants are difficult to access in Scotland and even more so for existing activities that are delivering impact as funders like to see new things!”

One charity talked about how difficult it could be for new charities to navigate the funding system, as well as highlighting the important role played by condition-specific organisations in supporting people, saying that “we are still a small charity and as we are growing we are finding our way around how to fund our charity. It is daunting and feels like a lottery. We don’t have huge overheads so we don’t need a lot to keep us going. But project [staff] are valuable to us as there is very little knowledge on our condition and we don’t want to lose them and waste the energy and time we have taken to train them up.”

Although this survey is only a small snapshot of the current landscape, it provides further evidence of just how stretched the third sector is. Given the number of people reliant on the sector both for support and employment, and the value of the sector to Scotland’s economy, it is essential that organisations are offered greater security and stability of funding. In line with our central recommendation from the “Stretched to the Limit” report, the ALLIANCE continue to urge the Scottish Government to take forward proposals on fair funding for the sector, and are particularly keen to see progress on multi-year funding arrangements.

Note: The survey received responses from 40 ALLIANCE members, of which 39 responded to the funding arrangements question. Survey respondents were self-selecting and amounted to 11% of the ALLIANCE’s organisational members, and responses should be understood as a snapshot rather than a comprehensive breakdown across our members.

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