In April 2023 the Scottish Government committed to fairer funding by 2026. Despite the urgent need within the voluntary and charity sector – one year on there has been little progress.
Last month, after a discussion a few weeks ago with the Clerks of the Social Justice and Social Security Committee, SCVO received the very welcome news that the Committee would focus their Pre-budget scrutiny on voluntary sector funding.
The Committee want, “to examine how the Scottish Government’s approach to fair and efficient funding can contribute to the continued effectiveness of the third sector”, having heard about the funding challenges facing the sector.
For almost a decade, the Scottish Government has recognised the need for multi-year funding, committing to longer-term funding for the voluntary sector across multiple government strategies.
In April 2023 the Scottish Government’s policy prospectus New leadership – A fresh start, the Cabinet Secretary for Social Justice, Shirley-Anne Somerville MSP committed to achieving fairer funding by 2026:
“Working with my Cabinet colleagues, I commit that by 2026 I will have… Progressed Fairer Funding arrangements, including exploring options to implement multi-year funding deals, enabling the third sector to secure the resilience and capacity it needs to support the transformation and delivery of person-centred services for Scotland’s people and support our thriving social enterprise economy”.
Despite this renewed focus – and the urgent need within the sector- one year on from the policy prospectus, there has been little progress.
Our sector faces unprecedented challenges. Years of underfunding and poor funding practices, and crises such as the pandemic, and the cost-of-living crisis have put the sector under increasing pressure, exacerbating financial and operational challenges – 76% of organisations now experience financial challenges, while the number of organisations reporting that rising costs are having a negative impact on their ability to deliver services continues to grow.
To support voluntary organisations, our staff and volunteers, and the people and communities our sector works with, the Scottish Government must both take action and develop timelines and goals to monitor progress towards fairer funding.
SCVO defines Fair Funding as a long-term, flexible, sustainable, and accessible approach to funding.
To make meaningful progress towards Fair Funding the Scottish Government should:
Commit to a longer-term funding model for the voluntary sector across all Scottish Government departments.
Define multi-year funding for voluntary organisations as a three-year minimum commitment.
Record progress by collecting and publishing what proportion of grants and contracts are delivered on a multi-year basis and accommodate other essential Fair Funding elements.
To be meaningful and support a sustainable sector, multi-year funding must also recognise and incorporate other essential Fair Funding elements including:
Flexible, unrestricted core funding
Inflation-based uplifts
Timely notification and payments
Full costs recovery, which includes core operating costs.
As local councils fund far more voluntary organisations than Scottish government- between a quarter and a third of voluntary organisations receive funding from local authorities- mulit-year funding should also be provided to local authorities, to allow them to enter into multi-year agreements with voluntary organisations.
Our sector is an employer, a partner, and a vital social and economic actor central to delivering the Scottish Government’s aspirations.
To recognise and support the many contributions of voluntary organisations, their staff, and their volunteers across Scotland urgent progress is needed or the goal of achieving fairer funding by 2026 becomes increasingly unlikely.
As part of the Committee’s Pre-budget scrutiny inquiry the Committee will hold two workshops in Dundee on Wednesday the 21st of August for voluntary organisations who receive funding from statutory funders (such as Scottish Government, health boards, local authorities).
EVOC has announced a strategic review that puts a renewed commitment to supporting the community and voluntary sector in Edinburgh at its heart.
The ongoing cost of living crisis is hitting groups and organisations hard and this is a chance to refocus on creating a strong sector for a strong city.
An engagement programme will take place in the coming months, involving the sector in shaping a new EVOC strategy, and to ensure stakeholders are fully briefed on the changes.
After 3 years, Bridie Ashrowan has decided to step down as Chief Executive of EVOC to concentrate on research interests around nature-based learning and biodiversity recovery.
In the meantime, two interims have been appointed to lead EVOC through this period of change – David Peace (Interim Chief Executive) and Claire Ritchie (Strategic Advisor to the Board).
Bridie’s tenure at EVOC has brought many successes. She has been a strong advocate for investment in the community and voluntary sector, to support organisations through the ongoing cost crisis, and to strengthen sector capabilities to lead change.
Against a background of decreased funding and increased running costs, EVOC is focused on reducing costs and delivering a balanced budget for the year ahead. This will include an analysis of the current organisational structure.
EVOC Convenor, Diarmaid Lawlor said:“Firstly, I would like to thank Bridie for her commitment, passion and advocacy for the voluntary sector during her tenure at EVOC and we wish her well in her next ventures.
“Our focus continues to be the wellbeing of the many community and voluntary organisations who play such a vital role in the city. We are working with partners and funders to make sure that remains our top priority throughout this strategic review.”
David Peace added: “As Interim Chief Executive, I will be working with staff, Claire and the Board to refocus our efforts and ensure we continue to support voluntary and community groups in delivering core programmes and activities in the city.
“As a sector leader we remain focused on building a strong, sustainable and resilient future for our sector. I welcome engagement with the sector, partners and funders to help shape the way ahead collectively.”
Whether it’s developing skills and training to enter the workforce, investing in buildings and equipment, or providing services to fill gaps left by the public sector, the voluntary sector plays a significant part in the UK economy. However, measurement of its economic contribution is inherently complex, meaning the role it plays is often undervalued (write CIARA CRUMMEY and MAIRI SPOWAGE of FRASER of ALLANDER INSTITUTE).
There are several difficulties in measuring this economic contribution compared to methods used for the private sector. One reason for this is a lack of an adequate, recognised definition across the sector, which leads to wide variation in valuations.
Core National Accounts can be used to estimate the voluntary sector, through the Non-Profit Institutions Serving Households (NPISH) sector. However, the UK voluntary sector is much larger than the organisations that are included within NPISH, given the specific definition of this sector. Voluntary organisations are spread across sectors and industries in the National Accounts, so the use of NPISH results in significant undervaluation of the sector’s economic contribution.
It will answer questions surrounding NPISH and the National Accounts and improve measurement of the sector within the UK National Accounts framework. This project builds on previous FAI research on Scottish charities and links to other ESCoE work on National Accounts and beyond GDP.
Why does this matter?
The inability to measure the voluntary sector’s contribution to the UK economy limits its comparison to the non-voluntary sector, meaning that it may be undervalued or overlooked. Accurate measurement would allow for better recognition of the sector’s economic contribution.
This could encourage further volunteering and involvement and investment in the sector, along with better use and allocation of resources. Unleashing the potential of the voluntary sector by measuring it more accurately could also allow its inclusion in economic growth strategies to improve both regional and national economic performance.
What are the possible solutions?
Significant research has been conducted into how the voluntary sector can be measured more accurately, and what data is required to do so. Various methods have been identified to produce a variety of estimates of the size and contributions of the sector. These methods have used different definitions of the sector.
Extensive research has been conducted into the use of satellite accounts, as an extension to National Accounts, to measure both the size and impact of the voluntary sector.
National Accounts provide a single overview of all economic activity in a country through collating and presenting the output, expenditure, and income activities of a country’s economic actors; satellite accounts provide a framework that is linked to the National Accounts but allows for a more detailed focus on a certain field or aspect of the economy.
Stakeholders have highlighted that the existence of a satellite account is as important as what it includes to provide validity for the sector. They recommend that an initial satellite account should start with the simplest definitions and be improved with further additions over time. It should take a modular approach, allowing for different definitions of the sector, and should allow for comparisons with other sectors in the economy.
In 2023, Pro Bono Economics conducted an in-depth feasibility study into satellite accounts and developed a preliminary framework for its creation.
Their recommended short-term approach uses the legal status on the Inter-Departmental Business Register (IDBR) and organisation type in the Labour Force Survey (LFS) to identify organisations that are not included in NPISH but are considered to be within civil society. They suggest a modular approach where data can be broken down and compared by Standard Industrial Classification (SIC) codes.
They also propose an ‘intermediate approach’ to capture organisations within civil society that have been missed. They provide details on how to identify these organisations, where to access relevant data and how to select what data to include. However, they acknowledge that this ‘intermediate’ approach is still limited in measuring all aspects of the sector and highlight the need for further research on volunteering, social enterprises and growth measurements.
Whatever form a satellite account takes in the UK, it is clear from previous research that one of the biggest challenges is the delineation of the sector. Given the different views of stakeholders, it is likely that a ‘menu’ of definitions is likely to be required to ensure this product has greatest utility for users.
What issues remain?
Despite these significant recent advances, issues still remain in measuring the voluntary sector and capturing its economic contributions.
The first issue is the lack of a clear, adequate definition that is recognised and adopted across the sector. Until this is agreed, measurement methodologies and estimates will continue to differ.
NPISH in the National Accounts is also an inadequate measure of the voluntary sector. NPISH is defined as economic units that supply services on a non-commercial basis. To be considered, NPISH institutions must: provide goods and services either for free or below market prices; mainly derive their income from grants and donations; and not be controlled by the government. Therefore, NPISH does not capture all voluntary sector organisations.
As a result, using the value of the NPISH sector significantly underestimates the economic contribution of the voluntary sector. Additionally, the methodology used by the Office for National Statistics (ONS) to create these estimates in unclear and not publicly documented, so it cannot be critiqued or replicated in devolved countries’ national accounts.
Finally, while the Pro Bono Economics report has made great advances in the technicalities of constructing a satellite account, several questions still remain to ensure the entire sector is accurately measured.
This includes a need for further understanding on how the IDBR legal status flag is constructed and how to capture other organisations not included on the IDBR (including many small organisations).
Additional considerations include how to capture informal volunteering, data collection on sources of funding for organisations, how to identify social enterprises and how to prevent double counting across multiple data records.
A new research project
Our project aims to answer some of these questions surrounding NPISH and the National Accounts. It will focus on three elements:
Documenting ONS methodology for calculating NPISH
Interviewing data providers and users
Investigating recommendations for data on the voluntary sector used in National Accounts
1. Documenting ONS methodology for calculating NPISH
Through this project we will formally document the full methodology used to create the NPISH statistics in the National Accounts. NPISH includes charities, higher education and further education, political parties, and trade unions, and we will highlight what data is used for each of these elements.
In particular, we will focus on documenting the data process for charities, at both the National Council for Voluntary Organisations (NCVO) level (who provide charity data to the ONS), and how the ONS then use this data. NCVO provide ONS with data for charities in England and Wales, collected from the Charity Commission register.
These charities undergo a ‘market test’, where charities that ‘fail’ the market test (if 50% or more of income comes from donations and legacies) remain in NPISH, and the rest are captured in the industrial market sectors of the National Accounts.
We will document and review these processes and outline recommendations for improvements on how to make NPISH more representative of charities outwith England and Wales and allow for replication in both regional and devolved National Accounts.
2. Interviewing data providers and users
We plan to interview key practitioners in the sector about their understanding of the role of data in the development of national accounts. These will include national infrastructure organisations involved in producing the data for the accounts, organisations that might use the accounts for their work understanding and campaigning about the sector, and government officials. We will identify what role they think National Accounts plays in their work and how they think it shapes understanding of the voluntary sector within society.
3. Investigating recommendations for data on the voluntary sector used in National Accounts
Following on from our interviews with providers, we will recommend improvements and investments in the data infrastructure for the voluntary sector, ensuring regulators, voluntary sector representative organisations, and statistical producers are focussed on supporting the production of appropriate and accurate statistics about the sector. We will investigate the IDBR flag recommendation underpinning the PBE recommendations for a satellite account. A better understanding of this flag will identify if it would be possible to use this flag to describe voluntary organisations across the National Accounts, including those currently considered outside the NPISH sector.
We will also analyse the data collected for charities in Scotland and Northern Ireland to identify how this can be included in UK NPISH calculations in addition to NCVO data. Finally, we will examine the sectors charities self-report into, and design a mapping methodology between different industry classification codes This will ensure greater consistency in the classifications used across charity registers.
As part of this final research stage, this ESCoE research project will support an economic student summer placement through the Economics Futures programme, hosted at the Fraser of Allander Institute.
This placement will focus on highlighting the differences in charity registers held across the UK. We will then use the data held in the charity registers in Scotland and Northern Ireland as a proxy to estimate the number of charities that are under the minimum registration requirements in England and Wales, so are not captured in their register. This same methodology will be applied to identify charities missing from UK business register data, to inform recommendations on expanding the data used for measuring the charities in NPISH.
Overall, this research will provide a review of the current National Accounts practise. Our recommendations have the potential to improve the National Accounts construction methodology and allow for more accurate measurement of NPISH in both UK, regional and devolved country’s National Accounts.
This will complement the building of a civil society satellite account, if the underpinning National Accounts are fundamentally more robust.
If you don’t have the time (or the desire!) to read this blog in its entirety – just read this: we are looking for voluntary organisations who are expecting funding from the Scottish Government in the forthcoming financial year to take part in a quick and easy monthly survey for six months. To get involved, contact details can be found at the bottom.
If you do have time to read the whole blog – here’s a bit more on why we’re doing it:
At SCVO, we’ve been working hard over the last couple of years to build our Fair Funding asks in response to what the sector has told us. We’ve also been putting a lot of time and effort into taking those asks to parliament. A result of that has been the Scottish Government’s commitment to Fairer Funding by 2026 and, although that remains largely undefined at present, some additional commitments have filtered out since.
One of those commitments relates to funding notifications. We know that timely decision making, and subsequent issuing of funds, is crucial to ensuring no organisation is disadvantaged by the funding process.
When decisions and notifications are delayed, organisations are plunged into uncertainty which can have hugely negative impacts on their ability to deliver services, retain staff, and plan ahead.
And so, as part of our Fair Funding package, we have been asking the Scottish Government to ensure funding decisions are issued no later than December and funds paid no later than the start of the tax year in April.
We were encouraged, then, when Colin Smyth MSP submitted a written question at parliament at the end of November, asking “what action it is taking to ensure that its funding decisions regarding support for the voluntary sector are issued no later than December, and that any funds are paid no later than the start of the tax year in April”.
The fact that we had not had prior contact with Colin would suggest that our Fair Funding calls, with the support of sector organisations echoing those calls, are very much landing with MSPs.
But even more encouraging was the Scottish Government’s response: “We understand that organisations need timely grant decisions and payments in order to reduce financial uncertainty and effectively resource delivery,” the Cabinet Secretary said.
“In line with the commitment given by the First Minister, we are working, within the context of the Scottish Budget process, to issue notifications of funding arrangements to third sector organisations, as soon as is practicably possible and no later than end of March for funding beginning on 1 April.”
With that in mind, we are keen to track the experiences of voluntary organisations who expect to receive funding from the Scottish Government this coming financial year.
We’re looking to build a group of such organisations to participate in a monthly survey, beginning in a few weeks and running for six months. The survey itself will be quick and easy to complete, the results gathered will be kept entirely anonymous, and your participation will allow us to document the journeys of organisations between February and July this year in terms of the relevant correspondence and notifications they are receiving from the Scottish Government.
In July, we will then hopefully be able to congratulate the Scottish Government on realising this commitment on timely notifications. Alternatively, if that is not the case, we will have the statistics that will allow us to hold the Scottish Government to account and to demand that Fairer Funding genuinely does incorporate this and many other of our Fair Funding asks in future.
If your organisation is awaiting notification from the Scottish Government on funding for the forthcoming financial year and you’d like to participate in this series of surveys, or you would like a little more information, please get in touch with Jason Henderson at: jason.henderson@scvo.scot
Legal charity highlighted as part of national campaign
Glasgow-based legal charity JustRight Scotland is the latest star in a nationwide campaign highlighting the work of Scotland’s voluntary sector.
#EssentialSector, a campaign developed by and about the voluntary sector, has been launched to great acclaim, with voices from across Scotland praising the opportunities provided for grassroots groups that are often overlooked.
Work towards #EssentialSector began earlier this year, with ten organisations selected as part of a new programme to highlight how voluntary organisations change people’s lives for the better, bring communities together, improve policy and contribute to the economy.
The films feature real people, telling their stories in their own words and paint an inspiring and raw picture of the value, diversity, and impact of the voluntary sector. They show the challenges the sector faces, as well as its many achievements.
Now, the general public have their chance to view the series of short films which capture the everyday work done by the dedicated individuals behind charities and voluntary groups in every corner of Scotland.
The #EssentialSector campaign partners are led by the Scottish Council for Voluntary Organisations (SCVO), Scotland’s national membership body for the voluntary sector, and include: ACOSVO, the Chartered Institute of Fundraising, Evaluation Support Scotland, Social Enterprise Scotland, the TSI Scotland Network, and Volunteer Scotland.
The films were premiered at SCVO’s Gathering 2023, the largest voluntary sector event in the UK, in Edinburgh last month and are now being showcased on a weekly basis.
The project saw the ten groups given support and access to everyday equipment to make their own films, with training provided by ethical media production group media co-op. Charities were given the skills to produce their own video content, which was edited by SCVO’s video content creator, James Ewen.
Anna Fowlie, Chief Executive of SCVO, said: “The #EssentialSector films tell the stories of just 10 of Scotland’s 46,500 voluntary organisations. The films are a lovely celebration of the work they do.
“We want to highlight as many stories as we can on a national stage to bring to life the vital role of voluntary organisations in communities across Scotland.”
JustRight Scotland is a Scottish Charitable Incorporated Organisation (SCIO) providing legal services to defend and extend people’s rights.
JustRight Scotland is a charity founded by human rights lawyers. They use the law to defend and extend people’s rights by providing direct legal advice to people who would otherwise struggle to access justice.
They work in collaboration with others to achieve social justice, with the aim of reducing discrimination and disadvantage. With their partners they have established four centres of legal excellence and a legal policy, research and training hub.
All of JustRight Scotland’s legal centres have been recognised as making a significant contribution to defending people’s rights across Scotland.
The charity has seen huge growth during their first five years, and has moved swiftly to meet people’s needs and to seize opportunities. Over the coming years, they plan to continue to make sure they are resilient and sufficiently agile to be able to thrive.
Alongside their core legal work with the people we serve, they will continue to develop their capability to influence policy, to communicate effectively, and to support others to learn and build on the approaches they have pioneered.
Emma Hutton, CEO at JustRight Scotland, said: “Taking part in the #EssentialSector campaign allowed us to share our stories and demonstrate the direct impact of our work nationwide, raising awareness of our work with wider networks.
“We emphasised the crucial role played by our dedicated team in achieving our mission of defending and extending people’s rights. Only through their strong commitment and passion, can we make a significant impact in the lives of people and communities throughout Scotland.”
A Labour MSP for Lothian has rung alarm bells about the barriers to funding for small, community-based organisations.
Foysol Choudhury yesterday (17th January) hosted a roundtable at the Scottish Parliament for third-sector community organisations to discuss the current funding model, barriers to access for smaller organisations, and what lessons could be learnt.
The roundtable attendees and MSPs heard from Citadel Youth Centre, Edinburgh and Lothians Regional Equality Council (ELREC), EVOC, North Edinburgh Arts and The Larder.
Mr Choudhury is Chairperson of ELREC and will be well aware of the challenges faced by third sector organisations.
Following the roundtable, Foysol Choudhury praised the work of these third-sector organisations in working so closely with, and to benefit of, local communities. He said, however, that more could be done to support these vital organisations to be more included in the funding process:
“The third sector in Scotland is a vital contributor to both the economy and society as a whole.
“The recent Scottish Budget announcements have left many organisations in the third sector unable to be sure of secure funding for the year ahead, directly impacting on their ability to provide vital services to communities when they need it the most post-pandemic and during the cost-of-living crisis.
“It was made clear from today’s discussion that sustained, long-term and fair funding is needed for the sector.
“Some third sector organisations may be smaller, but they have a big impact and they must be consulted with and represented in the Scottish budget.
“This is especially true where they cater to minority communities and exclusion from the budget may increase inequalities for those communities.”
Mr Choudhury says that the conversation at the table today was positive and collaborative but that the organisations were also “crying out for more support and recognition of their vital work”.
Organisations at the roundtable raised how many smaller organisations were in competition with each other for grants and core funding, so the system should facilitate more collaboration.
Other groups also raised how smaller organisations are missing out on funding because they don’t meet criteria, or don’t have the experience and funds to hire fundraisers to make applications like many bigger organisations do.
Mr Choudhury says he will continue to build on this constructive conversation and represent small third-sector community organisations in the Scottish Parliament, pressing for more funding and consultation wherever possible.
Budgets are about spending priorities, and Labour trails both the SNP and the Conservatives at Holyrood. Elections to the Scottish Parliament will not take place until May 2026.
Of more immediate concern for voluntary sector organisations is the current budget process. The city council (a Labour-led coalition with Lib-Dems and Conservatives) is looking at further cuts as it sets it’s budget for 2024 – 25.
Councils blame the Scottish Government for funding cuts while Holyrood in turn blames the UK Government at Westminster. It’s a blame game that’s gone on for as long as I can remember, and while the politicians bicker, the poorest communities – and the charities and voluntary sector projects that support them – bear the brunt and feel the pain of service cuts.
That’s got to change – but sadly change, if it comes, will come too late for many – Ed.
LOCAL organisations, charities and social enterprises have been left homeless due to water damage to the former Centrica building at 1 Waterfront Avenue.
The organisations lease space at Waterfront through Edinburgh Pallette, occupying floors 2 and three of the building.
Karen Black, founder and CEO of SHE Scotland, explained: “We were notified on 3rd January and it is unlikely to be fixed until next month at earliest! We have only today (Wednesday 10 January) been told we can only have limited access to small items and still no full access to our resources.
“You can understand this had impacted negatively on local services, delivery of services, moral of staff and volunteers. At this time when the pressure on funding, staff retention, cost of living impact and now the issue with space is causing a real strain to all of us.”
Among the organisations affected are:
SHE Scotland
Scran Academy
Edinburgh Uniform Bank
North West Carers
Who Cares
Project Esperanza
Passion for Fusion
Social Print
Veterans Society
Baby Bank
Sharp Stuff
The affected organisations have written to Centrica:
We are writing on behalf of a number of Edinburgh charities and small voluntary sector companies who lease space in one of your sites – 1 Waterfront Avenue, Edinburgh. You may be aware that this site has had to close due to flooding in the basement of the building.
Fortunately, Centrica employees have been very quickly relocated to offices in another part of Edinburgh with little or no business interruption.
Unfortunately, the other businesses who lease the space who form the signatories of this letter – all low-income charities and community interest companies – have not been supported in the same way and many face business-critical disruption. We were advised on Friday 5th January that the building would be closed until the 31st January.No priority was given to ensure access to files or materials essential for continued business operation. In fact, it was not until one week later that we were finally advised that we could enter the building accompanied to collect small items.
This closure will cause all of these voluntary sector organisations considerable business interruption and possible loss of contracts. This will directly impact the support our organisations provide for local communities, as well as risking loss of income and reputation. Not only are there business delivery consequences to this but there is a substantial human cost. The stress on our staff and volunteers of finding out that their place of work has lost its’ operating base literally overnight is considerable.
Every tenant is now scrambling around trying to find alternative premises instead of focusing on core delivery. Delivery which is essential to the well-being of our local communities. The knock-on impacts of this are unmeasurable – businesses have been told they can have accompanied access to the building to collect ‘small items’. Where does that leave the Edinburgh School Uniform Bank, who store hundreds of uniforms to distribute to under-privileged school children or SHE Scotland who run workshops for young girls?
All these organisations have limited resources and rely on funding to survive so it is not a simple task to find alternative premises at short notice. We would like to advise you that we will be seeking compensation for business interruption and breach of lease obligations.
We feel we need to escalate this issue to a speedy resolution, and wish for Centrica to help our organisations, and the children, families and communities we support, to return to our space as quickly as possible.
We look forward to hearing from you.
Tenants of 1 Waterfront Avenue
Waterfront Avenue office accommodation and facilities are advertised on Edinburgh Palette’s website:
Waterfront Avenue provides flexible, open-plan office accommodation in the heart of North Edinburgh’s evolving Waterfront area. The building is located adjacent to the iconic Granton Gasworks, which is due to undergo renovation to be transformed into a tree-lined amphitheatre for cultural events.
Currently occupying floors two and three. Opening hours for the building are between 8:30am and 6pm Monday to Friday and closed on Saturday and Sunday. The building will also be closed on all public holidays.
Facilities include:
Security access, in addition to security desk, and full intruder alarm
Climate controlled heating and cooling
Good quality toilet facilities
Fully accessible with two passenger lifts and accessible toilets
Access to One Waterfront Café on the ground floor, serving a selection of hot and cold food and drinks
Numerous breakout areas, strategically located within the spacious open plan space
Secure cycle parking
On major bus routes: 24, 38, 47, 113, X37 & X47. Buses 8, 14, 16, X29, N16 & Skylink 200 all stop on West Granton Road which is a short 6-minute walk
A third of organisations reported recruitment as one of their top challenges
Third Sector organisations in Scotland are increasingly facing shortages of staff and volunteers, a new report has warned.
The Scottish Third Sector Tracker has found that issues relating to staffing and volunteers are one of the top challenges for a third of voluntary sector organisations.
Data from the tracker observes the emergence of the sector from the Covid-19 pandemic through 2021, followed by the development of the cost-of-living crisis and associated organisational concerns during 2022 and 2023.
In August 2021, 35% of organisations reported a significant concern about staff and volunteer numbers. Just two years on, that figure has now risen to 65%, with only finances currently proving a bigger challenge for the sector.
While staff and volunteer support remain a growing concern, third sector groups report an ongoing increase in demand for their core services and activities over the six waves of the tracker. In Wave 1 (Aug 2021), 56% of organisations reported an increased demand, rising to 63% by Wave 6 (Apr 2023).
These factors, on top of growing financial pressures due to the rising costs crisis and public sector funding cuts, are leading to a perfect storm for charities and voluntary groups, with strain put on already stretched teams.
Anna Fowlie, Chief Executive of the Scottish Council for Voluntary Organisations (SCVO), said: “The Scottish voluntary sector is a significant employer, providing jobs for 5% of the Scottish workforce.
“At a time where many organisations are facing recruitment challenges, the funding environment means that many voluntary organisations are struggling to keep pace with salary increases needed to attract and retain staff.
“Existing staff and volunteers have been working flat out since Covid, helping organisations and communities to weather the cost-of-living crisis. We can no longer afford to rely on their goodwill to go the extra mile. The invaluable services and supports provided by Scotland’s voluntary sector need sustainable investment to ensure their survival.”
Volunteer Scotland are also concerned by the staff and volunteer crisis facing the sector, highlighted by the Third Sector Tracker. The recent release of the 2022 Scottish Household survey results reinforces the volunteer crisis, with formal volunteer participation rates falling by 4 percentage points since 2019 to 22% – this equates to less than one million Scottish adults volunteering.
In light of the current crisis, the actions that can be undertaken by volunteer involving organisations include ensuring that volunteer expense policies are clear and considering how roles can be made more flexible to fit with the decreased time volunteers have available.
Alan Stevenson, CEO of Volunteer Scotland said: “The many impacts of the cost-of-living crisis on volunteering has meant that we can no longer take for granted the contribution of our volunteers.
“While recruitment and retention issues are being felt more acutely by some, the first step for all must be the focus on good volunteering practice, appropriately supported.”
The Scottish Third Sector Tracker is a growing research community made up of representatives from third sector organisations based across the whole of Scotland, who are willing to share their experiences, views and concerns as the sector faces both new and ongoing challenges.
The Tracker is run by an independent research company called DJS Research on behalf of SCVO, the Scottish Government, the William Grant Foundation and the National Lottery Community Fund.
Those involved in the running of a third sector organisation operating in Scotland are invited to represent their organisation as a member of the Scottish Third Sector Tracker.
An Executive Summary of the Scottish Third Sector Tracker’s First Phase of research can be found here:
Research also found a third of organisations were dipping into reserves
An overwhelming majority of charities in Scotland have reported financial challenges as their biggest source of concern. The Scottish Third Sector Tracker has found 7 in 10 charities cite financial challenges as their biggest challenge, up significantly in just two years.
Data from the tracker observes the emergence of the sector from the Covid-19 pandemic through 2021, followed by the development of the cost-of-living crisis and associated organisational concerns during 2022 and 2023.
Throughout the waves of research, the frequency with which organisations have reported financial challenges has hugely increased, and in the most recent data collection (April 2023), these were the most frequently reported challenges (71%), compared to just less than half of respondents (47%) just two years ago.
It is concerning that a third of organisations reported having made use of their financial reserves in the 3 months leading into April 2023, an increase compared to the same period in 2022.
Almost half (44%) of the organisations using their financial reserves believed that this situation is unsustainable.
Anna Fowlie, Chief Executive of the Scottish Council for Voluntary Organisations (SCVO), said: “Charities, community groups and social enterprises can be financially fragile at the best of times, and the Tracker research clearly demonstrates that we are currently far from the best of times.
“We are seeing that voluntary organisations are experiencing more financial challenges now than they did during the pandemic due to rising costs, particularly of energy and wages.
“Voluntary organisations make an invaluable contribution to Scotland’s social and economic fabric and the people, communities and causes they support are experiencing more pressures than ever before. Public giving of money and time have been hit by the cost-of-living crisis and we are seeing many organisations having to dip into their reserves just to keep going.
“Reserves are there as a safety net and are not meant to prop up business as usual. It’s akin to households having to buy their groceries on a credit card, simply storing up more problems for the future and threatening their medium to long-term viability.
“Everyone can play a part in supporting the sector, whether it is government and councils ensuring there is fair and sustainable funding in place, philanthropic funders investing their money wisely and the public giving when they can.
“A good start would be Scottish Government passing on the money that the UK Government allocated for energy bills relief to see charities through the winter months.”
The Scottish Third Sector Tracker is a growing research community made up of representatives from third sector organisations based across the whole of Scotland, who are willing to share their experiences, views and concerns as the sector faces both new and ongoing challenges.
The Tracker is run by an independent research company called DJS Research on behalf of SCVO, the Scottish Government, the William Grant Foundation and the National Lottery Community Fund.
Those involved in the running of a third sector organisation operating in Scotland are invited to represent their organisation as a member of the Scottish Third Sector Tracker.
An Executive Summary of the Scottish Third Sector Tracker’s First Phase of research can be found here:
Community engagement funding to ensure groups are heard
Third sector organisations are being awarded new funding to help ensure as many voices as possible are contributing to the design of the National Care Service.
The funding will facilitate contributions from minority ethnic communities, LGBTI people, children and young people and those with experience of homelessness or the justice system.
Organisations will each receive £5,000 to encourage the communities they work with to have their say on how future community healthcare and social work services should look.
Social Care Minister Maree Todd said: “As we build a National Care Service that best fits the needs of everyone in Scotland, we need to hear from people directly.
“The new National Care Service will set the standards and guidance to support the design and delivery of community healthcare and social work services locally.
“The complexities of getting this right should not be underestimated. People with experience of the current system, whether receiving health and care support or delivering it, are the experts. We need to hear those voices – and those of groups who are often overlooked.
“We know that minority ethnic communities, LGBTI people, children and young people and those with experience of homelessness or the justice system are under-represented in our co-design work to date. We also know that people affected by dementia are a key group we want to hear more from and we will benefit from partnering with an organisation with expertise in this area.
“I am confident the funding to support co-design activity with seldom heard communities will help us shape a system we can all benefit from and be proud of.”
The partner organisations are:
LGBT Health and Wellbeing
Minority Ethnic Carers of People Project (MECOPP)
The Simon Community
Scottish Association for the Care and Resettlement of offenders (SACRO)
