The Scottish Government has been urged to extend funding for charities to at least three years, with short-term arrangements creating financial instability for many organisations.
A pre-budget report by the Scottish Parliament’s Social Justice and Social Security Committee warns that short-term funding cycles are diverting time and resources away from charities’ delivery of services.
The report calls on the Scottish Government to prioritise three-year-funding and include provisions for inflation-based adjustments.
It calls for a shift towards more flexible, unrestricted core funding, but notes that public spending must be properly scrutinised.
In addition, the report asks the Scottish Government to detail how it will support charities to implement the real living wage for their employees.
“The committee believes the first step is to ensure three-year funding is provided as the default (noting the need for flexibility around certain projects) and that funding arrangements take account of inflation,” the report says.
“The committee therefore calls on the Scottish Government to set out its plan on how it will address these priorities.”
‘Straightforward measures’
Bob Doris, deputy convener of the committee, said: “The Scottish Government has a commitment to provide fair funding for the essential work done by Scotland’s charity sector.
“We make it clear in our report that this commitment should be recognised in the upcoming budget, so that the sector’s vital work can be safeguarded.
“We call on the government to prioritise strengthening its approach to multi-year funding and improving its processes.
“Whilst we acknowledge the Scottish Government’s ability to agree to multi-year funding when it does not know what funding it will receive from the UK government for subsequent years, our committee has made practical suggestions to overcome these challenges.
“We believe that implementing the straightforward measures outlined in our report, including multi-year funding, could positively impact the effectiveness of a sector that does so much to help so many.”
‘Public funding for voluntary organisations is broken’
Anna Fowlie, chief executive of the Scottish Council for Voluntary Organisations (SCVO) umbrella body, welcomed the committee's recommendations.
“Throughout their inquiry, the committee heard from witness after witness of how the practice and culture around public funding for voluntary organisations is broken.
“Too often and for too long voluntary organisations providing vital services to people and communities across Scotland contend with budget cuts, short-term funding cycles, late payment, incoherent decision-making, poor communication, inadequate grant management and more. That must end.
“The voluntary sector needs a funding landscape that is fair, flexible, sustainable, and accessible – as long-advocated by SCVO and recommended by the committee today.
“At a time when many voluntary organisations are facing extreme financial difficulties, these long-standing calls are more essential than ever.
“The prize is a sustainable sector, strong public services, and resilient communities – one the Scottish Government must grasp with both hands.”
The Scottish Budget for 2025–2026 is due to be presented on 4 December 2024.
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