SCVO briefing to Scottish Parliament: Programme for Government 2023/24

The Problem

Scotland's voluntary sector is an employer, a partner, and a vital social and economic actor which employs over 135,000 paid staff and works with more than 1.2 million volunteers to support people and communities across Scotland.

The Scottish Government’s policy prospectus, New leadership - A fresh start, committed to delivering Fairer Funding for the sector by 2026, including exploring options to implement multi-year funding deals. Beyond multi-year funding, however, what Fairer Funding means in practice is unclear.

The problems within the sector’s funding environment are multi-faceted and entrenched after years of poor funding practices that have left organisations vulnerable to shocks, impacting the sustainability of organisations and the services and support they offer.

The need for a clear plan to achieve Fairer Funding by 2026 is becoming increasingly urgent:

• The pandemic, inflation, and the resulting cost-of-living and running cost crises have strained sector finances and increased demand for the support and services of many organisations.
• The cost-of-living crisis brings many challenges. These challenges have the biggest impact on the most vulnerable in society, many of whom rely on voluntary sector services.
• 92% of respondents working directly with the public highlighted worsening emerging needs in the Third Sector Tracker.
• 1 in 10 voluntary organisations are going into another unpredictable winter uncertain whether they will still be operating in 12 months.
• The Scottish Government’s approach to managing available funding continues to exacerbate an already tough funding environment.
• Rather than reporting progress, voluntary organisations continue to experience delayed payments –even more so than in previous years - leading to significant strain on their operations, including a risk of redundancies, difficulty recruiting and retaining staff and negative impacts on their ability to deliver support and services.
• Many voluntary organisations have described this year as the “worst ever” for organisations funded by the Scottish Government.
• At the First Minister’s anti-poverty summit, attendees reiterated many of SCVO’s calls for Fair Funding, describing short-term funding as a crisis that undermines resilience.
• As a result of these pressures, this year the Poverty Alliance’s Challenge Poverty Week policy asks echo SCVO’s calls for Fair Funding to support organisations that are often at the frontline of efforts to challenge poverty in Scotland.

Testimonials

“Planning in the current climate is extremely difficult - funding agreements which cover 3 - 5 years would enable us to plan staffing and resources to meet needs.”     

Registered Charity 

“Funding issues ensure that no one has security of employment. Sustainability for voluntary sector organisations is fundamental to progressing positive change in our communities and in employment security”.                                  

Social Enterprise

“Everything we do is dependent on funding, and amounts are often not confirmed until very late in the financial year”.                                                    

 Registered charity

The Solution

The Programme for Government is an opportunity to support voluntary organisations their staff, volunteers, and the communities they work with by taking urgent action to progress Fairer Funding.

SCVO has worked with the sector for many years on Fair Funding, a long-term, flexible, sustainable, and accessible approach to funding. To ensure progress is made in 2023/24 the Programme for Government should:

• Align the Scottish Government’s Fairer Funding principles with SCVO’s definition of Fair Funding – developed through significant research and engagement with the voluntary sector.
• Ahead of the 2024/25 Scottish Budget and annual funding round, review and significantly improve the Scottish Government’s grant-making systems to address poor fund management approaches and create a framework for regular re-evaluation to ensure timely decision-making, communications, and payments.
• Introduce multi-year funding across a number of Scottish Government funds and report on the impact of this change to develop a multi-year funding model as standard by 2026.
• Establish transparent delivery goals, timelines, and accountability mechanisms – such as reporting and stakeholder groups - to ensure progress on Fairer Funding can be scrutinised by the voluntary sector and Parliament.

Conclusion

Our sector is a vital employer, partner, and social and economic actor, central to the fairer and more equal Scotland the Scottish Government aspires to. The Programme for Government is an opportunity for the new First Minister and the Cabinet team to recognise and support the many vital contributions of voluntary organisations, their staff, and their volunteers across Scotland.

Action is urgently needed to create the funding security 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. 

Together we can create a sustainable voluntary sector.

Additional information

SCVO’s proposals for the Programme for Government 2023/24 covered three areas: 

1. Delivering Fair Funding by 2026. 
2. Transparent voluntary sector funding.
3. Charity regulation for a modern voluntary sector.

These proposals were shared with the Scottish Government while the programme was being developed.