A number of Scottish charities have called on the nation’s devolved government to improve funding structures for the sector, so more long-term grants are available.
Scotland’s Social Justice and Social Security Committee recently consulted on third sector funding principles ahead of the Scottish Government’s budget for 2025-26.
The committee said it would like to understand what can be done now to make the funding process more efficient, so available funding can be used more effectively.
It noted: “A significant amount of the third sector’s funding comes from public sector contracts and grants. This includes contracts and grants from the Scottish Government and local authorities.”
Scottish Labour previously pledged to forge a “new deal for the third sector” and to give “fair and multi-year funding” to charities so they can “help grow our economy and communities”.
‘Huge uncertainty’
A number of Scottish charities and membership organisations called for urgent changes in answer to the consultation.
Children in Scotland said in its response that a shift to longer-term funding would be a significant benefit to it and its third sector members and partners.
The move would support “longer-term planning, more efficient spending, greater organisational stability (including staff retention), and it would also positively impact staff wellbeing”, it stated.
Citizens Advice Scotland (CAS) also called for longer term funding, and warned of the insecurity its staff face.
Derek Mitchell, CAS chief executive, wrote that most third sector organisations, including the network of 59 Citizens Advice bureaus (CABs) across Scotland, receive funding on an annual basis.
“This means at the end of each year, there is huge uncertainty about whether funding will be renewed,” he said.
“The immense stress this places CAB staff under cannot be understated.
“At its heart, advice is about bringing stability to volatility. And yet, this approach means our advisers’ own livelihoods are often marked with precarity and at the mercy of short-term funding cycles.
“CAB managers are all too painfully well acquainted with the annual process of issuing redundancy notices to staff as the new financial year approaches because funding is yet to be confirmed. The worst task of the year so many have told me.”
Furthermore, the TSI Network, a body of charities that support the third sector across Scotland, emphasised the importance of fair funding, and the increasing inequality between third sector and public sector employees often doing similar jobs.
“We also ask the committee to consider the impact of the recent Scottish Government announcement that all but essential expenditure would be halted.
“We are deeply concerned about what this will mean for the third sector, and what it signals for the Scottish budget.”
It also highlighted “the lack of clarity” about the future of UK government funds going into communities across Scotland through the Shared Prosperity and Levelling Up funds.
Charities struggling to meet demand
SCVO’s Scottish Third Sector Tracker is a research community made up of representatives from third sector organisations who share their experiences, views and concerns.
Its most recent findings for Spring 2024 reported a 6% drop since winter 2023 in charities reporting being able to meet the demand for their services.
In this wave, SCVO also asked organisations what they considered the main features of good grant management in the sector and any improvements they would like to see made to ensure that reporting is proportionate.
On grant management, respondents said they valued flexibility, clear communications, transparency, timely payments, ongoing support and relationships, as well as a good understanding of the sector and the specific challenges faced by different types of organisations, such as small and rural organisations.
On reporting, respondents highlighted the frequency and deadlines for reporting; proportionate reporting based on grant size; flexible and adaptable reporting; feedback on reporting, reducing duplication and simplification and standardisation.
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