A third or organisations say they are reducing their workforce, or are planning to do so
New research shows the continued impact of the running costs and cost of living crises on charities as the vast majority say they have experienced increased demand for services.
In total, 86% of organisations say they are having to do more while funding dries up, according to polling from the Charities Aid Foundation (CAF).
Over half (54%) say that demand has increased by ‘a lot’, up from 43% reporting the same in 2023.
Growing demand for services comes as half (50%) of charities cite increased competition for funding.
Worryingly, nearly a third (30%) say they are reducing their workforce, or are planning to do so.
The polling, among 784 UK charity leaders, found that poverty-relief, human rights, and diversity charities are most affected.
CAF’s research mirrors the results of the Scottish Third Sector Tracker, a project run by the Scottish Council for Voluntary Organisations, which monitors the state of the sector.
Its most recent findings, published in August, showed that the number of Scottish charities forced to make job cuts has doubled – and many organisations are eating unsustainably into their reserves just to survive.
Increasing numbers of organisations in Scotland are struggling to meet the demand for their services, while six in ten organisations feel the use of their reserves to be unsustainable, up from four in ten just six months earlier, and the number of organisations making redundancies has doubled, from 5% to 10% in the same period.
As part of the CAF survey, a chief executive of a human rights charity said: “We’re not even meeting the demand that exists now and we’ve got 70 people on our waiting list for counselling.”
Despite improvements to the economic climate over the last year, the research also finds that over a quarter (28%) of charity leaders are uncertain that their organisation will be able to meet the rising demand.
The situation for charities is exacerbated by increased competition for funding. Half (50%) of the leaders surveyed cited this as one of the main challenges facing their organisations.
This uncertainty over funding is forcing charities to change how they operate. Nearly a third (30%) of charities have either reduced the size of their workforce or are planning to do so, while 18% are not confident that they will have the funding necessary to continue their work by the end of the decade.
A chief executive of a medium-sized refugee charity said: “We’ve already seen a lot of mergers already, a lot of charities winding down and we are thinking about it quite seriously as well.”
Ashling Cashmore, head of impact and advisory at CAF, said:“While the worst effects of inflation may have subsided, charities are still having to do much more with less. They are dealing with ever-increasing demand which is only expected to rise as we head into winter - yet their income is not keeping up and there is less funding to go around.
“We need to work together to create a stable environment for our hard-working charities and those they support. The new government has said it wants to reset its relationship with civil society and an important next step would be to introduce a national strategy for philanthropy and charitable giving to make sure charities receive the support they desperately need.”
As an important source of data and insight and a critical delivery partner for public services, charity leaders see the need to make the case for a more substantial role in advising governments on policy areas that affect their work.
Separate CAF research found that the public is supportive of charities having more of a voice in policy decisions, with a majority saying it’s important for government, businesses, charities and philanthropists to work together to deliver projects nationally (84%) and locally (85%).
