New research finds funding delays emerge as major challenge for Scottish charities 

Funding delays emerge as major challenge for Scottish charities

Organisations call for reliable, multi-year funding to avoid increased annual pressures.

Charities in Scotland are increasingly struggling with funding delays, with organisations facing cash‑flow pressures, postponed or cancelled services, and depleted reserves.  

The latest findings from the Scottish third sector tracker reveals a sector that continues to show resilience and adaptability, but one that is increasingly stretched across multiple fronts. 

The Scottish Council for Organisations (SCVO) have now said calls for multi-year funding for the sector in line with inflation is absolutely essential.  

The research, carried out for SCVO and partners, found over a quarter (28%) of organisations now cite delays or reductions in funding as a top challenge. 

As a result, charities say these hold-ups in funding force organisations to draw on reserves as well as creating immediate cash‑flow pressures and forcing services to be postponed or cancelled.  

The tracker found 58% of organisations hold less than six months’ reserves - up five per cent from Spring 2025 - and 57% say their current use of reserves is unsustainable, a sharp increase from 40% in Autumn 2024 

Delays create immediate cash‑flow pressures (for around 60% to 65% of those organisations), force organisations to draw on reserves (45% to 50%), and lead to postponed or cancelled services (35% to 40%). (1)  

Critically, funding delays also have a profound impact on staff morale, wellbeing, and retention.  

Uncertainty around contract renewals, the risk of redundancy, and the inability to plan long‑term contribute to anxiety, frustration, and the loss of experienced staff are all exacerbating existing problems.  

Overall, the findings show a sector committed to delivering for communities but increasingly constrained by financial instability, workforce shortages, and systemic uncertainty.  

Steve Grozier, Research Officer at SCVO, said: “This latest wave of Scottish third sector tracker reveals a sector that continues to show resilience and adaptability, but one that is increasingly stretched across multiple fronts. Service delivery remains broadly stable, yet over half of organisations report that limitations in resources, skills, or capacity are hindering their ability to meet demand.  

“Financial pressures have intensified. Staff recruitment and retention remain difficult for many organisations. Volunteer recruitment and retention challenges remain acute. Funding delays have now also emerged as a major challenge. The work being done by organisations across the sector in the midst of these issues is commendable.” 

Responding to the tracker survey, organisations consistently emphasise that secure, multi‑year, inflation‑linked funding — particularly for core costs and staff salaries — is the single most important factor that would enable them to do more.  

Without structural changes to public sector funding models, investment in workforce capacity, and improved partnership working, organisations risk being unable to meet rising demand or sustain essential services. 

The calls come ahead of a hustings of candidates for the 2026 Scottish Parliamentary elections at SCVO’s flagship event, The Gathering, on Tuesday, 10 February.  

SCVO have published their manifesto, Scotland’s Essential Sector, outlining the need for the next Scottish Government to deliver Fair Funding, with the need to reform the public sector funding landscape for voluntary organisations more pressing than ever. 

Anna Fowlie, SCVO Chief Executive, added: “Scotland’s charities, community organisations and social enterprises are a fundamental cornerstone of our society and economy. This research shows a growing fragility which is detrimental to us all. It’s time to give these organisations, and the people they serve, the respect and stability that they need.  

“The next Scottish Government needs to implement Fair Funding as a matter of urgency.” 

ENDS

Editor’s notes:

(1) These are estimates due to the question being an open question. 

Anonymous contributions from participating organisations:  

“The immediate impact of delayed receipt of funding can be cashflow problems and the need to use reserves to keep the charity going.” - Org 1

“We are unable to plan sustainable services for the future due to the uncertain nature of our funding. This means beneficiaries cannot rely on continuity of support, and we risk losing trust when programmes are paused or cancelled.” - Org 2

“Ongoing delays each year with Scottish Government funding has had a huge impact on our ability to deliver services, to recruit staff, to offer longer term or permanent contracts, to offer pay increases, and on the wellbeing of staff facing constant uncertainty over job security and stress of not being able to plan long‑term delivery.” - Org 3

“Uncertainty for staff and risk losing skilled staff due to not being able to renew contracts on time. Having to dip into our limited financial assets to cover payroll has created anxiety around job security and concern about having to use very limited company reserves to cover salaries.” - Org 4

The Scottish Council for Voluntary Organisations (SCVO) is the national membership organisation for the voluntary sector. Our mission is to champion the role of voluntary organisations in building a flourishing society and support them to do work that has a positive impact. We're passionate about what the voluntary sector can achieve. Along with our community of 3,540 members and supporters, we believe that a thriving voluntary sector should be at the heart of a successful, fair and inclusive Scotland. 

The Scottish Third Sector Tracker is a growing research community made up of representatives from third sector organisations based across the whole of Scotland, who are willing to share their experiences, views and concerns as the sector faces both new and ongoing challenges. The Tracker is run by an independent research company called DJS Research on behalf of SCVO, the Scottish Government, the William Grant Foundation and the National Lottery Community Fund. 

Those involved in the running of a third sector organisation operating in Scotland are invited to represent their organisation as a member of the Scottish Third Sector Tracker. 

A full copy of the findings from Wave 11 of the Scottish Third Sector Tracker can be found here: https://files.scvo.scot/2026/01/wave-11_final.pdf?_gl=1*1ptbqsy*_gcl_au*MTMxODAwMDM5MS4xNzYyMjU0NzI0

More information about SCVO’s The Gathering can be found online here: https://scvo.scot/the-gathering

A copy of SCVO’s 2026 Scottish Parliamentary Election manifesto, Scotland’s Essential Sector, can be found here: https://scvo.scot/about/manifesto-2026