More than four out of five small and medium-sized charities are "struggling to raise the funds they need to survive", according to new report.
A survey of 800 charities in England and Wales by the Lloyds Bank Foundation, carried out in early 2015 and published in report form today, says 81 per cent of charities that responded said they were struggling to raise funds.
The charities, which had all received grants from the foundation and had annual incomes of between £25,000 and £1m, were asked to choose from a list up to three areas they saw as the main challenges they faced.
Eighty-one per cent of respondents chose funding, with increased demand for services in second place and selected by 54 per cent of respondents.
"Capacity and capability" was in third place, selected by 38 per cent of participants.
Asked for their predictions for securing funding over the next two years, 63 per cent said it would get harder, 20 per cent said it would stay the same and 5 per cent said it would get easier. The remainder were unsure.
The report says 88 per cent of respondents said they had experienced a change in demand for their services, with 72 per cent of those saying demand was increasing.
The report says 61 per cent of those surveyed had bid for contracts but just under half of those said they found the process difficult or impossible.
The obstacles they identified included being undercut by larger organisations or being used as "bid candy" by them and then excluded when services were actually delivered.
The report calls on the government to reform commissioning processes to ensure a level playing field for small and medium-sized charities.
Paul Streets, chief executive of the Lloyds Bank Foundation, said the message coming from the charities was not surprising but was resounding.
"Great small and medium-sized charities reach and support some of the most vulnerable in our communities and the numbers seeking their help are rising, yet funding is being reduced," he said. "Commissioning is favouring larger and commercial providers, leaving smaller and local charities and their clients out in the cold – sometimes literally.
"We hope this report will be a wake-up call and that David Cameron and colleagues will hear it call and put small and medium-sized charities at the heart of tackling the great social issues of our day."