The Civil Society Group (CSG) has called on chancellor John Healey to ensure the sustainability of charity funding in his first budget next month.
The group of more than 80 sector organisations submitted a joint response to the government’s consultation last week, urging Healey to recognise charities as strategic partners in delivering the government’s ambitions for growth and stronger communities.
Recommendations included ensuring that government funding arrangements better reflect the real costs charities face, encouraging donations and long-term philanthropy and supporting place-based giving initiatives and local voluntary sector infrastructure.
“The autumn budget therefore provides an early opportunity to put the ambitions of the Civil Society Covenant into practice and position civil society as an effective strategic delivery partner, connecting national priorities with local communities,” the submission reads.
“This should be underpinned by genuine co-design, recognition of the sector’s expertise and sustainable funding.”
‘Beyond transactional relationships’
CSG, which includes sector bodies such as NCVO and the Charity Finance Group (CFG), said that grants and contracts should cover full delivery costs, including employing staff, reimbursing volunteers, and increased costs from changes to employers’ national insurance contributions.
“It’s our view that statutory commissioning must evolve beyond transactional relationships,” the submission states.
“It requires a fundamental pivot toward multi-year funding settlements, transparent full cost recovery, and genuine co-designing of services alongside the sector experts who actually deliver them.
“Sustainable public service delivery depends on funding that fully reflects the real costs of employment, volunteering, inflation, and policy change.”
CSG said the government must preserve existing fiscal incentives for charitable bequests as charitable gifts in wills are proving an essential source of long-term sustainable income.
It asked that any changes to the inheritance tax framework consider “the inevitable impact on charitable income".
“Any fiscal reform should also be developed in consultation with charities, donors and professional advisers, to ensure that appropriate incentives are in place to encourage and reward legacy giving so this vital income stream can maintain its growth trajectory,” it said.
‘An essential partner’
Richard Sagar, head of policy at CFG, said: “Civil society is an essential partner in delivering the government’s ambitions for growth, stronger public services and thriving communities.
“Charities contribute billions of pounds to the economy every year, attract investment into local areas and provide support to people and communities when they need it most.
“But charities are under increasing pressure.
“Rising costs, falling levels of giving and growing demand for services are forcing many organisations to do more with less, or close their doors for good.
“Without sustainable funding and the right policy environment, the sector's ability to deliver positive outcomes will be constrained.
Sagar added that strengthening the partnership between government and civil society represents “a significant opportunity to support growth, unlock additional investment and build stronger communities across the UK”.
Healey is due to present the autumn budget on 28 October.
