Charities lack the reserves to survive impending cuts, warns NCVO study

Finance | Gareth Jones | 6 Aug 2010

A third of active charities have no funding in reserve, while the median reserve level for charities which receive government funding is just one month of expenditure, according to research by NCVO.

Based on data from 171,704 charities in England and Wales, the findings have led the umbrella body to warn that “drastic cuts” in government funding “could threaten the survival of many organisations providing vital services”.

The figures on assets and reserves also show that while housing organisations typically hold almost 20 months’ worth of expenditure, this falls to 4.5 months for employment and training organisations and just 1.4 months for playgroups and nurseries.

NCVO is now considering further work on the issue such as undertaking qualitative research and collating case studies.

‘Vital services at risk’

Sir Stuart Etherington, chief executive of NCVO, said: “These figures show how vulnerable many community and voluntary organisations will be in the testing and unpredictable times ahead.

“Without a financial safety net, vital services for local people and communities will be at risk.

‘This really demonstrates the need for public sector funders to work with voluntary and community organisations where cuts are necessary, to make sure they are properly planned and implemented.

“As the recession has driven up the need for many frontline services, it is critical that the sector retains its capacity for supporting some of the most vulnerable people in society.”

Directory: National Council of Voluntary Organisations (NCVO)
Who's Who: Sir Stuart Etherington

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