Allan Faulds: "the longer we wait for fair funding, the greater the risk it will be stretched to breaking point"
The financial pressures facing the third sector are nothing new.
Organisations have been warning for years about the impact of insecure, short-term funding, as well as increasingly onerous reporting obligations attached to contracts to justify those funds.
The Covid-19 pandemic then shone a further spotlight on these pressures, even as the third sector mobilised and innovated rapidly to meet the challenges. Yet when pandemic restrictions began to wind down, the sector barely had time to catch its breath before the cost of living crisis began to unfold.
Last year, the ALLIANCE published its first report on the crisis, ‘Disabled people, unpaid carers and the cost of living crisis: Impacts, responses and long term solutions‘, which investigated the impacts on individuals.
We heard worrying stories about people cutting back on heating, food and charging essential assistive technologies like powered chairs in the face of rising energy bills. In response, we called for investment in emergency social security payments in the short-term, and argued for a longer-term investment in changes to our energy systems that would protect people from future price shocks, as well as a wider shift to a wellbeing economy.
We also heard brief points about the difficulties some third sector organisations were having responding to increased demand. We therefore decided to further investigate this theme in its own right, through a survey of the ALLIANCE’s organisational membership, followed by a detailed case study of a member organisation based in Highland and a workshop at our annual conference.
Taken together, the resulting ‘Stretched to the Limit: Scotland’s Third Sector and the cost of living crisis‘ report paints a picture of a sector which is under intense stress.
Alongside the overwhelming majority (84%) of respondents saying they had experienced increased demand for their services, we found significant impacts on every aspect of operations. A significant majority reported increases to their energy bills (72%) and bills in general (76%), whilst a small number of respondents even said they had given up (10%) or moved to smaller (eight per cent) premises.
Organisations are also struggling to support the people who they rely on to deliver their services. Roughly half of respondents said they were having difficulty filling vacancies (52%) or were unable to give staff pay uplifts (48%), whilst significant minorities were finding it difficult to retain staff (41%), with multiple respondents highlighting the difficulty in competing with public and private sector salaries. Volunteering was likewise affected, including through lack of funds to support volunteers (62%), a lack of new volunteers coming forward (59%), and a lack of time to support them (44%).
Funding is evidently at the root of these issues, as most organisations said they’d experienced a reduction in their fundraising capacity (71%) in general and of grant funding in particular (61%). It’s no surprise then that confidence was relatively low across the sector, with over half (54%) feeling less confident about being able to manage the crisis than they were in spring 2022, or that the vast majority (88%) identified longer-term funding as the key support they needed.
Despite these challenges the third sector continues to be a lifeline for many across Scotland, responding flexibly to the changing needs of the people it supports, as well as providing employment for over 130,000 workers.
There’s no doubt about the immense value of the third sector, but warm words from the Scottish Government need to be backed by concrete action.
Scotland’s third sector is already stretched to the limit and the longer we wait for fair funding, the greater the risk it will be stretched to breaking point.
Allan Faulds is senior policy officer for Health and Social Care Alliance Scotland (the ALLIANCE)