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 Caledonian Exchange, 19A Canning Street, Edinburgh EH3 8EG.
The Scottish Third Sector Tracker Pulse 1 (Spring 2026)
Pulse 1 consisted of 12 organisations from the Scottish Third Sector Tracker divided in two focus groups. Group 1’s themes were funding and relationships with funders, and Group 2’s themes were funding, the Scottish election and changing socio-political environment.
Summary for both reports
Across both reports emerges a clear picture of a sector under growing and ongoing pressure. Funding challenges, such as short‑term and competitive funding, are made worse by a difficult wider environment.
The first report shows that the funding system is unstable, competitive, and overly bureaucratic, and does not always match what communities need. This makes it harder for organisations to plan ahead and remain sustainable. The second report shows how these challenges are made worse by uncertainty around elections, a more difficult social and political climate, and rising demand for services.
Together, the findings show a cycle where short‑term funding and weak relationships with public affect organisations that play a vital frontline role.
Participants across both sets of focus groups consistently called for change that includes:
- Long‑term, core funding that organisations can rely on.
- More trust‑based funding approaches.
- Better communication and transparency from funders.
- Genuinely collaborative partnerships that recognise the sector’s expertise and essential role in supporting communities.
Click on the buttons below for the full reports:
Group 1: funding and relationships with funders
Six member organisations of the Scottish Third Sector Tracker who had reported funding delays or reductions in the latest wave were invited to participate in one of two 45-minutes online focus groups.
Overall, participants expressed deep frustration with the funding landscape and exhaustion. Despite this, their commitment to communities remains a priority. Their collective message to funders is consistent and direct: trust us, respect us, resource our core work, and involve us in decisions that shape the communities we serve.
Seven key themes emerged from the focus groups' conversations:
Funding scarcity, instability and competition
A strong and repeated theme is that funding is scarce, unpredictable, and increasingly competitive. A “perfect storm” of shrinking funding, increased need, and no route to stability. In general, participants were more complementary of independent funders and most of the following is directed at statutory funders. Participants described:
- Oversubscribed funds with narrow or “whacky” criteria that exclude otherwise suitable organisations.
- Difficulty accessing grants post‑pandemic, with some organisations unable to secure any grant funding in the last five years.
- Increased reliance on multiple small funders: “six funders for one project means six reports.”
- Organisations having to use their own reserves to keep services running.
- Staff leaving due to uncertainty, harming culture and morale.
- Funding delays from Scottish Government and local authorities causing financial crisis points.
Heavy administrative and reporting requirements
Participants state that bureaucracy takes resources away from frontline work and is not proportionate to funding levels, particularly an issue reported with statuary funding.
- Groups expressed frustration at the time-consuming and inconsistent reporting requirements:
- Small grants (e.g., £10k) often require quarterly reporting while large funders may ask for much less.
- Tender applications are “soul-destroying”, especially for small organisations with little admin capacity.
- Disproportionate monitoring that is not reflective of impact, described as reporting on “what colour of socks everyone’s wearing.”
Unequal and often poor relationships with funders
Participants believe that funders expect professionalism and accountability from the sector but do not model these behaviours. Relationships with funders—particularly statutory ones—are frequently seen as:
- Unequal, not collaborative, and lacking in respect.
- Marked by lack of transparency, arbitrary decisions, and poor communication.
- Sometimes damaging - participants feel dismissed, undervalued, or misunderstood by public sector partners.
- Fear of being fully transparent because information may be taken out of context and funding reduced.
- However, where relationships are based on trust and long-term partnerships, experiences improve significantly.
Need for long-term, core, flexible funding
This was perhaps the most dominant shared demand. In short, core, multi‑year, unrestricted funding is crucial for stability and impact. Respondents noted the following:
- Reliance on short-term (often annual) funding makes planning impossible.
- Need for 3–5-year funding to sustain staff and operations.
- Project‑based funding is seen as driving “reinventing the wheel” and forcing organisations into unrealistic packaging of core costs.
- Organisations stressed the importance of funding for the everyday, “boring” essentials—lights, salaries, rent—not just “new and shiny” projects.
Misalignment between funders’ priorities and community needs
Funders frequently misunderstand the context, needs, and expertise of third sector organisations. Some of the issues highlighted by respondents included:
- Local issues (e.g., poverty in Govan) overlooked in favour of ringfenced priorities such as cycle lanes.
- Funders’ priorities are shaped by politics, ideology, or internal agendas, not community evidence.
- Specialist/niche services struggle because funders believe certain work should fall to other sectors (e.g., health).
Increasingly competitive, ‘marketised’ commissioning
Participants state that a ‘marketised’ model undermines community organisations and risks major loss of local infrastructure. There is deep concern about a shift toward:
- Full competitive procurement, even where previous partnership models were effective.
- Lowest‑cost contracting with no weighting for community history, evidence of impact, or local knowledge.
- Fear that national/multinational organisations will displace small, local ones.
- Funders driving decisions based on budget cuts, not social value.
Emotional toll and burnout
The financial uncertainty and administrative burden cause:
- Stress, exhaustion, and demoralisation.
- Leaders feeling responsible for protecting staff at great personal cost.
- Harm to culture, trust, and long-term sustainability.
Calls for respect, partnership, and practical change
Organisations want relational—not transactional—funding, and when asked what message participants would send to funders, key asks included:
- Treat us with dignity and respect—as equal partners.
- Make processes easier, not harder.
- Listen to communities and frontline expertise.
- Be transparent and accountable in decision-making.
- Trust organisations, especially those with long track records.
- Provide fair work conditions by ensuring funding is timely and stable.
Conclusions
These focus groups highlight a Scottish third sector under significant and growing strain. Participants described a funding environment marked by instability, short‑termism, and heavy bureaucracy, which is undermining organisational sustainability at the same time as demand for services continues to rise. Funding delays, competitive commissioning, and disproportionate reporting requirements are depleting capacity, damaging staff wellbeing, and limiting organisations’ ability to plan or deliver consistently.
Relationships with funders—particularly statutory bodies—were often experienced as unequal and opaque, with trust‑based partnerships the exception rather than the norm. There was strong concern that increasingly ‘marketised’ funding and procurement models risk displacing local, community‑rooted organisations and weakening essential social services.
Across discussions, the need for long‑term, core, and flexible funding emerged as the sector’s most urgent priority, alongside clearer communication, simpler processes, and decision‑making that better reflects community need and third sector expertise. While commitment to communities remains strong, participants warned that without meaningful changes to funding models and relationships, the resilience of both organisations and the communities they support will continue to be at risk.
Group 2: funding, the Scottish election and changing socio-political environmentand relationships with funders
Six member organisations of the Scottish Third Sector Tracker who had reported funding delays or reductions in the latest wave were invited to participate in one of two 45-minutes online focus groups.
Overall, participants described severe and growing funding insecurity, with election‑related delays, reduced or withdrawn long‑term funding, and a lack of clarity from government and funders, which makes planning and staff retention difficult. Demand for services has risen sharply—particularly around mental health, poverty, trauma, and youth violence—while organisations face workforce exhaustion and are increasingly forced to turn people away.
Seven key themes emerged from the focus groups' conversations:
Overarching mood
Across both sessions, the tone was anxious, frustrated, and fatigued, driven largely by:
- Funding uncertainty
- Election-related delays
- Increased demand for services
- Deteriorating social conditions
- Poor experiences with local authorities and procurement processes
Participants described organisational and workforce burnout, rising community need, and a political/operational environment that feels increasingly unstable.
Holyrood elections: concerns and expectations
Shared themes:
- High anxiety about funding continuity. Participants feel that elections cause delays in decisions, leading some organisations to pause planning or wind down activities.
- Fear of political change. Participants raised concerns about the growing prominence of political parties and movements that they perceive as hostile towards marginalised communities. They highlighted the potential impact this could have on those communities and the organisations that represent and support them.
- Lack of clarity and communication from government about funding timelines and expectations.
- Need for multi-year funding to allow for stability, staff retention, and forward planning.
- Continuity regarded as positive, instability as harmful.
Funding experiences and organisational impact
Participants in both groups described statutory funding in the following terms:
- Funding decisions delayed for many months or paused due to the election.
- Cuts to longstanding funding streams (even after 10 years in some cases).
- A sense of being taken for granted (“We shouldn’t have to put our team through this”).
- Losing staff or reducing hours due to uncertainty.
- Being unable to plan beyond a few months.
Impact:
- Increased unpaid labour and volunteer reliance.
- Inability to meet community need (some turning away referrals).
- Growing financial precarity: “Hanging on—are we going to get funding, can we continue?”
- Organisations carrying more risk as core funding falls while demand increases.
Strategies to mitigate impacts
- Applying to more independent funders.
- Avoiding local authority procurement due to excessive workload and low returns.
- Building informal partnerships with other small third sector organisations.
Local authorities and procurement
Core problems identified included:
- Procurement widely seen as unfit for purpose.
- Bureaucratic, opaque, and favouring larger organisations.
- Allows “cowboy contractors” to undercut quality and subcontract cheaply.
- Local authorities seen as inconsistent or poorly informed.
- Some councillors described as not understanding what they are funding.
- Uneven distribution of funds, especially in areas with mixed deprivation profiles.
- Perceived power imbalance when partnerships are imposed or when the LA is both funder and gatekeeper.
Suggested Improvements:
- Participants suggested some improvements, including:
- More relational, trust‑based funding, less paperwork.
- Focus on outcomes rather than technical requirements.
- Remove (“Get rid of it!”) or radically reform procurement.
- Ensure third sector organisations can apply directly, rather than everything being routed through councils.
Partnership working
Participants thought that:
- Partnerships within the third sector seen as respectful, collaborative, and effective.
- Ad hoc collaborations with community groups, sports clubs, patient support groups are also fruitful.
- Partnerships with statutory services (NHS, councils) are seen as generally poor.
Participants report:
- NHS making promises on their behalf without consultation.
- Power imbalance where the funder dominates.
- Loss of opportunities to feed in lived experience.
There is strong desire to restore meaningful strategic partnership working, with smaller organisations emphasising that their insights are often missing from decision‑making.
Sociopolitical landscape
Participants report worsening conditions, including:
- Rising racism, misogyny, transphobia, and online‑influenced youth behaviour (“manosphere”).
- More community tensions and visible hardship.
- A “bleak” landscape with housing emergencies and lack of statutory services.
- Schools under severe strain, with teachers seeking trauma support.
Impact on Organisations:
- Surge in mental health crises and complex needs.
- Dramatic increases in referrals (up 55% in one case).
- Feeling that preventive work is impossible due to lack of capacity.
- Increased emotional burden: “We are traumatised ourselves after the pandemic.”
Partnership working
Participants thought that:
- Partnerships within the third sector seen as respectful, collaborative, and effective.
- Ad hoc collaborations with community groups, sports clubs, patient support groups are also fruitful.
- Partnerships with statutory services (NHS, councils) are seen as generally poor.
Participants report:
- NHS making promises on their behalf without consultation.
- Power imbalance where the funder dominates.
- Loss of opportunities to feed in lived experience.
There is strong desire to restore meaningful strategic partnership working, with smaller organisations emphasising that their insights are often missing from decision‑making.
Key messages participants would send to funders
Across both groups, messages included:
- Communicate clearly and early.
- Stop delaying decisions—our services depend on certainty.
- Fund core costs and multi‑year stability.
- Focus on relationships and outcomes, not bureaucracy.
- Take lived experience and local knowledge seriously.
- Recognise the vital role and real costs of third sector delivery.
Across both focus groups, participants highlighted a sector under enormous strain. Funding insecurity—exacerbated by delays related to elections—sits at the core of nearly all challenges. Organisations are facing increased demand, more complex needs, and an exhausted workforce, while also navigating:
- Inconsistent support from government and local authorities,
- An unworkable procurement system,
- Rising social tensions, and
- Deteriorating partnership structures.
Conclusions
This paper reports findings from two focus groups with Scottish third sector organisations held in March 2026, exploring experiences of funding, the forthcoming Holyrood election, and the wider socio‑political environment. Participants described severe and growing funding insecurity, with election‑related delays, reduced or withdrawn long‑term funding, and a lack of clarity from government and funders making forward planning and staff retention increasingly difficult. Demand for services has risen sharply—particularly around mental health, poverty, trauma, and youth violence—while organisations face workforce exhaustion and are increasingly forced to turn people away.
Relationships with local authorities and procurement systems were widely criticised as bureaucratic, opaque, and biased towards larger providers, with a strong call for multi‑year, core, and trust‑based funding focused on outcomes rather than processes. While partnership working within the third sector was viewed positively, engagement with statutory bodies was often described as imbalanced and performative. Overall, participants thought the sector being undermined by unstable funding, poor communication, and unrealistic expectations. Participants called for greater stability, clearer communication, fairer funding models, and genuine collaboration from government and funders.