Stretched Beyond Limit: ALLIANCE report finds deepening crisis in third sector funding
- Area of Work: Policy and Research
- Type: News Item
- Published: 16th December 2025
A survey of ALLIANCE third sector members found a worsening financial crisis arising from a range of pressures.
Scotland’s third sector is facing a severe financial crisis. As Scotland’s third sector intermediary for health and social care, the Health and Social Care Alliance Scotland (the ALLIANCE) are deeply concerned about the challenges facing our members and the people and communities they support. Our research of third sector members has found that:
- 64% reported being financially insecure, up from 49% in March 2024.
- Only 3% reported there was no pressure on their finances.
- 60% of members reported experiencing cuts to their core grants, almost all of whom (55%) said this was having a major impact on their operations.
- 25% of members reported experiencing cuts to contracts, of whom a majority (18%) said this was having a major impact on their operations.
- 57% reported unsustainable reliance on reserves and difficulty to offer pay uplifts to their employees.
If Scotland’s third sector was stretched to the limit in 2023, by 2025 it is being stretched beyond that limit. The current financial situation is unsustainable and increasing risks to essential public services, jobs, and wellbeing. It is therefore essential that the Scottish Government and other public bodies that fund the third sector make rapid progress towards fair funding principles. In August 2025, the ALLIANCE and the Coalition of Care and Support Providers in Scotland (CCPS) coordinated a joint open letter – signed by over 200 of our third sector members – that contained four key asks for the Scottish Government:
- An immediate, substantial cash injection in the upcoming Scottish Budget and Spending Review, including full cost recovery for employer National Insurance Contribution increases
- A medium-term, fully funded recovery plan for the sector, to address decades of underinvestment, developed in partnership with us
- Multi-year funding arrangements adjusted for inflation, to ensure stability for organisations
- A firm commitment to fully include the sector in planning and meaningful decision-making.
The 2026-27 Scottish Budget must deliver on these asks and ensure that third sector health, social care and wellbeing services are securely funded for the year ahead, whilst laying the groundwork for longer term recovery.
You can read the full Stretched Beyond Limit report via the resource links below.
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