The next year is likely to be the “most challenging” for the voluntary sector out of the next five as the government implements spending cuts, Sir Stuart Etherington warned yesterday.

Speaking at the NCVO Funding Conference yesterday, Etherington said that the funding cuts that were announced in the Spending Review will mean that “this year will possibly be the most challenging of the next five” with local government facing a 56 per cent cut over the next five years.

He expects that from April the sector will see “something of a cliff-edge in funding” when current grant and contract agreements come to an end and local authorities overhaul arrangements.

Sir Stuart Etherington said that based on how government cuts were implemented in the last Parliament that: “This year will possibly be the most challenging of the next five.” And predicted that the combination local authority cuts and further devolution would mean “that local commissioning is going to look very different in a year’s time - and without intervention will become increasingly complex for smaller organisations to navigate”

He said that because the sector has already suffered from significant cuts many charities have priotised frontline spending at the expensive of improving back-office, which has “reduced their ability to adapt to the new financial normal, leading to further problems securing new funding sources”.

Ahead of this month’s Budget he urged the government to listen to the sector’s concerns around the devolution of business rates, apprenticeship levy and the impact of the National Living Wage.

Continued media scrutiny

The conference also heard how the charities can expect continued scrutiny from the media over the coming year.

Nick Brooks, head of charities at Kingston Smith, said that he was aware of national newspapers “looking for any the dirt they can dig out on charities” and that this would probably have “some effect on fundraised income”.

Etherington agreed that charities were “vulnerable” to criticism at the moment and said that where reporting was inaccurate is important “to be very robust in defence” but that where the press and public raise issues like executive pay and fundraising methods the sector needs to “address it in a different way” by being able to show impact and “demonstrating value for money”.

But he also said he was disappointed that some of the media coverage of fundraising regulation over the weekend “assumed that nothing had been done” because while “it is not fixed yet it is on the way to being fixed”.

He added that the sector shouldn’t be too pessimistic and that one of its biggest strengths was that: “We can tell stories about what has happened in interesting ways.”