There has been a £13.2bn reduction in council funds to charities since 2010, according to newly published findings.
Research by Pro Bono Economics (PBE) and Nottingham Trent University suggests that further cuts to services can be expected and even closures announced by charities in the coming months.
As councils withdraw from providing services, it will also generate additional demand for charity services, the research published today adds.
Earlier this week, the latest State of Local Government Finance report said that most senior council figures feared that their authority would go bust in the next parliament unless local government funding is reformed.
Many council respondents said they planned to cut funding for parks and leisure, arts and culture, special educational needs and social care services.
Increasing funding challenges
The PBE and Nottingham Trent University report finds local government funding of charities fell 23% between 2009-10 and 2020-21, which has led to an estimated £13.2bn reduction in council funds to charities.
It warns that while charities are seeking alternative sources of funding to make up for council cuts, public donations have been depressed by the cost-of-living crisis.
Its survey found that 28% of charities that work with local councils predict their funding from them will fall over the next 12 months.
“The current difficulties in local government finance mean that loss will continue to grow,” it states.
This is despite attempts by councils to pull more money in through council tax rises, with analysis from the County Councils Network last week suggesting that 95% of councils in England will raise council tax by the maximum amount in April.
Some 13% of the charities that responded to the survey were tenants of local authorities and the report warns some are at risk of being evicted from their premises by councils selling off property, and of a failure of councils to maintain their buildings’ roofs and floors.
In some parts of the country, the loss of council staff redundancies has led to a loss of meaningful engagement with charities, the report adds.
Nine in 10 charities surveyed that work with local councils stated that the relationship is important, and four in 10 stated their relationship as being critical.
The research says money from councils is currently responsible for 13% of the sector’s income and that a financial crisis in local government is a moderate or high risk for most charities that work with authorities.
‘The fates of councils and many charities are entwined’
Jansev Jemal, director of research and policy at PBE, said: “The fates of councils and many charities are entwined, and when one partner goes into difficulty, the other struggles too.
“Charities have already seen significant withdrawal of support from local government over the past decade, and the current difficulties in local government finances mean that the loss of will continue to grow.
“These cuts are being announced at pace, and charities across the country are anticipating further escalation in the months ahead.
“The hidden impacts of the council funding crisis matter too. Charities are being evicted from their council premises, or forced to reside in unsuitable buildings, where roofs are falling in and floors are deemed unsafe.
“This will generate extra costs and disruption to charities at a time they can ill afford it, and hit the people who rely upon them the most.”
Daniel King, director of the National VCSE Data and Insights Observatory, said: “While this reflects a concerning financial reality for these organisations, it also highlights a deeper societal issue — the growing reliance on charities to provide essential services, particularly as they face their own financial constraints.”
The analysis uses the most recent charity income data available from the NCVO’s UK Civil Society Almanac adjusted for inflation.
Its survey was undertaken between 17 January and 7 February 2024, and includes responses from 573 registered charities and other voluntary groups across the UK.
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