The extent of the challenges faced by Scottish charities has been laid bare in a survey of third sector staff
Scotland's third sector is facing an onslaught of challenges in meeting the needs of the growing number of Scots turning to it for help.
The Scottish Council for Voluntary Organisations' (SCVO) 2019 Third Sector Forecast research reveals the extend of the pressures facing charities, with three-quarters expecting the sector's financial situation to worsen in 2019 and 81% believing more people will need them this year.
The full findings of the survey, which was completed by 318 people between November 2018 and January 2019, will be released at The Gathering later this month.
It reveals the sector continues to face significant financial challenges, against a backdrop of swingeing public sector cuts. A staggering 100% of respondents said they are concerned about rising overheads, with nine out of 10 saying planning for the future is a key challenge and long-term funding is a major concern.
Worries over cuts to budgets, how to meet growing demand and deliver quality and affordable services were rife among the responses.
Looking back on 2018, 39% of organisations said 2018 was a good year but nearly a quarter (23%) said it was a difficult year. More than a third had grown in size, half had stayed the same size and 11% had decreased in size.
Despite the challenges, resilience remains high with organisations saying they are confident they can continue to carry out vital work.
They are planning to develop new services and innovate their funding streams to do so.
Although there is a lot of uncertainty in the sector around funding and the political environment, three quarters of respondents said they felt confident in planning ahead for the coming year. A third of those surveyed were more optimistic than they were 12 months ago, with only 7% of small organisations less confident.
SCVO chief executive Anna Fowlie said the research will be used to help champion the third sector and lobby for improvements to the environment it operates in.
She said: “It is testament to the tenacity of those working in the third sector that despite worries about the future of their organisations many still feel optimistic and are willing to innovate to enable their vital work to continue. But they cannot overcome the challenges they face alone.
“SCVO will continue to fight for the third sector, offering support to organisations but also highlighting its importance to the community and the vital work it carries out.
“We all benefit from the third sector - four out of five people used a charity in the past year - so it’s crucial that we act now to ensure these organisations have the resources to continue making a big difference in our communities.”
Planning for the future, sourcing long-term funding and meeting increased demand were highlighted as the biggest challenges facing charities in the coming year.
Despite its prominence in the mainstream press, one area the sector does not seemed too concerned with is Brexit – only 17% of respondents recognised it as a key challenge, and 43% said it would be a secondary challenge for their organisation.
Innovation seems to be the key to responding to the concerns organisation's face – 78% said they are planning to develop new products and services. Seven out of 10 are intending to diversify their funding, 58% plan to invest in staff and volunteer development and 53% aim to strengthen their boards.
A smaller number are planning negative coping strategies for the year. Just five organisations featured in the study said they were considering winding up in 2019, but 13% plan to close projects or services.
Celia Tennant, chief executive of funder Inspiring Scotland, said she is impressed by the resilience of the sector.
“What I get from the survey is a real positivity,” she said. “Despite the quite significant challenges and concerns, especially around funding, the survey really does ooze positivity.
“There is definitely a resilience there. I think the sector benefits from the personal involvement and flexibility of the people involved in it, and they recognise that they are needed.”
Despite confidence being high, Tennant added it is important to remember that times are tough for charities.
“Issues such as the significant cuts made by to Integrated Joint Board community health funding in Edinburgh perhaps go against some of the findings of the survey,” she said. “There are a couple of smaller organisations that may face closure this year.”
The survey found that some third sector organisations are continuing to grow. Just over a third, 37% reported expansion in the past year, and the same amount expect their income to go up in 2019.
However, larger organisations are more likely to be expanding – with nearly half (48%) of respondents from organisations with a turnover of more than £1 million experiencing growth in 2018.
How confident a charity is about the future is also very dependent on the size of the organisation.
Smaller groups tend to have higher confidence levels, perhaps as they are less reliant on traditional funding streams. Larger organisations are less optimistic than previous years but still more confident than those in the middle – who are likely being squeezed more by drops in local authority funding (see box right).
The sweet spot – Refuweegee is optimistic for 2019
Founded three years ago, Refuweegee is an organisation that is punching above its weight.
With a staff team of one full-time and three part-time workers, the Glasgow-based charity has helped provide support to thousands of refugees across the city and built up a vast volunteering network.
SCVO’s state of the sector survey suggests that smaller organisations appear to have had a better 2018 than larger organisations – perhaps because they are less reliant on competitive funding and less vulnerable to large funding cuts.
Selina Hales, founder and director of Refuweegee, said that there is a feeling that communities are keen to work with smaller organisations.
“I think people want to be involved with smaller local organisations,” she said. “They can see the good work being done in their communities.
“I think also that the smaller you are the less reliant you are on funding streams.
"We are not looking at the big pots of money and we are not spending a huge amount of money on funding applications. We can put our energy into helping as many people as possible.”
Hales added that smaller organisations are not also focused on competing as much with other charities, and are perhaps more likely to collaborate and support groups who may be seen as competitors.
Charities in rural areas appear to be particularly struggling, with 88% saying they think the sector’s financial situation will worsen over the next year and widespread concerns over the ability for small charities in more remote areas to be able to survive more funding cuts.
Kirsteen Murray, chief executive of Argyll and Bute Third Sector Interface (TSI), said she believes rural organisations are having a harder time.
“The findings of the survey certainly tie in with what we are being told,” she said.
“In Argyll and Bute we have quite a high proportion of organisations who deliver public sector contracts in practice. Their view is that times are certainly getting tougher.
“In rural areas we do not have a multiplicity of services and providers. Small organisations, charities and social enterprises are often responsible for delivering and developing very localised services.
“Volunteering is also very localised. We tend to have services that are very dependent on sources of funding, whether that is public funding or specific grants.”
Transport is one area that local authorities often make cuts to when trying to find efficiencies, says Murray, but as many organisations are based in areas with limited public transport, these cuts have a knock on effect on other services.
Murray said: “Funders look for efficiencies but if there is no bus service for staff and volunteers to use, then they have no choice but to use their cars amidst rising fuel prices and high cost of repairs.”
The survey also paints a picture of the mood within the sector’s workforce. An overwhelming majority of respondents (76%) said they expected their workload to increase over the next year, with 57% believing their stress levels would also rise.
Most staff feel secure however, with only a third saying their job security is likely to decrease. One in 10 said they expect to see staff redundancies at their organisation in 2019.
Over a third of workers (35%) said they had received no inflationary increase to their pay over the past 12 months, with financial constraints cited as the main reason for this. Worryingly, some respondents even reported staff had not received pay increases for multiple years, ranging from four years to as much as nine years.
Looking forward, over a quarter of staff (26%) said they do not expect to receive a pay increase in 2019, with 31% not sure what to expect.
The squeezed middle – Fife Gingerbread fears for the future
Despite widespread praise for its work, Fife Gingerbread face a bleak future following a series of funding cuts.
At the time of writing, the award winning organisation that provides support to lone parent, vulnerable and disadvantaged families is facing a funding gap that is likely to result in job losses and a reduced level of service.
The charity’s chief executive Rhona Cunningham said that medium-sized organisations are often hardest hit by funding cuts.
“I think we have been a victim of our own success,” she said. “We have been good at identifying what gaps there are in Fife, and this has led to us expanding and diversifying.
“We are not small enough to be considered a locally-based organisation but don’t have the clout of some of the bigger organisations.”
Cunningham said that she feared that local authorities may not feel as connected to organisations like Fife Gingerbread as smaller groups, and that now may be focusing their finances on preserving council services.
“The future is looking pretty bleak for us just now,” she said. “We have been told that there is no allocation in the council budget for us and it looks like we may need to downsize considerably.”
