The Scottish third sector tracker - wave 11 report (Autumn 2025)
The eleventh wave of the Scottish third sector tracker reveals a sector that continues to show resilience and adaptability, but one that is increasingly stretched across multiple fronts. Service delivery remains broadly stable, yet over half of organisations report that limitations in resources, skills, or capacity are hindering their ability to meet demand. Organisations consistently emphasise that secure, multi‑year, inflation‑linked funding — particularly for core costs and staff salaries — is the single most important factor that would enable them to do more. Alongside this, respondents highlight the need for additional staff and volunteer capacity, specialist skills (especially digital, fundraising, governance and mental health), and improved infrastructure and partnership working.
Financial pressures have intensified. The increase in Employer National Insurance Contributions (NICs) has had a moderate–significant negative impact on the finances of 43% of organisations, pushing many into deficit, accelerating the depletion of reserves, and forcing cuts to staffing and services. The rise in ENICs has also contributed to recruitment freezes, redundancies, and an inability to offer competitive pay — all of which feed into wider workforce challenges.
Staff recruitment and retention remain difficult for many organisations. While recruitment pressures have eased slightly since Autumn 2024, 41% still report moderate–significant challenges, driven by burnout, uncompetitive salaries, and a shortage of suitably skilled candidates. Retention challenges have increased, with organisations citing limited progression opportunities, salary constraints, and the cumulative impact of uncertainty and rising workloads.
Volunteer recruitment and retention challenges remain acute. Sixty‑two percent report moderate–significant difficulty recruiting volunteers, with fewer people coming forward, reduced availability, and a lack of staff capacity to support new volunteers. Retention is also becoming harder, with rising volunteer fatigue and deteriorating health and wellbeing among some volunteer groups. Trustees, administrative roles, and communications/marketing positions are the hardest to fill.
Funding delays have emerged as a major challenge. Over a quarter of organisations now cite delays or reductions in funding as a top challenge. Delays create immediate cash‑flow pressures, force organisations to draw on reserves, and lead to postponed or cancelled services. Critically, they also have a profound impact on staff morale, wellbeing, and retention. Uncertainty around contract renewals, the risk of redundancy, and the inability to plan long‑term contribute to anxiety, frustration, and the loss of experienced staff.
Overall, the findings show a sector committed to delivering for communities but increasingly constrained by financial instability, workforce shortages, and systemic uncertainty. Without structural changes to funding models, investment in workforce capacity, and improved partnership working, organisations risk being unable to meet rising demand or sustain essential services.
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