Medium-sized charities are most under pressure as a result of cuts to local authority funding and current commissioning practices, according to NCVO.
Speaking at the launch of the latest UK Civil Society Almanac last night, Karl Wilding, director of public policy and volunteering, at NCVO said that while overall sector income had risen slightly, medium sized charities were still suffering a “very real squeeze”.
For the first time in a decade central government funding for the voluntary sector is more than local government funding for the sector.
He said that the largest charities, those with an income of over £100m, had benefited from central government funding increases, and that the very smallest were “relatively static” partly because they’d “never had that much income in the first place”.
Wilding blamed the drop in local government grants, which are instead “being rolled up into larger amounts and turned into contracts”.
This means that “specialist” providers are being replaced by “general” providers.
Wilding said that the relationship between the voluntary sector had changed from being one where charities were funded to “do things we wanted to do” to one where its things “they want us to do”.
This has led to a more “instrumentalist relationship” he said.
He reiterated NCVO’s suggestion that the government use the £2bn dormant assets windfall to endow community foundations and to help charities buy community assets.
‘Fundraising is getting harder’
Wilding said a greater proportion of total expenditure is going towards fundraising than before.
He said it appears that “fundraisers are having to work harder to generate income” and this could have “fed into what the public experience in their fundraising communications”.
He noted that this year’s Almanac covers the period to March 2015, which is before the fundraising scandal. As a result, even though fundraised income has been relatively stable in recent years that might change going forwards.
He added that despite the push towards social investment, loan finance was “relatively static” and that most of it still came from high street banks.
Relationship with the private sector
Wilding said that he did not expect to see income from the private sector increase, even though “one of the government’s aspirations is to strengthen the link between the voluntary sector and the private sector”.
At the moment income from the private sector accounts for a relatively small proportion of income.
In his experience corporates are more interested in talking about “time and employee supported volunteering” and don’t want to be seen as “cash machines”.
“They are thinking about a broader relationship,” he said.