NCVO has finalised its estimates for the scale of government funding cuts to the sector, saying that charities stand to lose £2.8bn by 2016.

Based on the government’s projected spending plans released by the Office of Budget Responsibility, the Counting the Cuts report also calculates that statutory funding will be £911m less in 2015-16 than in 2010-11, a fall of 7.7 per cent.

The figures are calculated by assuming that funding to the sector by each government department will continue to be the same proportion of that department's total spending, declining in line total budget cuts.

However, despite the size of the figures given by the report, it warns that this methodology may even underestimate the scale of the cuts, as freedom of information requests have shown that half of local councils will reduce the proportion of their spending on the sector as well as their net spending.

Karl Wilding, head of policy and research at NCVO said: “Putting an authoritative figure on the extent of the cuts to date has been like trying to pin jelly to the wall.

“Estimates have varied widely and this report provides a solid baseline figure based on the Government’s own figures.

“Many charities are unwilling to speak out for fear they will jeopardise other funding streams but we currently face the perfect storm of an increase in demand and nearly £3bn public sector cuts – this is a significant cause for concern because it will significantly hamper the ability of charities to support those most in need.”

The report also contains a “myth busting” section, which looks to dismiss common misconceptions about charities, such as the idea that they “live off government handouts” or that those who receive statutory funding “are not real charities”.

“Growth opportunities”

Responding to the findings, a spokesman for the Cabinet Office said the Big Society is offering the voluntary sector many new opportunities to grow.

“Our reforms will allow the voluntary sector to bid for public service contracts worth billions of pounds. Just over a week ago Big Society Capital launched with an expected £600m to give the sector access to much needed finance, which will help them expand and bid for these new contracts.

“And we’re doing more to support giving and philanthropy including measures in the budget estimated to be worth £600m over the lifetime of the Parliament. This is just the start.”