Just over 80 per cent of small and medium charities are struggling to obtain enough funding and a further 63 per cent are “seriously worried” about ongoing income, according to a report released by Lloyds Bank Foundation.

The report is based on the responses of 800 recent grantees with annual incomes ranging between £25,000 and £1m, and warned that despite the fundraising efforts, many do not have the capacity to add or diversify income streams.

Some 81 per cent of respondents said securing funding was the main challenge for their organisation. More than half said that increased demand for services was a challenge and 33 per cent were concerned about the decline of public services.

The report also shows that certain areas of England and Wales are in “particularly precarious” positions. Some 70 per cent of small to medium charities surveyed in Wales reported that “it will get harder to secure funding”, compared to 40 per cent in London and some other English regions. 

Almost half of the charities surveyed were also critical of the process of bidding for contracts, with 49 per cent saying they found the bidding process “difficult or impossible” and that there was a “predatory feel” to the way that bigger organisations were “branching into different areas where they see a funding opportunity.”

The results of the survey were published, in the report: Expert yet undervalued and on the front line. The foundation’s statement said that as the survey was conducted “after the announcement of the Spending Review” and the Chancellor’s planned further cuts, it "expects the situation of the 800 respondents to get more difficult”.

Paul Streets, chief executive of Lloyds Bank Foundation, said: “The message from these charities is not surprising but it is resounding.

"Great small and medium-sized charities reach and support some of the most vulnerable in our communities and the numbers seeking their help are rising, yet funding is being reduced. Commissioning is favouring larger and commercial providers, leaving smaller and local charities and their clients out in the cold – sometimes literally.

“We hope this report will be a wake-up call and that David Cameron and colleagues will hear its call and put small and medium-sized charities at the heart of tackling the great social issues of our day.”