A debate in the Scottish Parliament has highlighted the importance of multiyear funding to help charities rebuild after Covid-19

Politicians have acknowledged that a revamp of the way voluntary sector organisations receive state funding is needed.

A debate on ‘Valuing the Third Sector’ took place in the Scottish Parliament on Tuesday afternoon (1 December).

The debate was prompted by the Equalities and Human Rights Committee’s 2019 Valuing the Third Sector report, and to highlight the challenges the sector faces in recovering from the Covid-19 crisis.

The committee’s inquiry heard that reduced and short-term funding led to job insecurity, loss of talent and essential services either being reduced or stopped altogether, directly affecting the communities and vulnerable people who rely on them.

Since then, many organisations have struggled through the coronavirus pandemic – a recent study by the Scottish Council for Voluntary Organisations (SCVO) revealed 20% of Scottish charities reported a critical threat to their financial viability in the next 12 months.

The session was opened by Ruth Maguire MSP, convenor of the equalities committee, who said it is vital that the Scottish Government embraces longer term funding models for organisations.

She said: “The committee noted that, in 2019, the government had moved to a three-year equalities funding cycle. We recommended that other funders should follow suit, and asked the government to set up a working group, involving key stakeholders, to examine longer-term funding models, and for its conclusions to be made available before the end of this parliamentary session. The government told us in its response that the ‘duration of funding periods is a matter for other statutory funders.’

“The committee calls on the government to rethink its approach and show leadership in that area; to work with other statutory funders to share the benefits of longer-term funding; to harness the work of the Scottish leaders forum for change; and to bring consistency of approach and best practice through the establishment of a working group.

“The committee argues that those steps are essential if the government is to achieve its national outcomes. We are aware that there is no single, direct and effortless solution to the funding issues facing the sector, but the situation could be greatly improved if the government, statutory funders such as local government, independent funders and the sector itself were to work together strategically to ensure the financial sustainability of the sector.”

Rachael Hamilton MSP, who opened the debate for the Scottish Conservatives, said the committee’s findings had highlighted issues with the way previous funding was handed out.

She said: “I want to keep my contribution positive and to work with the government to ensure that recommendations are actioned, but that is hardly a ringing endorsement of the government. We saw in the report how fragile the financial situation is, with short-term funding cycles causing instability in some third sector organisations and creating issues around staff retention and development. SCVO made that point in its briefing for today’s debate by highlighting that the Scottish Government’s promises of longer-term funding are very rarely seen in practice.”

Minister for older people and equalities Christina McKelvie MSP said that multiyear equalities funding has been provided in recent years, and two new funds will be launched shortly.

She said: “The Equalities and Human Rights Committee considered the use of multiyear funding, and I am pleased to say that we have been able to provide multiyear funding over the past three years. That ensures sufficient time and support for the application process and supports partnership working and the ideals of fair work principles.

“The equalities and human rights budget will support the launch of two new funding streams that will support the third sector. Our new delivering equally safe fund will develop and deliver work that directly contributes to delivering the ambitions of our equally safe strategy. I will launch the fund very shortly, and we will announce successful applicants in summer 2021 to allow for projects to start in October 2021.”

Pauline McNeill, Labour MSP for Glasgow, echoed calls for the way the sector is funded to change.

“The relationship between the third sector and the public sector needs a fundamental shift. We must begin a new partnership-based style of working,” she said. “The voluntary sector delivers vital services to our communities and we cannot do without it. The sector is far larger than people may think, with more than 40,000 organisations employing more than 100,000 paid staff. However, the sector is struggling to cope with decreasing budgets and funding.”

Lib Dem MSP Beatrice Wishart said the Liberal Democrats would like to see the sector receive the funding it deserves.

She said: “Liberal Democrats want to see the third sector provided with as much certainty as possible, through funding from both local and national Government that recognises the contribution that they make, the demand that they respond to and the need for continuity of services. Indeed, the third sector is well placed to get things moving in the renewal and recovery phase.”

Cabinet secretary for communities and local government Aileen Campbell MSP said the Scottish Government had recognised the value of the sector during the pandemic, and the way it is funded needs to reflect this.

She said: “We are determined to capture the good changes, the things that worked and the messages that we have had from the third sector over the past nine months about feeling valued, supported, trusted and respected. Even though the unfortunate prompt was a pandemic, we need to use this moment to improve what we do and how we value our important third sector. That is why my colleague Shirley-Anne Somerville and I established the social renewal advisory board, with a key focus on what we need to change and the system that we need to disrupt to protect the third sector. The third sector and volunteering circle is examining how we do that, and the social renewal advisory board will report to us very soon.”

Campbell continued: “We are taking those actions and providing that funding because, if recovery is to be about more than just reverting back to the old ways of doing things, we need a flourishing third sector. For us to translate the ambition of the national performance framework into reality, we need the third sector. Therefore, I agree that funding needs to be multiyear. I have endeavoured to provide that in my portfolio, but we need it to happen more widely across the rest of government and wider public life. We also need to respect the third sector, which is why, in response to the advisory group on economic recovery, we committed to work with local government and the third sector to address the barriers that face the sector. That is taking on board the steer from the committee, and, no doubt, it will also be among the recommendations from the social renewal advisory board.”

Anna Fowlie, chief executive of SCVO, said the debate had highlighted the value of the sector.

She said: “It’s great to see the parliament recognising the massive and diverse contribution that the voluntary sector makes to Scottish society. That support from our national and local politicians to is very welcome and it’s time to demonstrate that commitment with real action around sustainable funding and genuine partnership.”