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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

Voluntary organisations across Scotland struggling as costs continue to rise

This news post is over 1 year old

The Scottish Third Sector Tracker published its latest round of results this week. 

A report into the challenges facing voluntary organisations and charities across Scotland has warned of significant pressures bearing down on the sector. 

The Scottish Third Sector Tracker published its latest round of results this week, with research suggested the impact of the rising costs crisis is becoming increasingly apparent. 

Overall, 93% of organisations said they were experiencing rising costs in at least one area of their business, compared with 86% in April.

Organisations reported sharp rises in costs across almost all operating areas, with the most pressing being the cost of materials and supplies (76% of the sector); transport costs (61% of the sector); energy costs (50% of the sector) and staffing costs (43% of the sector). 

Of organisations seeing rising costs, 43% felt this was having a negative impact on their ability to deliver their core services or activities.

To mitigate these impacts, 40% of organisations have applied for funding from new funders and one in three have used their financial reserves. One in ten have had to reduce their services or work.

Almost 80% of organisations reported they were seeing increasing financial hardship in the groups and communities they work with and 64% of organisations considered that demand for their services had increased, with 23% saying that demand had significantly increased. 

The majority (80%) of those organisations seeing an increase in demand for their services were able to meet most or all of that demand.

Rising costs are not the only challenge third sector organisations reporting facing in the three months since April, with 72% reporting shortages and issues with staffing and volunteers and one in three difficulty planning for the future.

Only one quarter of organisations reported being able to award staff a pay rise since April, typically a rise of between three and five percent.

The report states: “Particularly evident in this report was the increased prevalence of staffing issues and shortages, volunteer shortages and financial challenges in the third sector. 

“Organisations have seen costs rise across all areas of business, and approximately one third of respondents made use of financial reserves between April and August 2022.

“Further, many organisations have reported concern about the impacts of the cost of living crisis on their beneficiaries, and in open responses gave insights into issues relating to mental health and wellbeing, rising food and energy costs, and increasing hardship and vulnerability in the communities they serve.

“Short term funding was found to be dominant, and respondents described the challenges such agreements create for planning for the future and employment. 

“Behind securing funding for core activities, multi-year funding agreements was respondents’ second most frequently reported fair funding priority.”

The Scottish Third Sector Tracker (Tracker) is a community of third sector organisations. 

The community was established in response to the pandemic as third sector support organisations, including SCVO, Scottish Government and funders, sought to understand the challenges facing third sector organisations and how best to support them.

The information gathered from the community of organisations continues to inform and direct how these support organisations provide support to the sector.

The Tracker provides third sector organisations the opportunity to contribute to a national research project that reaches decision makers across the country.

The wave 4 summary report presents key insights into Scotland’s third sector. The report covers current challenges, risings costs and the impacts on organisations and their beneficiaries, staffing and volunteering, financial health, and funding.