The Covid-19 pandemic and cost-of-living crisis are the latest chapters in a longer story of instability and unpredictability in voluntary sector funding.
The cost-of-living crisis has, for many organisations, increased demand for the essential services and support the sector provides. At the same time organisations, like households, are struggling with rising costs while incomes stagnate. This is having a negative impact on organisations’ ability to continue to deliver essential services and meaningfully engage volunteers.
SCVO and Volunteer Scotland are part of the UK Civil Society Group, a coalition of over fifty organisations that support the voluntary sector across the UK. In a letter to the Treasury the Civil Society Group have called for the Spring Statement to include:
In addition, the UK Government should recognise the pressure on the voluntary sector in Scotland by committing to:
Inflationary pressures impact both the voluntary sector and the communities we work with. Like households, voluntary organisations are affected by rising energy prices and other rising costs, while incomes stagnate or, in some cases, decline. The Third Sector Tracker found that between August and December 2022, 93% of organisations reported rising costs in Scotland. Common price rises included:
As a result of these pressures, the proportion of organisations falling back on their financial reserves has steadily increased throughout 2022, over a third accessed their reserves between August and December alone.
Organisations under financial strain also risk losing skilled and experienced staff and volunteers, placing increased pressure on vital projects and services. This is unsustainable and support is urgently needed.
The UK Government’s Energy Bill Relief Scheme has protected many voluntary organisations from volatile and rising energy prices over the winter. However, the new Energy Bill Discount Scheme offers significantly reduced support. £18.4bn over 6 months has been reduced to £5.4bn over 12 months and there is no certainty beyond March 2024. Similarly, the Trade Intensive Industries Scheme does not recognise that rising energy costs impact organisations across the sector, regardless of their size or their levels of energy use.
In Scotland rising energy costs are the most pressing rising cost issue, impacting 48% of organisations. While wholesale energy prices are falling, the energy prices available to charities are still 4.5 times higher than in February 2021. Solutions that are accessible across the sector are urgently needed.
Inflation-based uplifts to Scottish Government funding, and UK level grants and contracts would offer some support. Without uplifts many voluntary organisations will be unable to keep the lights on, meet demand, support volunteers, or uplift wages to protect the living standards of the skilled and experienced voluntary sector workforce. Scotland’s voluntary sector employs 135,000 people – 5% of the Scottish workforce. 67% of voluntary organisations in Scotland are already struggling with staffing issues and shortages.
The Spring Statement can and should support organisations with these financial pressures.
The UK Government’s funding for levelling up reached £2.08 billion in Scotland in 2022, with millions of pounds of further investment expected in 2023.
To provide certainty for voluntary organisations and local authorities in Scotland a clear commitment to the future of Levelling Up post-2025 is urgently needed. This commitment should match the 12 levelling up missions outlined in the Levelling Up White Paper, by making funding available for at least another 5 years, until 2030.
The benefits of long-term funding are well understood, allowing voluntary organisations to recruit and retain skilled staff and volunteers, plan for the long-term, and deliver quality outcomes. That European funding was long term, 7 years, was a significant benefit to voluntary organisations across Scotland and the UK. The UK Government should recognise and support these benefits by offering certainty.
Voluntary organisations continue to see high and increasing demand for a range of services, including those that support mental health and wellbeing and financial hardship. Those needs have worsened since the Autumn Budget, with 67% of voluntary organisations highlighting financial needs as a worsening concern (up from 62% in August 2022).
Funding cuts, staff shortages and industrial action in the statutory sector also increase demand for volunteer-led services. Rising demand paired with staffing challenges within the sector also increases the risk of exploitation of volunteers if asked to undertake roles and tasks previously carried out by paid staff. A recent report analysing data captured from Volunteer Scotland members at their AGM in November 2022 found that 13% of respondents had already been asked to engage volunteers in inappropriate roles.
Volunteer Scotland and the STUC launched an updated Volunteer Charter in 2019 which sets out the key principles for assuring legitimacy and preventing exploitation of workers and volunteers. These principles include that volunteers should not carry out duties formerly carried out by paid workers, that volunteers should not be used instead of paid workers or undercut their pay and conditions of service or undertake the work of paid workers during industrial disputes.
In the most recent Third Sector Tracker results, 30% of organisations rated volunteer shortages as among the three biggest challenges their organisation faces. Research from Volunteer Scotland exploring the impact of the cost-of-living crisis on volunteers and volunteer involving organisations has found that volunteer participation could be declining in Scotland. In 2018, volunteering was worth £5.5 billion to Scotland’s economy. A decline in volunteering of just 5% could therefore potentially equate to a £275 million loss to the Scottish economy.
Volunteers could be reducing their volunteering or leaving their roles due to a range of practical and emotional barriers caused by the Covid-19 pandemic and compounded by the cost-of-living crisis. One such barrier is the lack of clarity from the Department for Work and Pensions regarding the impact of volunteering whilst on benefits. In a recent survey by Volunteer Glasgow, over 70% of people said that a statement provided by the DWP around volunteering and Work Capability Assessments left them afraid or unsure if their benefits would be affected by volunteering.
Another practical barrier to volunteer participation that has become more acute during the current crisis is the Approved Mileage Allowance Payment (AMAP) rate. This rate has remained static for 10 years and there is a lack of clarity from the treasury regarding how it is calculated. With many volunteers facing increasing cost pressures, the reimbursement of expenses should not be a barrier.
SCVO is the national membership organisation for the voluntary sector (sometimes referred to as the third sector). Along with our community of 3,200+ members, we believe that charities, social enterprises, and community organisations make Scotland a better place. SCVO supports the sector through delivering services, by giving the sector a voice at a national level and promoting and supporting innovation and improvement.
Contact Sheghley Ogilvie, Policy & Public Affairs Officer (email@example.com)
Volunteer Scotland is Scotland’s national centre for volunteering. We believe that volunteering should be an enjoyable, rewarding and fulfilling experience for the volunteer; that volunteers have the right to be safe and protected in delivering their volunteering roles; and that to derive health and well-being benefits from volunteering requires regular and meaningful contributions of time.
Contact Sarah Latto, Policy Officer (firstname.lastname@example.org)
Scotland relies heavily on its voluntary sector and volunteers to deliver a range of services, to provide tailored support in local communities, and to promote community connection and resilience. The sector is hugely diverse, ranging from tiny volunteer-run community groups like village halls and play groups to major public service providers in social care and housing. In Scotland, we enjoy the benefits of 46,500+ organisations.
Together these organisations employ over 135,000 paid staff – a third more than the 100,000 staff employed in the digital and technology sector in Scotland. A quarter of charities employ staff, and the average income of these charities is around £900k. However, three-quarters of charities are run entirely by volunteers and have an annual turnover of less than £100k.