Public sector spending on the third sector in Scotland has frozen
Public sector funding to Scotland’s voluntary sector has dropped by £177million in real terms since 2021, a new report has found.
Research by the Scottish Council for Voluntary Organisations (SCVO) shows the amount of public money provided to third sector organisations froze between 2021 and 2023.
The SCVO ‘Public Sector Funding’ research report found a 5% cut in real-terms funding, meaning organisations across Scotland are being asked to continue providing vital frontline services with a pot of money now worth less.
SCVO has consistently called for public bodies to implement a new Fair Funding model to help charities, voluntary groups, and social enterprises to thrive and provide greater security for our people.
The national membership organisation for the voluntary sector said this must include longer-term funding of three years or more, and sustainable funding that includes inflation-based uplifts, full cost recovery, including core operating costs, and pay uplifts.
Public sector funding – around half of which comes from local authorities, and a third of which comes from the Scottish Government – should also accommodate paying staff at least the Real Living Wage, which organisations in receipt of public money are required to pay their staff.
SCVO also continues to push for funding to include provision for the additional costs that medium and large voluntary sector employers will face as a result of increases to Employer National Insurance Contributions.
The calls for Fair Funding come at a time when voluntary sector organisations are increasingly required to make use of their reserves, with SCVO research showing a decline in cash reserves – particularly in those organisations who deliver public sector contracts.
These pressures, including the real-terms cut in public sector funding, underline the need for the Scottish Government and other public bodies to implement Fair Funding across the country.
SCVO Chief Executive, Anna Fowlie, said: “We know the times are tight for the public sector, and we appreciate that in that context even standstill funding is sometimes seen as a win.
“However, at a time when demand for support from voluntary sector services is rising, including as a result of cuts in public services, it is simply unsustainable to expect the voluntary sector to find the £177million shortfall that these figures tell us our sector is facing.
“Voluntary organisations do not have ready access to other sources of funding: public fundraising and trading income has also been impacted by the cost of living crisis. That leaves many organisations using their reserves to fund this deficit, which may provide a temporary solution, but over the long term is wholly unsustainable.”
SCVO Head of Policy and Research, Kirsten Hogg, added: “In addition to rising demand and rising costs, voluntary sector employers face additional pressures going into the new financial year.
“Medium and large voluntary organisations that employ staff will be hit by changes to employers National Insurance contributions, leaving the sector to find at least an additional £75m annually.
“Against the backdrop of reduced real terms budgets, and a lack of other sources of income, it is little surprise that nearly one in ten of Scotland’s 46,500 voluntary organisations is unsure whether or not they will still be operating in 12 months’ time.”
Foysol Choudhury, MSP for the Lothian Region, has expressed deep concern over the proposed £29 million savings programme being considered by the Edinburgh Integration Joint Board (EIJB) as part of its £900 million budget for health and social care services.
The EIJB’s proposed financial strategy aims to address rising service demands, increasing costs, and demographic shifts, but Foysol Choudhury MSP emphasised the need for transparency in decision-making, highlighting the importance of long-term strategic investment.
The proposed budget cuts will be formally discussed at the EIJB meeting on March 25, 2025. Foysol Choudhury MSP is encouraging residents to stay informed and make their voices heard in the decision-making process.
Commenting, Foysol Choudhury MSP said: ““The health and social care system in Edinburgh is already under immense strain, and while we all recognise the financial pressures facing the EIJB, it is critical that these cuts do not disproportionately impact the most vulnerable in our community.
“We must ensure that any savings made do not come at the expense of frontline services that so many Edinburgh residents depend on.”
“We need a future-proofed approach to social care that ensures sustainability, rather than short-term fixes that could lead to deeper crises down the line. I urge the EIJB to explore all possible options, including securing additional funding and working more closely with third-sector partners.”
“With the highest record settlement from the UK Labour Government since devolution, local authorities should not be pressured to cut essential services.”
Community-led mental health and wellbeing projects are to benefit from £30 million Scottish Government funding over the next two years.
The Communities Mental Health and Wellbeing Fund for Adults – first launched in 2021 – supports local groups to deliver programmes for adults which build resilience and tackle social isolation, loneliness and mental health inequalities. It is expected the Fund will open to applications this Autumn.
In the first three years around 4,800 grants were made to a wide range of grassroots community projects focused on connecting people and providing peer support through activities such as sport, outdoor activities, and the arts.
The charity, Empower Women for Change, has secured grant awards in all rounds of the Fund to date. This year, the group is using its grant to support lone parents, families with a disabled family member, Minority Ethnic families, and young mothers.
Visiting their office in Glasgow Mental Wellbeing Minister Maree Todd said: “I am pleased to meet staff and service users at Empower Women for Change and hear more about the valuable work they do in the community they support. It is inspiring to see first-hand the impact that this funding can have.
“Since the fund was established, we have invested £66 million, reaching a variety of groups supporting those at increased risk of poor mental health and wellbeing – including people facing socio-economic disadvantage, older people and ethnic minority communities.
“I look forward to seeing the positive impact that this further £30 million investment will make to the wellbeing of people and communities across Scotland.”
Empower Women for Change CEO and Founder Asma Abdalla said: “We are delighted and honoured to welcome the Minister Maree Todd to our organisation.The Wellbeing Fund has played a transformative role in improving the lives of our service users of ethnic minority women and girls and our volunteers, members, and staff.
“Through our Inspired Women projects, we have provided vital mental health support, resilience, and community connection, changing lives and strengthening communities. We are looking forward to continuing this work, with support from the Wellbeing Fund.
“We welcome this unique opportunity to share Inspired Women participants’ testimonies, their voices highlight the urgent need for sustained investment in grassroots wellbeing services. Please join us in amplifying their stories and celebrating the power of community-led change.”
Partnership Manager at Glasgow Council for the Voluntary Sector Sheena Arthur said: “We are delighted that the Scottish Government’s Communities Mental Health and Wellbeing Fund is continuing.This fund delivers small grants which make a positive difference and so far, has supported over 900 Third Sector organisations and community groups across Glasgow.
“In increasingly challenging times, the Third Sector plays a crucial role. This fund enables the development of existing projects as well as emerging ideas from the community. It helps to bring people together- contributing to better health and wellbeing of people and families, strengthening social connections and tackling inequality and poverty.”
Regenerative Futures Fund will help tackle root-causes of poverty, racism and climate change
Edinburgh, like many cities, faces serious and systemic issues of poverty and racism, and these are deeply connected with environmental challenges.
Time after time local charities across the city have proven they are well-placed and able to provide the solutions needed to deliver real impact for their communities, but they are seriously constrained by the existing funding model of short-term cyclical or project funding, lack of trust and lack of understanding.
Launching today, The Regenerative Futures Fund is a pioneering ten-year community fund for Edinburgh that puts decision-making power into the hands of those who are most often excluded.
It supports approaches that improve the lives of local people living in poverty and experiencing racism, and that contribute towards a just, green transition, by enabling equity and power-sharing.
The fund is specifically designed to step into the space of long term, unrestricted funding, placing trust in communities that they themselves can allocate resources where they are most needed, and where they will make the biggest impact.
The fund also brings together long-term commitments from some of the biggest funders in the country, contributing to and collaborating on the pooled fund, including Esmée Fairbairn Foundation, The National Lottery Community Fund, The Robertson Trust, Turn2us Edinburgh Trust, Foundation Scotland and crucially City of Edinburgh Council, but completely removes them from the decision-making process.
Instead, they are giving local individuals and organisations the agency and the resources they need to create a brighter future for all residents of Edinburgh.
With nearly £6 million pledged to date, the team is actively inviting others to join the impressive coalition of funders, corporate partners, and philanthropists committed to a just and sustainable Edinburgh to fully realise the ambitious 10-year programme.
Leah Black, Co-Head said“We have a wealth of incredible organisations in Edinburgh who are passionate and capable of delivering the changes we all need to see but unfortunately the current funding landscape can often stand in their way.
“Traditional funding programmes do little to address the root causes of poverty and inequality; short timescales, restricted single-issue support and overall, a real lack of trust in the organisations delivering on the ground. A radical shake up is needed and that is why we are coming together to launch The Regenerative Futures Fund.
“The Regenerative Futures Fund is different. Collaboratively designed by local people in community organisations, campaigners, funders and the local authority, this £15 million, ten-year pooled fund presents a unique opportunity to support and learn with others to enable a long-term community-led approach to systemic change.
“We are committed to meaningful, long term and unrestricted funding. This means that organisations will be given the freedom to think and plan for the long-term.”
Through the fund, grants of up to £100,000 per year will be offered to around 10-15 Edinburgh-based organisations, over 10 years.
Aala Ross, Co-Head said: “The Regenerative Futures Fund directly addresses the huge problem we have with short-termism. Transformative thinking – and doing – requires long-term resource.
“We struggle to think and act long-term due to the dominance of short-term and restricted funding, resulting in ‘sticking plaster’ and siloed solutions to our biggest societal issues.
“We are frustrated with restrictions and barriers of short-term, restrictive and power imbalanced funding for social sector organisations. We know that this is a funding programme with a difference, and we know that other cities and funders will be watching and we will openly share our learning across the next ten years.”
Edinburgh City Council Leader Jane Meagher said: “Here in Edinburgh we have an ambitious target to end poverty by 2030, and we remain committed to making our city fairer. We know that this isn’t an easy task but we need to be bold and drive the change that is so greatly needed.
“The Regenerative Futures Fund will empower local people and the third sector to directly fight poverty and inequality in our communities. We need a city-wide partnership fund to help us end poverty together. This innovative model is unique to Edinburgh.
“With backing already in place for £6 million, including £100,000 of Council funding, the team is well placed to start working alongside those with firsthand understandings of poverty. This will help make a lasting difference – ensuring their voices are at the heart of decision-making.”
One of Scotland’s biggest funders, The Robertson Trust has contributed £1 million to the Regenerative Futures Fund, the largest award they’ve made in this strategic funding period, and their first ever ten-year award.
Jim McCormick, Chief Executive of The Robertson Trust said: “The Robertson Trust is committed to preventing and reducing poverty and trauma in Scotland by funding, supporting and influencing solutions to drive social change.
“As an independent funder, we recognise our responsibility to explore new approaches, particularly to address the root causes of poverty, racial injustice and climate risks. Our partners tell us consistently that lasting change cannot be achieved through short-term funding.
“That’s why we were drawn to The Regenerative Futures Fund’s long-term vision, its ambitious cross-sector collaboration, and its deep commitment to shifting power towards people and places with lived experience of these deep-seated challenges.
“Our £1 million award over ten years – the largest and longest commitment of strategy period to date – reflects our commitment to long-term change. We share the Fund’s bold vision and look forward to learning about power-sharing and ambitious collaboration to achieve transformative change in Edinburgh.”
Esmée Fairbairn Foundation have contributed over £500,000 to the Fund. Gillian Goode, Funding Manager at Esmée Fairbairn Foundation said: “Regenerative Futures Fund is an ambitious vision to reimagine and demonstrate an alternative model of citizen-led change for the City of Edinburgh.
“Communities have no shortage of ideas for how to explore and create innovative solutions and address the inequalities that exclude people from being part of that experience; what they often lack is stable and secure resourcing and the right to decide how best to use it.
“We are grateful and excited to have the opportunity to learn alongside communities, other funders, City of Edinburgh Council, other partners and stakeholders how we might work together differently in future towards sustainable change that can meet everyone’s social and economic needs and safeguard our climate and natural world.”
Independent charity Foundation Scotland is involved as both a key funder and the host of the Fund overall.
Helen Wray, Head of Philanthropy at Foundation Scotland said “This is an ambitious fund that ultimately aims to empower people to play a central role in improving their lives and those of others – to have their voices listened to and be active in shaping their own futures.
“We talk about this kind of approach often, but rarely do we see it so powerfully laid out. The Regenerative Futures Fund has the potential to create a compelling model for others to follow. We will fully support them to make that ambition a reality.”
Eligibility checkers and application details for both the lived experience panel and interested organisations are now live on the Fund website.
Those interested in contributing to the collaborative pooled fund and building a more just, equitable, and sustainable future for Edinburgh should get in touch with Leah Black: leah@foundationscotland.org.uk
For more information about the Regenerative Futures Fund including eligibility criteria and application information visit https://regenerativefuturesfund.org.uk
It is the 21 February and the days are getting longer but more importantly, the future is looking brighter (writes EVOC CEO BRUCE CRAWFORD).
EIJB Fund Cuts
On Thursday (yesterday) the City of Edinburgh Council held a full Council meeting. I was in attendance to make a deputation on behalf of the voluntary organisations impacted by the cuts by the EIJB grants programme for social care.
This followed months of work by colleagues from across the sector who have worked tirelessly for the affected organisations. The work was largely done by members of the Third Sector Reference Group that came into existence after the EIJB meeting on 1 November which led to a three month extension to June 2025.
The eventual outcome is that the £4.5m grants programme has been replaced for the next financial year, so services can continue to be delivered to many of the most vulnerable people in our communities.
Further work needs to be done in the coming weeks and months to help the officers to create the mechanism for disbursement of the funds.
I want to thank all the individuals who contributed to this success, it is evidence of the need to work together, focus on the needs of our communities and stand up for what is right. I hope that we can build on the experience to generate continued investment into the sector as this will not be the last challenge we face.
A key function of EVOC is advocacy and this includes responding to consultations on proposed legislation and strategies. A current example of this is the draft Edinburgh Integrated Joint Board’s strategy 2025-28.
We have published information on our work in this area on our website. It includes a presentation and a video that explains the draft strategy.
To inform our response we have asked a number of questions through an online survey. Despite our request for an extension, the deadline from the EIJB is this Sunday (23 Feb 2025) and there is still no easy read version available.
We encourage everyone who is interested in, or affected by this, to submit a response here.
Looking Forward
On 29 January I attended my first EVOC board meeting and found it to be useful and productive in equal measures. In the spirit of openness and transparency the directors unanimously agreed to my proposal to publish minutes of EVOC board meetings on the website. The minute of that meeting can be found here.
Following the challenges faced by EVOC in 2024 we created a recovery plan and are well on the way to developing a more robust and resilient organisation.
Some key changes are: improved policies and procedures, greater financial scrutiny and forecasting, better communication, along with a new risk management policy and risk register and a new strategic plan that focuses on the core purpose of the organisation to serve the needs of the sector.
Thank you to everyone who contributed to the survey that we issued last month to inform our understanding of the needs of our members. We received a great deal of useful feedback and it will help our thinking as we develop the strategic plan for EVOC for 2025-2030.
Finally I am looking forward to our AGM on 26 February.
It is being held online to help make attendance as easy as possible. Details of how to register for the meeting are available here.
Largest health union protest against £4.5m cuts to Lothian’s third sector services
Activists from Scotland biggest health union, UNISON will gather outside Edinburgh City Chambers this morning to lobby against proposed £4.5m cuts to 64 third sector organisations in the city.
These cuts, including a £1 million reduction in welfare rights services, will strip vital support from low-income families, disabled people, carers and contradicting the Edinburgh Council’s anti-poverty strategy, says UNISON
Unions and community organisations are warning that the consequences could be catastrophic for service users and staff.
The removal of these preventative services will also increase pressure on NHS services, A&E, and crisis care, shifting costs rather than delivering real savings, says the union
UNISON is calling on the City of Edinburgh Council to allocate £4.5 million in next year’s budget to keep these essential services running.
UNISON Lothian health branch secretary Tracy-Anne Miller said:“Slashing funding to third sector organisations will devastate communities and cost more in the long run.
“These cuts will push more people into NHS services at a time when hospitals and GPs are already overstretched. We need investment in care, not a crisis. We are calling on the council to step up, protect these services, and prevent these cuts.”
UNISON activists will gather outside Edinburgh City Chambers from 8.30 am this morning (Thursday 20th February) to lobby the City of Edinburgh Council to protect funding for 64 third sector organisations facing cuts following the announcement by the Edinburgh Integrated Joint Board (which directs the health and social care partnership) to cut its £4.5million third sector grants programme from June 2025.
UNITE City of Edinburgh Branch will also be making their voices heard in the quadrangle today. A demo will take place outside the City Chambers on the High Street from 8.30am to 9.30am,
The unions will send deputations to the meeting to speak on behalf of their members. In all, ELEVEN deputations will be heard today. Among them are Oaklands School Parents Council and LIFT Muirhouse Millennium Centre from North Edinburgh.
Labour nominally runs Edinburgh, propped up by Lib Dem and Tory support. Last year, under the leadership of now-suspended Cammy Day, the administration controversially adopted a Lib-Dem budget.
Labour, and the City of Edinburgh Council, is now under new leadership, but the perennial challenge of meeting an increasing demand for services with never quite enough financial resources remains as tough as ever.
As councils try to balance the books a painful Council Tax increase is inevitable.
Earlier this week COSLA’s Resource Spokesperson, Councillor Katie Hagmann, warned: “Councils are working hard to deliver every day for our communities. However, budget cuts, inflation, higher costs such as the increase to employers’ national insurance contributions, and the previous freezes on council tax mean councils have unfortunately had to make difficult decisions to avoid reducing or cutting essential services.
“Council tax is one of the few options councils have to raise money to invest in local improvements such as roads; community halls and leisure centres; and public transport. These are services that benefit us all, but especially the people in our communities who might need extra support – such as children and young people, parents with young children, elderly people, or those with disabilities. With this in mind, councils are carefully considering what increase is necessary and appropriate for them locally.
“Reform of council tax is overdue and COSLA wishes to see a Council Tax that is fair and proportionate for all householders.
“Councils have advice and support services in place to help people who are struggling to pay their council tax or having financial difficulties. We recommend speaking to the council tax and benefits department in your council to find out more.”
Today, National Leadership Day incidentally, we’ll hear the respective political parties put forward their vision for Scotland’s capital city. Just what kind of city does Edinburgh want to be?
Tough choices? Of course, but it’s also an opportunity to begin to restore Edinburgh’s battered reputation.
New research from SCVO outlines the state of the sector’s finances
Charities across Scotland have continued to draw on their reserves “unsustainably” despite funding from government staying relatively stable, new research shows.
The Scottish Council for Voluntary Organisations (SCVO) has published its latest research, State of the Sector 2024, which shows the challenges which organisations across Scotland continue to face.
The paper, which contains key figures and trends from the Scottish voluntary sector, shows funding from government has stayed relatively stable, while income from the public has to a large extent recovered after being hit hard by Covid.
Unfortunately, for many voluntary organisations inflation and expenditure rises have matched and outpaced these hard-won gains.
While most organisations were able to stay in the black, the margins are wafer-thin and there has been a steady rise in the numbers of organisations ending the year with a deficit. In 2023, 45% of charities spent more than they managed to generate.
These narrow margins and rising deficits have seen charities continue to draw on their reserves unsustainably while they try to identify new sources of funding or have to consider reducing services – link to Reserves doc and Tracker.
SCVO also published a review of Scottish voluntary organisations’ financial reserves, which found the value of the funds looked after by the sector fell by £1billion between 2021 and 2023.
The average value of funds held by large charities fell by £5million, from £17m in 2021 to £12m in 2023.
Half of medium and large charities now have less than six months expenditure in reserves and nearly 1 in 3 large charities has less than three months of expenditure in reserves.
Ilse Mackinnon, SCVO Research Officer, said: “It’s been sobering looking at charities’ accounts this year and seeing just how tight finances are for many. People have been telling us via the Tracker and anecdotally that things are tough, but it’s another thing seeing the figures in black and white.
“It’s great that many income streams have recovered but we also saw essentials like energy bills, rents and staff costs shoot up, sometimes to double what they were the previous year.
“We can see the impact of that on reserves, with many charities struggling to meet costs and keep enough cash back for emergencies.”
A Third Sector Response to the Draft EIJB Strategic Plan for 2025-28
In response to the EIJB consultation inviting people and organisations to have a say on the draft Strategic Plan for 2025 – 28, the Third Sector Reference Group is working on a contribution on behalf of our sector.
This is another in a series of actions in light of the future funding crisis third sector organisations are facing across the city.
Your input to this response is vital and we would ask any and all third sector groups and organisations to share your hopes, fears and priorities, by answering the 9 questions in this short survey.
You are also encouraged to submit a separate response individually, feeding back on the identified priorities, planned actions and measures of success.
You can find out more and submit a response to the consultation here.
Please be aware that the deadline for the consultation submission is extremely tight – Sunday 23rd Feb 2025.
This is strongly influencing the actions we are focusing on to deliver the best outcome for the sector.
The Reference Group has pulled together several resources that you might find useful:
More than £60 million for pilot projects focusing on essential services and eradicating child poverty
A new Fairer Funding pilot to deliver on the Scottish Government’s top priority of eradicating child poverty will provide additional multi-year funding in the form of 45 grants to organisations across Scotland.
The funding, subject to budget approval, will support projects in areas including health, education, poverty and culture and have a total value of £61.7 million in 2025-26 and £63.2 million in 2026- 27.
Speaking on her visit today to the Gathering, the largest third sector event in the UK, Social Justice Secretary Shirley-Anne Somerville said: “I know many charities, faced with rising costs and falling donations, need more security and stability to enable them to plan and develop.
“Child poverty, in particular, requires longer-term interventions to help achieve the solutions we want to see. For that, the third sector needs financial stability and certainty. That’s why I have prioritised delivering on our commitment to provide more multi-year funding where we can to support the vital work of the third sector in Scotland, as part of our fairer funding approach.
“The pilot is the first step in mainstreaming multi-year funding agreements more widely across the third sector. It will give organisations the ability to plan for the future and make the most of their resources.
“The pilot’s focus on grants connected to tackling child poverty and the delivery of frontline services to our communities will maximise the impact of longer term funding and support the delivery of our number one priority, eradicating child poverty.”
Scottish Council for Voluntary Organisations (SCVO) Chief Executive Anna Fowlie said: “The voluntary sector has a crucial role to play in delivering essential services across Scotland that people and communities rely on.
Multi-year funding models are vital, providing security to voluntary organisations and, crucially, allowing them to get on and deliver for people and communities.
“We welcome the Scottish Government’s commitment to piloting multi-year funding for a range of voluntary organisations across Scotland – a first step, we hope, towards rolling out Fair Funding principles to voluntary sector funding.”
Organisations to receive multi-year funding for 2025/26 and 2026/27
Social Justice
Scottish Refugee Council
Scottish Empty Homes Partnership
Homeless Network Scotland
Housing Options Scotland
Poverty Alliance
CentreStage – Social Innovation Partnership
COVEY – Social Innovation Partnership
Flexibility Works – Social Innovation Partnership
Heavy Sound – Social Innovation Partnership
MsMissMrs – Social Innovation Partnership
Street Soccer – Social Innovation Partnership
WorkingRite – Social Innovation Partnership
MCR Pathways
Economy and Gaelic
Scottish Mountain Rescue
Constitution, External Affairs and Culture
Youth Music Initiative
Sistema Scotland
Health and Social Care
Cruse Scotland Bereavement Helpline
Penumbra Self-harm support pilots
BASICS Funding PHEC BASICS Scotland
The Listening Service Samaritans
Communities Mental Health and Wellbeing Fund for adults
Communities Mental Health and Wellbeing Fund Management
Autism Advice Line Scottish Autism
Young Scot Carer support funding
Active Play Development Programme Inspiring Scotland
Active Play Development Programme Actify
Community Food Networks Edinburgh Community Food
Community Food Networks Lanarkshire Community Food and Health Partnership
Community Food Networks Community Food Initiative North East
Community Food Networks Glasgow Community Food Network
Drugs Policy: Core Funding Scottish Families Affected by Alcohol and Drugs
Drugs Policy: Family Recovery Initiative Fund Scottish Families Affected by Alcohol and Drugs
Fetal Alcohol Spectrum Disorder FASD Hub Scotland Service
Finance and Local Government
Planning Aid Scotland
Education and Skills
Dyslexia Scotland
Children’s Advocacy for Children’s Hearings
Who Cares Scotland
Inspiring Scotland
Children in Scotland Enquire National Advice and Information Service on Additional Support for Learning
Scottish Book Trust Bookbug
Access to Childcare Fund
Scottish Association of Minority Ethnic Educators
Justice and Home Affairs
Victim Centred Approach Fund
Apex Scotland
Medics Against Violence
These pilots are in addition to the multi-year funding announced last week by Creative Scotland, which has been funded as part of a record £34 million uplift for culture in the draft 2025-26 Scottish Budget.
