SCVO says contracts and funding are major challenges for Scottish charities amid concerns over social division

Third sector remains key in environment characterised by increasing demand, financial uncertainty and capacity pressures. 

Charities and voluntary groups in Scotland have warned navigating the complexities of contract procurement is impacting them financially and organisationally.

The latest findings from the Scottish third sector tracker reveals a sector that continues to play a critical role in supporting communities across Scotland but is doing so in an environment characterised by increasing demand, financial uncertainty and capacity pressures.

New for this wave, organisations were asked about their experience applying for and securing contracts in the past two years, with those currently working with health boards, local authorities and other public sector bodies represented. 

Only 10% of organisations described the current procurement process of applying for contract opportunities as easy or fairly easy, while almost half found it fairly or very difficult. The most common barriers were complex tender documents (58%), difficult-to-navigate processes (54%), and limited internal capacity (46%). 

Responses to the latest survey suggest many organisations view procurement systems as overly complex, resource intensive and disproportionately geared towards larger organisations with specialist capacity. Smaller, volunteer-led and rural organisations often felt disadvantaged by existing arrangements.

Concerns were also raised about inconsistent practices across public bodies, poor communication, inadequate cost recovery and contract values that have failed to keep pace with rising costs.

A further one-third of respondents reported challenges linked to the changing socio-political environment, including funding pressures, growing demand for services, social division, discrimination and difficulties engaging with public bodies and decision-makers.

Those facing socio-political challenges were not primarily seeking new programmes or initiatives. Instead, they called for more sustainable and flexible funding, stronger representation, better relationships with government and public bodies, and practical capacity-building support.

SCVO’s 2026 Scottish Parliament manifesto, Scotland’s Essential Sector, outlined the need for the Scottish Government to deliver Fair Funding, with the need to reform the public sector funding landscape for voluntary organisations more pressing than ever.

Steve Grozier, Research Officer at SCVO, said: “The clearest message from this wave is that organisations are not asking for more initiatives or short-term projects. They are asking for the conditions that allow them to plan, invest, and deliver effectively: sustainable, multi-year funding, meaningful engagement with decision-makers, fairer access to opportunities and practical support that strengthens organisational capacity.

“The voluntary sector has demonstrated extraordinary resilience over recent years. But resilience is not an unlimited resource. If organisations are to continue supporting Scotland's communities, they need an operating environment that aligns with their needs. This latest wave of the Tracker suggests that supporting the sector's long-term sustainability is no longer desirable — it is essential.”

Financial challenges remain widespread, with difficulty fundraising, rising costs, and funding uncertainty continuing to affect a large majority of organisations. 

In total, 97% of organisations reported facing challenges – up 2% since Autumn 2025.

While many organisations remain confident about their future and are continuing to deliver planned services, this is increasingly being achieved through adaptation, the development of new income streams, and, in some cases, the use of financial reserves. 

73% of organisations reported delivering everything they had planned or most of what they had planned over the previous six months. More than half (51%) expect to be operating at a similar level in 12 months’ time and almost one-third (32%) expect to expand their activities or services.

Anna Fowlie, SCVO Chief Executive, added:  “Voluntary organisations play a vital role in delivering services and support in communities across Scotland through services commissioned and procured by public bodies – from employability support and social care to community transport, youth work, advice services and much more besides.

“The system needs to work better though – not just for voluntary organisations, but for the people and communities they serve. 

“With only one in ten organisations saying that they find applying for contracts easy, it’s clear the system is not working as intended.

“Despite welcome efforts to make the system more accessible and fairer for voluntary organisations, we still see too many public bodies default to rigid, complex processes that place insufficient emphasis on quality, impact and community need. The result is that too many voluntary organisations are locked out, meaning our communities lose their ingenuity, experience and reach. 

“Public services work best when they are designed with communities, and commissioning processes should recognise the value, expertise and local relationships that voluntary organisations bring. We need approaches that make it easier for organisations of all sizes to participate and deliver for the people who rely on them.”

ENDS

Editor’s notes: 

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, the Bank of Scotland 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 12 of the Scottish Third Sector Tracker can be found here: https://scvo.scot/research/scottish-third-sector-tracker

A copy of SCVO’s 2026 Scottish Parliamentary Election manifesto, Scotland’s Essential Sector, can be found here: https://scvo.scot/about/manifesto-2026. SCVO called for the Scottish Government to show leadership in continuing to embed ethical commissioning, by committing to:

• Application of Fair Funding principles to all contracts — including flexible, sustainable, accessible, and transparent funding, with a presumption in favour of multi-year commitments as standard practice.  
• Adoption of a collaborative commissioning approach, designing funding and commissioning processes that encourage joint working across sectors, rather than defaulting to competitive tendering, where possible. The planning, design and delivery of services must bring together people, communities and providers.  
• Simplification of processes, reducing complexity in commissioning and tendering processes for small and specialist organisations, while avoiding applying procurement approaches to grant-making. 
• Improving understanding of the voluntary sector within public bodies.  
• Ending the default to procurement within public bodies, recognising that commissioning should be flexible and proportionate, and that formal procurement is not always the most appropriate route.  
• Consistency of good practice across public bodies, ensuring that commissioning and procurement is guided by shared principles, and not a patchwork of different systems and expectations.  
• Investment in training and development for both voluntary organisations and public sector commissioners.  
• Use of lotting, breaking large contracts into smaller, more manageable parts to enable participation by smaller, expert organisations.