SCVO report finds Scottish charities in 'survival mode'
Scottish charities have gone into "survival mode" amid severe financial pressures, according to a new report.
Analysis by the Scottish Council for Voluntary Organisations (SCVO) found there has been a sharp drop in confidence in the third sector.
It called on the Scottish government and councils to help the sector by awarding fairer funding packages.
The Scottish government wants a three-year funding cycle to give charities greater stability.
However, councils have said that until their income is guaranteed three years in advance, they cannot plan ahead.
The SCVO report found that almost half (47%) of charities saw a reduced turnover last year.
Most of those which did record growth were large organisations with an annual turnover of more than £500,000.
It highlighted concerns that many organisations are unable to plan ahead because funding is allocated on a short-term basis.
Yet almost three quarters of charities (72%) expect demand for their services to increase in 2017.
John Downie, director of public affairs at SCVO, said: "Our research clearly shows that Scotland's third sector has given up on the idea of growth and has gone into survival mode.
"Organisations feel they will have to do more with less as demand for services increases at a time where funding streams are squeezed.
"There is a strong expectation of growing competition to secure unstable hand-to-mouth funding and this is hampering the sector's ability to develop."
The main findings of the report include:
- A total of 53% of Scottish charities saw their turnover increase last year, and the average increase was just 0.0001%;
- The majority of growth was recorded by charities with an annual turnover of more than £500,000;
- Just 1% of charity workers believe the economy of the sector will improve;
- Many organisations (41%) are unable to plan ahead because of short-term funding problems;
- Almost a third (32%) say they are unable to plan ahead for more than 12 months.
Mr Downie added: "Given the relatively small amounts of money the sector relies on, an increase in funding is not necessarily required to improve things.
"We know it's possible to provide more stability and security to third sector bodies with more straightforward funding processes and three or five year awards.
"SCVO has been calling for funders to commit to long-term funding for decades. It's time to move on from empty promises to actual solutions."
A spokesman for the Scottish government said it was supporting Scotland's "strong and dynamic third sector".
He said: "We have protected core funding for the sector of £24.5m next year, an investment in prosperity and social cohesion across the country.
"We will continue to work in partnership with the sector to ensure our support continues to be effective. We will continue to work in partnership with the sector to ensure our support continues to be effective.
"Last week, for the first time, we announced three year rolling funding from our Equalities budget. That will give organisations more financial security and enable better planning for the longer term."