Canaries in the coal mine?  What wave 9 of the Scottish Third Sector Tracker tells us, and where it has me asking questions

I love the Scottish Third Sector Tracker.  Having robust data to evidence the issues the sector is facing is absolutely key to shaping our influencing work at SCVO, and adds vital weight to our asks of decision makers.

From the most recent (wave 9) data, we know that four most prevalent issues the sector was grappling with over Summer/Autumn 2024 were

• Volunteer shortages: we know from the Scottish Household Survey that volunteer numbers have dropped dramatically from over 1million to 800,000, and the Tracker data shows the impact of that on voluntary organisations, with 62% of respondents reporting moderate to significant challenge in recruiting volunteers.
• Difficulty fundraising: having heard from a growing number of independent funders over recent months who are pausing awards or tightening criteria, it is perhaps not surprising that difficulty fundraising featured high on the list.  Add in the stats on the number of organisations that saw a decrease or withdrawal of funding during this time (8% of respondents mentioned Scottish Government cuts, 16% local authorities and 11% other funders) and the significance of not being able to secure additional funds becomes all the starker.
• Inflation and rising costs: costs have been rising for so long now that it’s almost become background noise.  But with 60% of respondents saying that rising costs are impacting on service delivery, we can’t afford to ignore it.
• Financial or cash flow restraints: with costs rising and securing additional funding becoming more difficult, it stands to reason that financial or cash flow restraints are a significant source of concern for respondents.  Digging a little deeper into the issue, the fact that 51% of respondents say their reserves are very important or essential to their short to medium term sustainability is deeply concerning.  One of the most striking statistics to me from this wave is that 58% of all of the respondents who reported increasing staff costs had used their reserves to fund this – it’s admirable, of course, to prioritise staff salaries, but not financially sustainable to use reserves to cover ongoing liabilities.

So far (not) so good, right?  The data is painting the picture we expect, based on the conversations we’re all having.

Many of those conversations have felt pretty gloomy in recent months, but the Tracker also brings a reminder of the sector’s resilience.  86% of respondents say they have capacity to meet most or all of the demand for their services, and 89% are confident that they’ll still be operating in 12 months’ time.

Although I admire and applaud our sector’s characteristic resilience, I have to admit that those figures were higher than I’d have expected, and had me scratching my head a little.  I have some questions (but no answers yet) about how we might unpick them.  For example, which parts of the sector/types of organisations are faring better/worse than others; what’s the relationship between organisations remaining in existence but services closing; and at what (human) cost are organisations pulling out all the stops to stay afloat?  I have my own assumptions that lie behind those questions, but I think they are worth further consideration to make sure we really understand what the data is telling us.

And while the numbers of organisations considering themselves to be at risk might not be as high as expected, there are signs in this wave that the impact of the slow erosion of standstill budgets might be starting to bite: 11% of organisations had made one or more members of staff redundant this wave, up from 5% in winter 2023, and 11% had stopped operating one or more strands of work.  We will see how the land lies when wave 10 goes into the field next month, but I do suspect these may be the canaries in the coal mine.
Read the wave 9 report here