The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB.
SCVO Briefing: Scottish Budget 2024/2025 Stage 1 Debate
Summary
SCVO welcomed the Scottish Government commitment to deliver ‘Fairer Funding’ by 2026 in the Policy Prospectus, New leadership - A fresh start, but there was little action on that in the Budget.
Our sector continues to face unprecedented pressures. Delivering Fair Funding is essential for a sustainable voluntary sector which can survive the running costs crisis, support people through the cost-of-living crisis, offer Fair Work, and deliver quality outcomes.
The problem
The running costs and cost-of-living crises continue to put pressure on voluntary organisations – with demand for services increasing, costs rising, and financial uncertainty ongoing. In April, the Third Sector Tracker found:
- Demand for support had increased for 63% of voluntary organisations.
- 92% of organisations working directly with the public highlighted worsening emerging needs.
- 45% of organisations reported cost increases.
- 71% of organisations reported that financial issues were amongst their top three challenges.
By November 2023 the Third Sector Tracker found:
- Almost 6 in 10 (57%) organisations believed that rising costs had affected the ability to deliver core services or activities since May 2023.
- 44% of organisations reported cost increases.
- 57% of organisations believed that the third sector would be in a less positive place in 12 months’ time.
The November data from the Third Sector Tracker is still being analysed and includes a mix of new and continuing questions. The initial results show enduring pressure, our sector and the people and communities we work with continue to face unprecedented challenges.
As local councils fund far more voluntary organisations than Scottish government, the fallout from the local government settlement will have a significant impact on voluntary organisations, further exacerbating these pressures. Similarly, any reduction in local services will result in further increased demand for some voluntary organisations.
The solution
To make progress the Scottish Government should align ‘Fairer Funding’ with SCVO’s definition of Fair Funding, developed through engagement with the sector. Many of SCVO’s Fair Funding principles have also been endorsed in the Social Justice and Social Security Committee’s Pre-Budget Scrutiny report 2024-25.
In the 2024-25 Budget, the Scottish Government can also take meaningful first steps to deliver Fair Funding.
- Pass on Barnett consequentials fromtheUK Government’s £100m support package for voluntary organisations in England, announced in the 2023 Spring Statement. This investment should include a mix of short and long-term support enabling voluntary organisations to both weather the current crisis and adopt energy efficiency measures.
- Implement multi-year funding of three years or more across several Scottish Government funds in the 2024/25 funding round and develop a multi-year funding model as standard by 2026.
- Resource Living Wage uplifts in grants and contracts as part of expanding the Scottish Government’s Fair Work First criteria and delivering on becoming a Fair Work Nation by 2025.
- Commit to annual inflation-based uplifts for public grant funding and contracts regardless of the type of delivery partner, recognising the impact of rising inflation on and the need for pay uplifts for voluntary sector staff.
- Ensure transparent monitoring and reporting on public sector funding of the voluntary sector. There is no accurate picture of how funding flows to voluntary organisations and from which budget lines. To ensure the sector, scrutiny bodies, MSPs and Ministers can understand the impacts of commitments on voluntary organisations, transparent monitoring – in the Budget and beyond - is crucial.
Without these commitments, which the Scottish Budget does not currently include, the Scottish Government’s commitment to achieve “Fairer Funding” by 2026 becomes increasingly unlikely. To make progress the Scottish Government must develop timelines and goals and monitor progress.
Testimonials
“It's incredibly worrying, we just received our gas and electricity quotes for the next two years, and they are going up 576% and 205%. No other options are available to us”.
Medium voluntary sector organisation
“Like all voluntary organisations, we have very short-term funding, so while our contracts are on paper secure, everyone knows their job is only as secure as the current piece of short-term funding”.
Registered charity
“Everything we do is dependent on funding, and amounts are often not confirmed until very late in the financial year”.
Registered charity
“Due to annual funding from Scottish Government, which doesn’t cover our core costs, recruitment is often on short-term contracts or is subject to ongoing funding, of which there is no guarantee”.
Voluntary sector intermediary
Conclusion
Scotland’s voluntary sector is an employer, a partner, and a social and economic actor, employing 5% of Scotland’s workforce and working with 1.2 million volunteers.
The 2024/2025 Scottish Budget is an opportunity to recognise and support Scotland’s voluntary organisations by making meaningful first steps towards a Fair Funding system that is long-term, flexible, sustainable, and accessible. There is little evidence of progress within this Budget.
About the Voluntary sector in Scotland
The voluntary sector in Scotland is a major employer, a partner in delivering public services, and a vital contributor to society and the economy.
The Scottish voluntary sector:
- Includes over 46,500 voluntary organisations.
- Employs over 135,000 paid staff- 5% of Scotland’s workforce.
- Works with over 1.2 million volunteers.
- Had an annual turnover of £8.5 Billion in 2021.
The sector provides a diverse range of essential services and support, including; childcare, social care, emergency support, support into employment, housing, and towards digital inclusion, and a huge range of advice services. The sector also undertakes vital medical and environmental research, runs most of Scotland’s theatres, museums, galleries, and sports clubs, and campaigns for change on a huge variety of issues.
To find out more about the voluntary organisations in your constituency visit the Geography section (pages 7-11) of SCVO’s State of the Sector statistics.
