The UK Civil Society Almanac 2009, published last week by umbrella body the NCVO, showed further evidence of a steady decline in voluntary sector grants.
The almanac reveals that the total value of grants fell from £4.3bn in 2005/06 to £4.2bn in 2006/07, which seems like a modest reduction.
But Kevin Curley, chief executive of local infrastructure group Navca, pointed out that it amounted to more than the £80m of grants being handed out by the Government's Grassroots Grants programme. "That's a large amount of money being lost," he said.
It was the third consecutive year that grant income had fallen, making it worth less to the sector than it was at the turn of the century. The spate of council cuts to voluntary sector budgets in recent weeks suggests the situation has not improved since the data was collated.
"It is very worrying," said Curley. "What we are seeing is indicative of a trend where local authorities under pressure to reduce their budgets are cutting voluntary sector grants because they see the sector as an easy target."
The fall of grants has been mirrored by the rise of contracts, which increased in value by 9.8 per cent in 2006/07 to £7.8bn - more than double their value in 2000/01. Largely because of this, total income for the sector grew by 3.3 per cent to £33.2bn, down sharply on the previous year's 9.4 per cent rise.
So does it matter that voluntary organisations are depending more on contracts and less on grants? A spokeswoman for the NCVO said it was not concerned that earned income - primarily money earned from contracts - accounted for more than half the sector's income.
A spokesman for the Office of the Third Sector asserted that it was continuing to spread the word about the importance of grants across government.
"The national training programme for commissioners makes it clear that grants remain a legitimate part of the commissioning process," he said. He added that there was still a good mix of funding options: "It's great news that more public service contracts are going to the third sector."
Ben Wittenberg, director of policy and research at the Directory of Social Change, said the decline in grants was worrying. "We still believe they are the best way for the government to support the voluntary sector," he said.
Some members of the National Coalition for Independent Action, which campaigns for the sector's independence from government, believe charities should not take any state money. Its founder, Andy Benson, said it was not in itself undesirable for charities to receive taxpayers' money, but contracts "subvert both independence and the capacity for a proper partnership relationship"
THE ALMANAC IN BRIEF
There were 170,905 general charities in the UK in 2006/07, an increase of 6,810 on the previous year. Their total income was £33.2bn. Wider civil society, which includes housing associations, universities and cooperatives, contained 870,000 org-anisations with combined assets of £210bn.
One in 50 UK employees worked in the voluntary sector. Between 1997 and 2006 its workforce increased by 123,000, or 24 per cent. A third of voluntary sector staff were based in London and the south east, although this figure is changing as more charities are established in areas such as Wales and the west midlands.
Charities spent £31.2bn, £7.9bn more than they did in 2001/02. Staff costs accounted for £12.4bn of spending, an increase of £2.4bn on five years ago. Large charities continued to dominate: 4,370 accounted for three-quarters of spending.
Charities on average had sufficient funds to survive for three years at current spending levels. Grant-making foundations were best placed, with an average of 11 years of reserves, while international charities, umbrella bodies, law and advocacy charities and employment and training charities all had on average less than a year's reserves and could therefore be most vulnerable in the downturn.
Full-time voluntary sector employees were contracted to work an average of 37.5 hours a week, excluding overtime. The average in the public sector was 38 hours, in the private sector 41 hours. Seventy-one per cent of staff were female, compared with 64 per cent in the public sector and 39 per cent in the private sector.