SCVO response to Scottish Labour's Policy Forum

SCVO will be engaging with political parties ahead of the next Scottish Parliament election, scheduled to take place in May 2026. This is our response to the Scottish Labour Party's Scottish Policy Forum's initial consultation - part of its policy development process, ahead of the election. Keep up to date with election developments here.

Summary

SCVO welcomes the opportunity to respond to the Scottish Labour Party’s Scottish Policy Forum initial consultation.

The consultation document is comprehensive, covering a range of policy spheres. Voluntary organisations with expertise across these policy areas will be a valuable resource to Scottish Labour in further developing innovative solutions to the issues facing our communities and our economy. 

In this SCVO submission, however, we confine our comments to those areas of work that impact on all voluntary organisations, regardless of their size or area of work, namely the operating environment of voluntary organisations. These are broken down by three distinct areas: (1) Fair Funding and procurement; (2) the voluntary sector’s role in society; and (3) better regulation. The policy changes advocated in this submission have been informed by extensive engagement with the voluntary sector. If implemented, these would support a thriving voluntary sector, strong public services, and resilient communities.

In the coming months SCVO will be doing further work to develop our 2026 election-specific policy asks, in partnership with Scotland’s voluntary sector, which will be put to all political parties ahead of the election. Until that engagement work is done, the response to this initial consultation should be taken as partial, with a final, 2026 election-specific policy platform forthcoming.

In the months ahead, we also look forward to working further with Scottish Labour on plans for a New Deal for the voluntary sector, which we hope will form a key strand of the 2026 manifesto. 

Fair funding & procurement

Poor funding and poor procurement approaches risk our sector’s contribution and ability to deliver vital services for people and communities across Scotland.   

Our sector urgently needs Fair Funding and streamlined procurement processes to support the essential work of voluntary organisations and their staff and volunteers. These must be priorities for the Scottish Government following the 2026 election.

Fair Funding

For many years, SCVO has been engaging with voluntary organisations to understand the many challenges of income-generation, including public sector grants, and the solutions needed. The evidence we have collected, through bespoke engagement and backed up by the findings of the Scottish Third Sector Tracker, demonstrates the urgent need for a Fair Funding approach.

The Scottish Government’s commitments to “fairer funding” by 2026, while welcome, fall short of SCVO’s Fair Funding asks. We also remain concerned about the feasibility of these commitments being met by the end of the parliamentary term. Whoever forms the Scottish Government after the next Scottish Parliament election must go further, incorporating the following:

• Longer-term funding of three years or more
• Flexible, unrestricted core funding, which enables organisations to provide security, plan effectively, and fulfil good governance requirements
• Sustainable funding that includes inflation-based uplifts and reflects full costs, including core operating costs
• Funding that accommodates paying staff at least the Real Living Wage and paying uplifts for voluntary sector staff at least on par with those offered in the public sector
• Accessible, streamlined, proportionate, and consistent approaches to applications and reporting, timely processing and payments, and partnership between the grant-maker and grant-holder
• A comprehensive and proportionate approach to financial transparency around grant funding to support organisations and the public to understand spending decisions (see the “financial transparency” section, where this is elaborated upon)

For further information on the experiences of voluntary organisations in receipt of public funding, please see the below resources, which we hope will be useful to the Scottish Policy Forum:  

• Fair Funding for the Voluntary Sector: SCVO’s policy paper setting out Fair Funding, what it entails, and why it is urgently needed.
• Scottish Government funding of voluntary organisations: a case study of voluntary sector intermediaries: in 2021 SCVO sought insight from senior leaders of voluntary sector intermediaries (voluntary organisations whose members are primarily other voluntary sector organisations that share a common interest or purpose, also called umbrella bodies) on the specific funding challenges they face.
• Fair Funding & Fair Work: Written in partnership with the TSI Network, this policy paper sets out why Fair Funding is required to enable voluntary organisations to become Fair Work employers.
• Funding Instability Creates Fair Work and Retention Challenges: in 2023 the Glasgow Council for Voluntary Organisations commissioned research on fair work in the voluntary sector, finding that insufficient and unstable funding are key factors in employee insecurity.
• Social Justice and Social Security Committee, pre-budget scrutiny 2025-26: third-sector funding principles - the Social Justice and Social Security Committee chose to focus on third-sector funding as part of its pre-budget scrutiny. The final report includes a wealth of testimony from voluntary organisations and includes a range of recommendations that, if met, would deliver a voluntary sector funding landscape that is fair, flexible, sustainable and accessible. SCVO’s written evidence to the committee is also available here.

Procurement

We work with colleagues across the sector to call for more equitable, effective, and flexible procurement processes that encourage participation of voluntary organisations of all sizes through straight forward, streamlined approaches that support Fair Work and quality outcomes.

At present significant barriers exist for voluntary organisations to fully engage in Scotland’s procurement landscape. That is a missed opportunity for not just voluntary organisations, but people and communities across Scotland. The current and next Scottish Government, post-2026, must prioritise addressing this.  

There are a host of improvements that could be made to procurement and commissioning in Scotland – not just the Scottish Government, but all public bodies. These include:

• Adopting a partnership approach to commissioning, involving people, communities and providers in the co-design and re-design of services
• Ensuring that commissioning is not automatically equated with procurement as default, as is too often and unnecessarily the case
• Delivering on our Fair Funding calls for all contracts
• Introducing best-practice consistency across all public bodies, ensuring voluntary organisations do not have to contend with countless different approaches across different public bodies
• Reducing complexity, particularly for small, specialist organisations, as we know that complicated tenders make it difficult for such organisations to bid effectively, or engage at all
• Improving understanding of the voluntary sector within public sector bodies
• Supporting training and development in public procurement, for voluntary organisations and public bodies alike
• Exploring opportunities to encourage greater use of lotting (dividing a large contract into smaller, more manageable parts), which would benefit smaller, expert voluntary organisations in particular

For further information on voluntary sector experiences of procurement, please see the below resources, which we hope will be useful to the Scottish Policy Forum:  

• The Voluntary sector and Procurement – a summary of current voluntary sector experiences: this paper draws together experiences of voluntary organisations engaging in public sector contracts and the procurement process, the barriers they face, and the practices which support engagement.
• Economy and Fair Work Committee post-legislative scrutiny of the Procurement Reform (Scotland) Act 2014: in 2024 the Scottish Parliament’s Economy and Fair Work Committee carried out post-legislative scrutiny of the Procurement Reform (Scotland) Act 2014, hearing witness testimony from a range of economic actors – including voluntary organisations. The Committee concluded that the existing procurement landscape “is causing a barrier to those who may want to engage.” SCVO’s written evidence to the Committee is available here.  
• Unlocking procurement for social enterprises and voluntary organisations: a 2023 survey by SCVO and Social Enterprise Scotland found that lighter-touch approaches, guidance from the public sector, individualised 1-1 support, and case studies showcasing successful bids from similar organisation would be most likely to make respondents consider bidding.
• Research with Third Sector Organisations and New Businesses – Views and Experiences of Scottish Public Procurement, Scottish Government: research commissioned by the Scottish Government and published in 2022 found that “there remains significant barriers to the participation of third sector organisations” in Scottish public procurement.
• Collaborative Commissioning and Commissioning for Outcomes: the Coalition of Care and Support Providers in Scotland (CCPS) has carried out work on the need to shift from competitive, price-driven procurement to collaborative commissioning, where service providers and commissioners work together as equals to plan, design and provide services.

Transparent funding

Funding Transparency is essential to understand how funding flows to the voluntary sector and to support voluntary organisations and others to assess the impact of spending decisions – on both the sector and the people and communities our sector works with.

SCVO has long called for the Scottish Government to make improvements to funding data to support voluntary organisations and others to understand Scottish Government spending. Transparent funding is also essential to monitor progress towards Fair Funding.

We call on the current, and next, Scottish Government to put in place a range of actions to improve financial transparency.

• Adopt, and publish awards to, the 360Giving Data Standard, including basic identifier core fields such as recipient name, organisation, and charity number
• Include all spending in the Scottish Government’s monthly reports and improve categories to ensure data is useful and accessible
• Collect funding information across all government departments and produce a breakdown of Scottish Government funding to the voluntary, public, and private sectors by department and budget line
• Publish the Scottish Government’s total direct investment in voluntary organisations annually from grants and contracts, with detail on the proportion that deliver on our Fair Funding principles

For further information on the funding transparency, please see the below resources, which we hope will be useful to the Scottish Policy Forum:  

• 360Giving data standard: the 360Giving Data Standard is a uniform and consistent way for funders to share open data about their grants, making it easier to find, understand, and compare funding information.
• Scottish Exchequer: fiscal transparency discovery report – the Scottish Government’s discovery report outlines that financial outputs are currently inaccessible and sets out the steps that could be taken to make improvements.

The Voluntary Sector's role in society

The voluntary sector is best known for the contribution it makes to the communities it serves. Indeed, the voluntary sector is the glue that holds communities together. We bring innovative solutions, uphold human rights, support the most vulnerable, engage in prevention, nurture creativity, and press for system change

The voluntary sector’s contribution to our economy

The Scottish Policy Forum’s initial consultation document identifies a thriving, dynamic economy that works for everyone. Crucial to delivering this is recognising the voluntary sector’s role in our economy.

With over 46,500 organisations across Scotland, the voluntary sector is wide-reaching and covers every area of society. This includes 23,600 Scottish charities and over 1,000 UK-wide charities operating in Scotland. Small charities (under £100,000 and new charities) make up 80% of the charity sector, but account for only 4% of its annual turnover – they have a large social impact but only a small financial footprint. Large charities with incomes over £1m make up only 3.5% of the sector but these 947 charities account for 80% of the sector's annual income. Over half of all voluntary organisations are involved in Social Care, Culture and Sport, or Community Development activities.

In 2023, the sector had a turnover of £9.7bn and the Scottish voluntary sector spend was £9.3bn. In the same year, the voluntary sector in Scotland employed just over 136,000+ people, making up 5% of the Scottish workforce. 34% of voluntary organisations are based in rural or remote areas, with more organisations per head of population than in urban areas.

Read more about the sector’s economic contribution here.

Despite these huge contributions, the voluntary sector continues to be poorly understood by decision-makers. We need to be considered equally alongside the private and public sectors as an economic actor. That calls for a new relationship between the voluntary sector and the Scottish Government, its agencies, and other public bodies.

For more information on the economic contribution of our sector, the following resources will be useful to the Scottish Policy forum.

• The economic contribution of the third sector in Scotland: in 2023, the Royal Society of Edinburgh carried out research into the substantial contribution the voluntary sector makes to Scotland’s economy.
• Measuring the voluntary sector research project, Fraser of Allander Institute: the Fraser of Allander Institute has established a research project, focused on economic data on the voluntary sector that is reflected in national accounts.
• State of the sector – size and shape: SCVO publishes data about the organisations and people that make up our essential sector.
• What we know about the third sector’s contribution to Scotland’s economy: in 2024 the Scottish Parliament Information Centre (SPICe) published a blog on the economic contribution of the sector.

Public Service Reform

The current Scottish Government has embarked on a programme of public service reform, the timelines of which extend beyond the next election. As such, it will be crucial that the next Scottish Government to make this process of reform a success, fully involving the voluntary sector.

Voluntary organisations are crucial to, and a partner in, the delivery of public services across Scotland. In its response to the Christie Commission on the future delivery of public services, in 2011, the Scottish Government stated that our sector “has a crucial role to play in delivery, because of its specialist expertise, ability to engage with vulnerable an flexible and innovative approach”.

Yet, well over a decade after the publication of the Christie Commission, voluntary organisations cannot continue be viewed as “the poor relation of mainstream public services” – a sentiment identified by the Auditor General for Scotland. Voluntary organisations, as well as people and communities in Scotland, deserve better.

The experience of the Covid-19 pandemic showed what was possible. The immediate response was shaped by powerful collaborations between communities, the voluntary sector and national and local government. Barriers to effective partnership-working across sectors were overcome in the short-term to the benefit of our communities, demonstrating what can be achieved on a large scale when we are empowered to work together towards a common goal. As the pandemic receded, so too has innovative practice on the part of the Scottish Government and other public bodies, with a return to business-as-usual. Too often, the system has returned to hierarchical, transactional relationships rather than a focus on outcomes and joint endeavour.

Any serious programme of public service reform must address this comprehensively, treating the voluntary sector as an equal partner. Our sector must be meaningfully involved in this process of reform and, in future, the design of the services they deliver, with a clear, shared focus on outcomes. This will be expanded upon in the next section – on partnership working. Our sector must also be resourced in line with Fair Funding principles, as set out above.

We hope that the following resources are useful to the Scottish Policy Forum in understanding the essential contribution the voluntary sector makes in delivering public services here in Scotland.

• Finance and Public Administration’s pre-budget scrutiny – Manage Scotland’s public finances: a strategic approach: the Scottish Parliament’s Finance and Public Administration Committee focused their pre-budget scrutiny on placing Scotland’s public finances on a sustainable footing, including reform of public services. The final report noted witness testimony of the pressing need to treat the voluntary sector as a partnership of equals in reforming Scotland’s public services.
• Public Service Reform in Scotland: how do we turn rhetoric into reality? - in 2024 the Royal Society of Edinburgh (RSE), in partnership with Audit Scotland, published a report with a range of recommendations for making public service reform a success, which included “a step change in levels of public and third sector engagement in the planning and delivery of public service reform”.

Meaningful partnership working

Building on the previous section on public service reform, a successful partnership between the voluntary and public sectors is crucial to delivering the best outcomes for people and communities across Scotland.

For the voluntary sector in Scotland at large, there is no singular experience in terms of engagement with public bodies. Different public bodies have different attitudes to engaging with voluntary organisations. Even within public bodies, departmental approaches will vary drastically. Our engagement with the sector has found that, where engagement is poor, it is driven by a range of barriers.

In recent years SCVO has worked with its members, as well as partners across local and national governments, to gather information and data on collaboration and partnership with the public sector in Scotland. We have found that, to support effective partnerships between the voluntary sector and public sector, the following are crucial: 

• Mutual trust and formalised relationships: mutual trust between the sectors is essential to overcoming barriers to collaboration. This means putting in place robust, formalised frameworks that future-proof, and make consistent, working relationships across all government departments and agencies. For example, we would draw Scottish Labour’s attention to the Third Sector Scheme in Wales.
• Parity of esteem: replacing the current imbalance of power between the public and voluntary sectors with a partnership of equals is crucial.
• Understanding of the role of the voluntary sector: proper understanding by public bodies (which is all too often lacking) of the role, remit, and the challenges faced by voluntary organisations, particularly in relation to funding, is also essential.  
• Clear, consistent communication: where a partnership has been entered between voluntary organisations and public bodies, joint agreement is vital – on the scope of collaboration and outcomes, the use of terms of reference, and honest conversations, especially when things do not go to plan. 
• Accountability and effective evaluation: where a partnership has been entered, accountability mechanisms ensure voluntary organisations and public bodies can hold one another to account and fulfil their obligations.
• Fair funding: as already outlined, SCVO calls on the Scottish Government, its agencies, and public bodies to adopt and apply our Fair Funding policy asks to all grants and contracts, which are crucial to effective collaboration. These include longer-term funding models, processes that are accessible and consistent, more unrestricted funding, and inflationary uplifts.
• Procurement processes that are inclusive of the voluntary sector: as already outlined, more equitable, effective, and flexible procurement processes that encourage the participation of voluntary organisations of all sizes are critical. This includes straightforward, streamlined approaches that support Fair Work and prioritise quality outcomes over cost alone. This will be elaborated on further below.
• Capacity building: also necessary is theprovision of support and resources to empower voluntary organisations enhance their capabilities to meaningfully engage with the Scottish Government and other public bodies.

For further information on the experiences of voluntary organisations in collaborating with public bodies, please see the below resources, which we hope will be useful to the Scottish Policy Forum:  

• SCVO response to UK government’s Civil Society Covenant framework engagement: in 2024 SCVO responded to the UK Government’s initial consultation on the Civil Society Covenant framework, which includes our reflections on partnership models.
• Organisational profiles: funding and public sector relationships:  in 2021 SCVO commissioned an independent consultant, Arrivo Consulting, to conduct depth interviews with several of our members. The aim of the project was to deepen our understanding of the key challenges faced by voluntary sector organisations, specifically in relation to funding and relationships with the public sector.  
• Supporting collaboration between the third and public sectors: evidence review: the research review conducted in 2022 as part of the Strengthening Collaboration work between Scottish Government, SCVO, COSLA and the TSI Network found that issues of trust, power and structure are as prevalent as ever. 
• Taking an outcomes-based approach to evaluating your partnership: in terms of effective evaluation of partnerships, we commend the work of Evaluation Support Scotland, and the assets they have produced for voluntary organisations to take an outcomes-based approach to evaluating partnership.

Better regulation

We work across the voluntary sector and beyond to ensure that regulation-related decisions are made by taking the sector's circumstances, views and concerns into account.

Scottish Government review of regulation

We want to see a regulatory landscape that reflects the reality of what it is to be a charity in the modern day.

The Scottish Government has committed to – and has now consulted on – a wider review of charity regulation. We await the Scottish Government’s analysis of the consultation, as well as the next steps it intends to take, and associated timescales.

Should the Scottish Government’s commitments fall short of our expectations, or stray into the next parliamentary term, SCVO will continue to press for a comprehensive, holistic, independent review of charity regulation, with an extensive scope informed by voluntary organisations. For more information on our position on the review of charity regulation, please see our response to the Scottish Government’s consultation.