By Richard Johnstone | 29 May 2012
Government spending cuts have left charities facing ‘a riskier future’, with a majority reducing both staff and services, according to a survey published today.
Research by the New Philanthropy Capital think-tank warned that public spending reductions could ‘seriously affect the sustainability of the sector’, even as the government promotes greater involvement of voluntary groups in public services.A survey of more than 100 of the top 750 charities in England found that 90% say they face a riskier financial future, with well over half (62%) already having to use or planning to use their reserves to keep operating.
The report, which was undertaken with public sector insurer Zurich, has revealed that around two-thirds (65%) of third sector organisations are cutting frontline services and nearly three-quarters (73%) are making staff redundant. Almost one in ten (9%) even risk closing down entirely in the next year.
However, around three-quarters are drafting in more volunteers, and most (70%) say they are confident in their skills and capacity to bid for public service contracts.
Dan Corry, NPC chief executive, said that charities were dealing with both large spending cuts and a changing landscape, as the government opens up public services to greater competition, including the Big Society initiative.
‘Our survey suggests some charities will be able to gear up to play a bigger role, but we think others will find it tough and will go under,’ he said.
‘It’s vitally important that we understand these changes and act now to ensure that their impact on the voluntary sector and the people they help is positive, not detrimental.’
Some of the government’s reforms have not been welcomed by the sector. The research found that many are uneasy about the introduction of payment-by-results contracts, where contractors are paid only after achieving an agreed target.
Over half of respondents believe this arrangement, which has been introduced in the Department for Work and Pensions’ Work Programme, will have a negative impact on their finances. However, the survey also found the shift away from traditional grants is happening more slowly than had been expected.
NPC has urged the government to develop best practice guidelines to help make the commissioning process for public services fairer and more transparent.
