Government funding of third sector organisations in Scotland has dropped by 10 per cent over the past three years, according to research from the Scottish Council for Voluntary Organisations.
The SCVO’s biennial research covers Scotland’s regulated third sector – comprising 20,000 registered charities, 165 housing associations and 107 credit unions – in the 2012/13 financial year, although information from 2011/12 was used for the credit unions because more recent data was unavailable.
The sector’s total income in 2012/13 was £4.9bn, while spending was £4.65bn. The research shows that the average change in an organisation’s income versus the previous year was 0.8 per cent.
The public sector was the biggest income source, contributing £1.69bn, with half of that amount coming from local authorities. This is 10 per cent fall from the £1.87bn of public sector funding in the year 2009/10.
The next-largest funding streams were housing association rents, which totalled £1.1bn, and the public, which donated £807m. Both public donations and trading income – the latter accounted for £384m last year – rose by £100m since the previous year, according to the SCVO.
Slightly less than £4.1bn of spending was on charitable activities, with £318m spent on generating funds, £200m on grants and £54m on grants.
Ruchi Shah, policy manager at the SCVO, said: "The impact of funding cuts and a slow economy are really starting to show now and with even more cuts to come, charities are having to think outside the box to find new, more sustainable, sources of income.
"Charities have proven time and again that they make a positive difference to the lives of the most vulnerable people in our communities and that they can find new ways to respond to ever rising demand despite drops in public sector funding. But this can’t continue indefinitely."
The SCVO will release further analysis from its research in the coming months.