# Snapshot of charity funding reveals big freeze Rhetorical question: can something really be called a ‘snapshot’ when it takes five months to produce? Every two years SCVO data elves analyse hundreds of third sector annual accounts to produce a [snapshot of the sector’s finances](http://www.scvo.scot/news-campaigns-and-policy/research/third-sector-funding-and-spending-in-2013/) and analyse the key trends in the sector’s income. This financial data, alongside the narratives in trustees’ annual reports, gives us a real insight into the financial health of individual organisations and the sector as a whole. It lets us see exactly what has been happening in terms of funding, where money is coming from (or not) and where it’s going. I’ve personally analysed thousands of charity accounts during my time as research officer here at SCVO. I expect it to take a while. I expect it to be impossible to assign some funds to the correct funder. I expect it to be complicated.  I even anticipate the occasional tension headache that accompanies staring at thousands of small numbers on a computer screen. What I did not expect was that the review of funding in 2013 would throw up major shifts in the sector’s income sources and a complete reversal of previous trends. First, let’s take the overall flat-lining of the sector’s income. For almost a decade I’ve been producing graphs showing a lovely upwards curve year on year. What we’re now seeing is that curve flattening out and the sector’s income plateauing. Some organisations have seen significant growth while others have seen income shrink, but mainly budgets have been frozen. On average, organisations have seen their income grow by only 0.8% in the last year, and when we take inflation into consideration that’s actually a drop in real terms. Secondly, there has been a huge drop in income from public sector funders. Despite all the talk of cuts, for some reason it still came as a shock seeing it in black and white in the accounts: * Local authority income is down by £100 million * Other public sector income (e.g. from Scottish Government, UK Government, NHS, Non Departmental Public Bodies) is also down by £100 million That’s a whopping £200 million loss to the sector in cash terms at a time when costs are rising and demand has never been as high. You can really see the public sector’s contribution to the overall income nose-dive in the graph below: [![share of funding graph](https://storage.googleapis.com/scvo-cms/wp-content/uploads/2014/11/share-of-funding-graph.png)](https://storage.googleapis.com/scvo-cms/wp-content/uploads/2014/11/share-of-funding-graph.png) > **That’s a whopping £200 million loss to the sector in cash terms at a time when costs are rising and demand has never been as high.** On a more positive note, the accounts show the sector rising to the challenge. Organisations are revamping business plans, developing new delivery models, setting up funding sub-committees, sourcing new income streams, and investing in trading activities. This hard work has paid dividends for many: * Income from sales and trading activities is on the rise, increasing by around £100 million last year * More surprisingly perhaps, given the recent recession and cost of living challenges, we also saw donations from the general public increase by £100 million Both these areas - trading and donations - will be looked at in more detail in special briefings in the coming months. For now let’s celebrate the positive steps the sector has taken to mitigate some of these public sector cuts. But there are more cuts to come. Up until now most funders have tried hard to avoid actual cuts to budgets. Grants have been awarded, albeit without inflationary increases. That could be about to change for the worse. One of the problems with analysing charity accounts is that we’re always looking backwards. Most 2014 accounts haven’t yet been made publicly available. Christmas is still a while off but a crystal ball is top of my wish-list – we need even more up-to-date intelligence to help us meet the opportunities and challenges of 2015. --- ## About SCVO SCVO (Scottish Council for Voluntary Organisations) is the national membership organisation for Scotland's voluntary sector. Our role is to champion the role of voluntary organisations in Scotland and to support them to do work that has a positive impact. SCVO supports members and the wider voluntary sector with all aspects of setting up and running a voluntary organisation. SCVO represents the needs and concerns of the voluntary sector to the Scottish government in Holyrood and UK government and Westminster. Through our learning and events programme SCVO offers training and development opportunities to the sector. Members access an extensive membership benefits package including specialist, in-depth, 1-to-1 guidance from our Information Services team and from professional service partners. Access to exclusive membership networks (including comms, employers, governance and policy) supports members to grow their connections, stay up to date, exchange ideas and views with peers, and learn through tailored learning opportunities. SCVO members enjoy free access to Funding Scotland Premium to stay on top of funding opportunities to support their organisation’s financial resilience. Discounts and savings on SCVO products and services (including our HR service, managed IT support, payroll service and events and training) and partner offers provide members with support to allow them to focus on delivering their organisation’s goals. Further SCVO products and services include [extensive digital support](https://scvo.scot/support/digital), a climate action resource [Growing Climate Confidence](https://climateconfident.scot), a voluntary sector publication [Third Force News](https://tfn.scot) and a voluntary sector jobs and recruitment service [Goodmoves](https://goodmoves.org). For more information on SCVO membership, visit [SCVO membership](https://scvo.scot/membership)