Cost-of-living crisis puts 'critical' services at risk, Scottish charities warn government

Charities "critical" to Scottish communities could be forced to cut services amidst the cost-of-living crisis without multi-year funding, the Scottish Government has been warned.

The Scottish Council for Voluntary Organisations (SCVO) says key services could be at risk as operating costs spike.

One in six charities are struggling with increased charges for materials and supplies, while half face a jump in transport costs and energy bills, according to its research. And in the three months to April 2022, just half of organisations were able to meet or exceed their planned programmes or services.

That was before continued increases took the rate of inflation to above nine per cent and the SCVO says the Scottish Government must act.

Kirsten Hogg, SCVO head of policy, research and campaigns, told Holyrood: "Voluntary organisations need to see the funding they receive from the public sector keep pace with inflation. Without this, large swathes of charities will be left with shrinking budgets at a time of rising demand, putting services at risk and leaving them unable to pay staff fairly."

Inflation is expected to hit 13 per cent in October, according to the Bank of England, with recession predicted in the last three months of the year.

The SCVO - which has almost 3,200 members - is a partner in the Third Sector Tracker, which reveals the growing challenges facing charities and voluntary groups. Data from March and April shows operating costs rose for most organisations in spring this year, and nine in ten said they'd been experiencing rises since December. 

One in four of all organisations experiencing financial hikes said this affected their ability to deliver core services or activities. One in three had dug into their reserves between December and April.

Half of organisations questioned said their reserves were "very important" or "essential" to their survival. But one in six organisations said they held less than six months' worth of reserves.

The results are based on research involving almost 460 third-sector groups based in or operating in Scotland.

In Edinburgh, the Prentice Centre community hub closed its doors at the start of July after costs became too much. The West Granton centre had been in operation for a decade and community hub manager Moira Fenning said that "all avenues for accessing alternative funding have been explored, but there is just no money out there".

Despite concerns, nine in ten third sector organisations believed they would still be running in 12 months' time. 

The Edinburgh Dog and Cat Homes says it will not "step back" but it has been "heavily affected" by the cost-of-living crisis. A spokeswoman said: "The fear of the winter and what lies ahead is palpable. The staff are worried for themselves and they worry about what it will mean for those thousands of homes we are already supporting."

She went on: "We need to push forward and try and do more as things get tougher. It's how we'll get through this. But that doesn't mean that we won't be having difficult conversations on what other things we can tighten our belt on to see us through."

Hogg said: "Far too many voluntary organisations are left wondering what, if any, funding they’ll receive to continue programmes and services from year-to-year.   

"Reserves are becoming more about survival and bridging the funding gap caused delayed funding or finding replacement funding."

She continued: "We cannot continue to see unnecessary expectations being placed on voluntary organisations that are not felt by their public sector equivalents. If the third sector is expected to continue providing lifeline services, this cannot be done without an ability to plan for the future. 

"Core funding must be expanded to ensure there is additional investment in the voluntary sector. It is not possible for a service to exist without an organisation to deliver it. Organisations need flexible investment to keep the lights on, to innovate and to continue their critical contribution to Scottish society."

A Scottish Government spokesperson said: "We recognise the impact that rising operating costs is having across society, including on charities and voluntary organisations. 

"The Scottish Government continues to invest widely in the third sector. We have committed to increase multi-year funding for the third sector and where possible we will do so. However, our ability to fulfil our devolved responsibilities remains a significant challenge due to the UK Government's budgeting approach."