The current situation for voluntary organisations is worse than pre-pandemic, or even during the pandemic. This is because, just as voluntary organisations were at a low ebb post-pandemic, they were hit with the cost of living crisis, which has seen them facing a perfect storm of rising costs, decreasing income and increasing demand.
The Scottish Government acted quickly to provide emergency financial support during the pandemic. This was an important and very welcome lifeline, allowing many voluntary organisations to keep the lights on, and supporting them to adapt to new ways of working.
This funding was in some ways a sticking plaster, masking the systemic problems with public sector investment in the sector which meant that voluntary organisations were financially vulnerable pre-pandemic, and still are today.
To truly support the voluntary sector to recover to pre-pandemic levels, both Scottish and UK Governments must commit to Fair Funding for the voluntary sector.
With over 46,500 voluntary organisations in Scotland, ranging from small unincorporated community groups to large multi-million pound social care providers, Scotland’s voluntary sector is incredibly diverse. Our observations relate to an aggregated picture of the impact of the pandemic across the sector, but cannot convey the nuance of the different ways that different organisations were affected. For some organisations, who had access to emergency funding, were able to pivot their services online and experienced growing demand, the pandemic was a time of growth and positive development, while other organisations who were not able to operate during Covid never recovered from this and have subsequently closed.
To convey some of the different aspects of ‘recovery’ we provide information below on the size of the sector; sector finances; the ability of voluntary organisations to deliver; and staffing/volunteering. Unless referenced otherwise, statistics cited in our response are taken from the Scottish Third Sector Tracker. As the Tracker was started in 2021, unfortunately we do not have comparable pre-pandemic data.
It is our impression that the current situation for voluntary organisations is worse than pre-pandemic, or even during the pandemic. This is because, just as voluntary organisations were at a low ebb post-pandemic, they were hit with the cost of living crisis, which has seen them facing a perfect storm of rising costs, decreasing income and increasing demand.
Size of the Sector
Overall, the size of the sector appears to be broadly consistent pre and post Covid1. While some organisations had to close during or after the pandemic, other groups which were formed to provide emergency support have continued to operate, and community cohesion, which appears to have grown, has seen other groups and organisations form.
Financial statistics for 2021 show an overall increase in turnover, due to the prevalence of emergency funding during the pandemic. We do not yet have data from more up to date annual accounts to show the longer term impact of the pandemic on the financial situation of the sector as a whole.
We do know that around two thirds of voluntary organisations are currently facing financial difficulties. Nearly 1 in 10 voluntary organisations are not sure they will still be operating in 12 months' time, the lowest confidence we have seen since we started to regularly survey the sector in 2021.
While some financial issues relate to a lack of uplift in statutory funding, making it impossible to meet rising costs, it is also worth noting that fundraised income has not returned to pre-pandemic levels, exacerbated by the cost of living crisis.
Many voluntary organisations used their reserves to survive the pandemic – while this is indeed just the sort of ‘rainy day’ that reserves are there for, in times of financial challenge post pandemic it is a huge challenge for organisations to build those reserves back up, leaving them financially extremely vulnerable.
Ability to deliver
Around half of voluntary organisations in Scotland currently report facing challenges to their ability to operate. Much face-face delivery has returned, but many organisations are not offering the same levels of face-face delivery, opting instead for hybrid models - this comes with both benefits and challenges.
Staffing and volunteering
In order to keep going during the pandemic, staff and volunteers across the voluntary sector went the extra mile, consistently working longer and harder than they were contracted to do in order to support people and communities. Over time, this takes its toll, and increasing numbers of voluntary sector staff and leaders are reporting burnout2, and recruitment challenges are high for the sector.
Volunteer shortages are a significant issue for the sector. Volunteer numbers fell during the pandemic and have not recovered. This is also impacting on voluntary organisations’ ability to find trustees.
The Scottish Government acted quickly to provide emergency financial support, as detailed in question 3. This was an important and very welcome lifeline during the pandemic, allowing many voluntary organisations to keep the lights on, and supporting them to adapt to new ways of working.
The Scottish Government worked with us to provide this funding in a flexible way that was much appreciated by the sector. There was much talk during the pandemic about how much we could learn from these positive funding practices, and how we must be careful not to slide back to old ways of doing things – unfortunately that is exactly what has happened.
This emergency funding, while incredibly helpful, acted as a sticking plaster, hiding the systemic issues around access to statutory funding which left the voluntary sector in uncertain and unsustainable financial situations pre-pandemic, and continue to do so now. During the pandemic the Scottish and UK governments said much about the importance of the voluntary sector – if these warm words are to be believed, they must work with us now to focus on the sustainability of the sector by reforming systems around statutory funding as outlined in our Fair Funding principles. While the Scottish Government has made an on-paper commitment to Fairer Funding, we are yet to see any changes.
During the pandemic Scottish Government also provided support to qualifying voluntary organisations via Business Support Grants. This was initially held not to be open to charities, but guidance on this was changed following lobbying by SCVO on behalf of the sector.
Alongside financial support, the Scottish Government was keen to ensure that the voluntary sector in Scotland also had access to practical support. They worked with SCVO to quickly establish a Coronavirus Hub for the sector, and channelled information to the sector through us. This included Ministers and senior officials taking part in a number of very well attended and well received webinars with the sector.
UK government support
Voluntary organisations in Scotland made use of the Coronavirus Job Retention scheme, which we found to be very useful. 1 in 4 charities with paid employees furloughed staff and 15-30% of sector staff were furloughed – this works out as between 16,000 and 32,000 people. This does not include publicly, or independently, funded posts which were not eligible for furlough.
In continuing to support the sector in England and Wales to recover to pre-pandemic levels, the UK government’s ongoing support with rising energy costs is very encouraging. We are disappointed that the Scottish Government is not minded to use the Barnett consequentials of this lifeline support to provide similar support to the sector in Scotland.
From the start of the pandemic, Scotland's voluntary sector called for urgent support at a time of unprecedented uncertainty. On 19th March 2020, a £350m package of support for a range of organisations across Scotland was announced by the Scottish Government’s Cabinet Secretary for Communities and Local Government. This package pre-dated specific commitments made by the UK Government.
SCVO welcomed the announcement of support which, while much of the funding was concentrated on local government, did highlight the Scottish Government’s understanding of the vital role that charities and community groups could and would play in dealing with the impact of coronavirus. These funds went a long way to helping voluntary organisations through the immediate pressures of the early stages of the pandemic enabling them to respond to the emergency needs being experienced by people.
The Scottish Government split the emergency funds between direct funds to specific organisations and three large proactive and reactive funds: The Third Sector Resilience Fund (TSRF), the Wellbeing Fund, and the Supporting Communities Fund. Voluntary organisations, along with other bodies in Scotland, also had access to a £70 million food fund to support those most in need and unable to access food as a result of the pandemic.
The Third Sector Resilience Fund (TSRF) was a £20m+ emergency fund for charities, community groups, social enterprises and voluntary organisations working in Scotland. The fund supported organisations that already delivered services and products but found themselves in financial difficulties directly as a result of the coronavirus pandemic.
Firstport, Social Investment Scotland and Corra Foundation worked together to deliver the Third Sector Resilience Fund, and it offered charities, voluntary organisations, and social enterprises grants of £5,000-£100,000. Also, there was up to a further £5m available in fully flexible, interest-free loans starting at £50,000. Organisations supported by the fund varied in size, sector, and geography, such as the 1st Thurso Boys Brigade (£828.00 grant award) in Caithness, to Horsecross Arts in Perth (£99,999.00 grant award) and Foxlake CIC in East Lothian (£80,000 loan).
The Wellbeing Fund made £52 million of funds available to voluntary organisations working in Scotland. The fund was split between small pro-active awards of £2k each being made to 1,713 organisations within ten days of announcement and £33 million open for more substantial awards to applicants through two open calls between April and June 2020. The fund’s purpose was to support projects targeting the immediate needs of vulnerable people in the context of coronavirus and to be delivered over an immediate three-month period. These emergency wellbeing funds supported a range of actions including co-ordination of food and grocery support, alleviating mental health and wellbeing issues, changes to enable remote working, and a shift to online service delivery.
The Fund was delivered through an innovative model which involved national funders, Corra Foundation, Inspiring Scotland, STV Appeal and SCVO working alongside Third Sector Interfaces from across Scotland’s 32 local authority areas. The method combined local expertise, assessment expertise and national efficiency to support more than 2,000 organisations working in every community in Scotland.
Wellbeing grants included £2,000 for Fetlar Community Association to deliver emergency supplies including food and prescriptions. Grants of £20,890 for the Glasgow based Amina, Muslim Women’s Resource Centre, and of £17,500 for the Why Not? Trust for Care Experienced Young People in Dumfries and Galloway were awarded to support both moving services online to help keep the people they work alongside safe, well, and informed. A £16,340 grant for Blood Bikes Scotland was awarded to increase their services transporting samples to testing labs to delivering medication from hospitals to those who had tested positive but were at home.
The Scottish Government’s Supporting Communities Fund had an initial £20m investment. This fund provided funding to community anchor organisations, such as charities, voluntary organisations, community-controlled housing associations and social enterprises to help support hyper-local responses to the pandemic. These community anchor organisations were already playing a key active role in providing services within their community and through this funding are supported to expand their existing networks and connections.
The Scottish Government initiated and funded ‘Connecting Scotland’, investing £5m in digital inclusion. The programme is co-ordinated by SCVO and is providing devices, connectivity, and support to develop digital skills and confidence for 9,000 people. It is being delivered through local authorities and voluntary sector organisations working together, targeting those who are: digitally excluded; on a low income; and at risk of isolation due to coronavirus because they are in the extremely high vulnerability group (‘shielding’) or the higher risk of severe illness group.
As detailed above, Scottish financial support to the sector was largely in the form of emergency funding early on in the pandemic. While it is clear that this helped to prevent closures and supported organisations to adapt, its longer term impact on organisations’ recovery is less clear.
Head of Policy and Research
Scottish Council for Voluntary Organisations
Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB