Short-term funding cycles are creating financial instability for Scotland’s charities, says Holyrood Committee

SCVO: Fair Funding needed now more than ever

• Calls come as Holyrood Committee publishes report on public funding to voluntary organisations

Short-term funding cycles are creating financial instability and diverting time and resources away from charities’ delivery of services, according to a pre-Budget report by the Scottish Parliament’s Social Justice and Social Security Committee.

At the outset of the Committee’s inquiry the Scottish Council for Voluntary Organisations painted a stark picture of the challenges faced by charities in Scotland, identifying a 2.1% real terms decrease in Scottish Government funding in the previous budget, against a backdrop of increased inflation and high demand for services.

In recognition of the critical role charities play in supporting Scottish society, the Committee’s report calls on the Scottish Government to look at options to prioritise three-year-funding and include provisions for inflation-based adjustments.

During the inquiry, witnesses raised concerns about inconsistency, complexity and a lack of transparency in the application process for funding. In response, the Committee’s report recommends that the Government, and its partner grant awarding-bodies, streamline and standardise application processes and improve the transparency of the grant-making decision process.

The Committee also heard about the challenges some charities have faced because of delays to funding decisions and payments, issues the Committee wants the Scottish Government to resolve.

Bob Doris MSP, Deputy Convener of the Social Justice and Social Security Committee, said: “The Scottish Government has a commitment to provide fair funding for the essential work done by Scotland’s charity sector.

“We make it clear in our report that this commitment should be recognised in the upcoming budget, so that the sector’s vital work can be safeguarded. We call on the Government to prioritise strengthening its approach to multi-year funding and improving its processes.

“Whilst we acknowledge the Scottish Government’s ability to agree to multi-year funding when it does not know what funding it will receive from the UK Government for subsequent years, our committee has made practical suggestions to overcome these challenges.

“We believe that implementing the straightforward measures outlined in our report, including multi-year funding, could positively impact the effectiveness of a sector that does so much to help so many.”

Responding to the report, Scottish Council for Voluntary Organisations (SCVO) Chief Executive Anna Fowlie said: “I welcome today’s report, and the committee’s recommendations. Throughout their inquiry, the Committee heard from witness after witness of how the practice and culture around public  funding for voluntary organisations is broken.

“Too often and for too long voluntary organisations providing vital services to people and communities across Scotland contend with budget cuts, short-term funding cycles, late payment, incoherent decision-making, poor communication, inadequate grant management and more. That must end. 

“The voluntary sector needs a funding landscape that is fair, flexible, sustainable, and accessible – as long-advocated by SCVO and recommended by the committee today. 

“At a time when many voluntary organisations are facing extreme financial difficulties, these long-standing calls are more essential than ever. 

“The prize is a sustainable sector, strong public services, and resilient communities – one the Scottish Government must grasp with both hands.”

The Committee report: