The latest findings from the Scottish Third Sector Tracker have been released. 

The number of third sector organisations in Scotland facing financial challenges has continued to rise in recent months, a new report shows. 

Research gathering responses from more than 350 organisations in Scotland are contained in the latest wave of the Scottish Third Sector Tracker, which has now published the results of its survey gathered between April and June 2023.

The Tracker gives insights into the challenges facing organisations by asking a series of questions on the demand for their services, costs, staff and volunteers, financial health, and fundraising. 

While this latest round of statistics shows a slight decrease in the overall number of groups facing challenges - down 5% to 88% - a number of concerning figures remain.  

A large majority (71%) of organisations report facing financial challenges, up from 67% in December, while more than half (51%) of organisations report that rising costs are having a negative impact on delivering their core services or activities - a rise of 5% since December.

A further 66% of organisations report increased demand for their services, a figure which was 58% in December.

Funding remains a core concern for many organisations. The levels and regularity of financial support they receive is having an effect on operations, with one in five organisations (21%) reporting delays to funding from local councils and 19% of organisations reporting delays from the Scottish Government.

The report reads: “The findings from wave 6 suggest that more organisations are feeling the impact of rising costs, inflation, and other financial pressures. Core operating costs continue to rise with more organisations reporting a negative impact on their ability to deliver services. 

“In addition, difficulty fundraising continues to be a perennial issue for around a third of organisations with over half applying for additional funding to combat rising costs. Funding delays and cuts, whilst not appearing to be prevalent, cause additional financial uncertainty for organisations.

“Two-thirds of organisations would like to see more funding made available to help with rising costs, with 40% wanting specific help with energy costs. This comes after a quarter of organisations said that the practical and financial support available to help with rising costs was not very sufficient and an additional 15% said that it was not at all sufficient.”

Questions asked for the first time in this round of the Tracker found that 41% of organisations feel that the current level of direct practical and/or financial support available to help them manage rising costs is insufficient.

A further 45% of organisations report that recruiting or retaining staff has been a moderate to significant challenge.

The report added: “Financial reserves remain important to the survival of many third sector organisations, however, almost half of those organisations using reserves feel this use to be unsustainable. This wave also saw an increase in the number of organisations reporting that they had access to less than six months operating costs in their reserves.

“Despite these financial pressures, 60% of organisations report reducing the cost of their services or making them free to support the communities they serve as the rising cost of living continues to have a detrimental impact on peoples’ lives.”

When asked to consider their top three challenges, the areas most frequently flagged were rising costs and inflation (45%), difficulty fundraising (35%) and volunteer shortages (34%). 

The report added: “While financial pressures are prevalent, staffing and volunteer issues remain high too, with volunteer shortages the response option most frequently ranked as organisations number one challenge. 

“Many organisations report increasing the pay offered to new and existing staff and offering more flexible working conditions to attract and retain paid staff. In the face of these challenges, most organisations remain confident of their future survival, although the percentage of organisations that are very confident has dropped.”