The Voluntary Sector’s Vital Role in Responding to our Crises: Findings from the Scottish Third Sector Tracker

The Voluntary Sector’s Vital Role in Responding to our Crises: Findings from the Scottish Third Sector Tracker

Kirsten Hogg

In this blog, Kirsten Hogg, Head of Policy and Research at the Scottish Council for Voluntary Organisations, reflects on the challenges faced by Scotland’s voluntary sector post-pandemic, and what this might mean for communities.

Scotland’s voluntary sector includes more than 46,500 charities, community groups and social enterprises. The sector has an annual income over £8.5bn, and a workforce comprising 135,000 paid staff and more than 1 million volunteers. Those numbers are probably much higher than you expected, but do little to convey the sector’s enormous contribution to Scottish society.  From youth groups to social care, environmental campaigning to village halls and museums to mental health support, the voluntary sector plays a vital role in all our communities.

The sector’s value came to the fore for many during the Covid-19 pandemic, providing emergency support, working with statutory partners to achieve things like the eradication of street homelessness that we never thought possible, and keeping us going with online clubs and choirs.  Our dependence on the sector continued during the post-pandemic phase and endures today as we support one another through the cost of living crisis. But how have these overlapping and continued crises impacted the voluntary sector, which in many communities is the front line for support?

During the pandemic, as a plethora of research on the impact of changes on voluntary organisations emerged, SCVO brought together key stakeholders to consider how to avoid duplication in this research and produce robust data to help us understand the sector’s recovery from Covid-19. With financial and practical support from Scottish Government and independent funders, and an advisory group that added academics and voluntary organisations to that mix, we launched the Scottish Third Sector Tracker, a longitudinal panel survey, to fill this gap. 

18 months on, as we launch phase two of the project, it is a good time to reflect on both the success of the Tracker in providing robust and consistent data, and on what that data tells us and how it has been used.

The recently published summary report on the first 6 waves of the Tracker (Summer 2021 – Spring 2023) gives a more detailed overview of what we heard, but key findings include:

Increasing demand

Across all six waves of the Tracker, we have heard from more than half of respondents that demand for their services is increasing. While this is to be expected post-pandemic (since some services were unable to operate during the lockdown periods), we could not have foreseen when we started the Tracker that demand would continue to rise due to the cost-of-living crisis. Around 70-80% of voluntary organisations report being able to meet this demand; while this is encouraging, it does suggest a significant level of unmet need within communities.  

Financial issues

Voluntary organisations have faced a range of financial challenges across this period.

Difficulty fundraising: Voluntary organisations raise funds from a myriad of sources: public fundraising; trading; grant funding; statutory funding.  All of these have been impacted since the pandemic: trading and events stopped during lockdowns; the cost-of-living crisis has reduced the public’s ability to give; and competition for other funding has increased.

Rising costs: Particularly in the most recent wave of the Scottish Third Sector Tracker, voluntary organisations have reported significant impacts of rising costs (materials, energy, staffing, transport).  These rising costs pose a particular challenge to voluntary organisations because there are no ready sources of income from which to fund these increases. Grant and contract funding is generally not increased in line with inflation – in some cases we know of organisations who have operated on standstill budgets for more than 10 years – and most voluntary organisations do not charge the end user for support. Those who do charge their beneficiaries feel unable to increase charges as those they work with have also been hit by the cost-of-living crisis.

Structural funding issues: These short- and medium-term shocks to voluntary sector funding are exacerbated by long term issues with the way that investment is made in voluntary organisations.  Funding to the sector is often short term (1 year); it is hard to find investment for core organisational costs (salaries, building costs, energy); and decisions about funding can be made long after the start of the financial year, leading to uncertainty and difficult planning.  SCVO is pushing the Scottish Government and other funders to adopt the Fair Funding principles we have developed in conjunction with the sector. The information from the Scottish Third Sector Tracker allows us to demonstrate the impact of the financial issues voluntary organisations are facing, which is vital in helping us to make our case.

Workforce issues

Staffing issues have become increasingly prevalent among voluntary organisations across the six waves of the Tracker. In the first wave it was one of the top three concerns for a third of respondents, while by wave 6 this had increased dramatically to two thirds.  Some of the workforce issues are linked to funding challenges, with organisations facing both difficulties in increasing staff salaries on standstill budgets and difficulties recruiting to short term contracts necessitated by short term funding arrangements.  Many organisations have found short term means to overcome these challenges, but these are not sustainable over the long term.  As one respondent to the most recent wave told us:

“We have used reserves to protect services and staff posts this year, and we have used reserves to increase staff salaries to support them with the costs of living – but the grants are not increasing with inflation, so we can’t plan ahead to cover the costs, and we risk depleting our reserves, as we can’t afford to do this again next year.”

Looking Ahead 

So what does this all mean for Scotland’s voluntary sector, and indeed the rest of the UK (with figures from elsewhere in the UK telling a broadly similar story). On the one hand, the Tracker findings are encouraging: since the first wave in Summer 2021, 90% or more of respondents have consistently said they will still be operating in 12 months, and this could easily be interpreted as a good news story about the sector’s resilience.  Given what we know about the operating environment for the sector, and the challenges it is facing, however, that story feels too simplistic. Behind those figures are organisations using up their organisational reserves, and individuals who cannot keep going the extra mile indefinitely, and while no organisation wants to have to close completely, cracks are starting to appear.  

The most recent wave of the Tracker, in April 2023, found that in responding to the increasing costs they are facing, 36% of respondent organisations have reduced or ceased services. Given that in many communities the voluntary sector is the first port of call for many citizens who need support, and that voluntary organisations supplement public services in most areas of our lives, consistent losses on this scale would be catastrophic. Through the Scottish Third Sector Tracker, we will continue to monitor and respond to the challenges facing voluntary organisations, and report on their impact.