The charity sector might face a "hollowing out of the middle" in which large and small organisations survive, but medium-sized ones struggle, an audience of charity academics has heard.
Dan Corry, chief executive of the think tank New Philanthropy Capital, said that one of the consequences of the recession might have been to make life particularly difficult for medium-sized charities.
"Everyone is wondering whether we’re facing a hollowing out of the middle of the sector," Corry said in a speech on the state of the sector at the Third Sector Research Centre annual conference at the British Library in London on Friday. "The big charities have the resources to survive difficult times. The smaller organisations have a niche and can cope. But the middle organisations that are neither one thing nor the other – are they in trouble?
"We need to work out whether the sector will come out of the recession leaner and meaner, or just more chaotic and smaller."
He said the recession had affected different charities in very different ways. "It depends on which sector you’re in," he said. "I sometimes speak to development charities, and the Department for International Development is still rolling in money."
Corry said the recession would also lead to more community and voluntary action.
He said there was "a lot of truth" in David Cameron’s suggestion that people needed to do more for their communities on a voluntary basis, but that the big society idea had been "the wrong brand at the wrong time".
He said the stricter funding conditions caused by the recession meant charities had to pay more attention to their impact.
"Funders want to know much more about what you’re achieving," he said. "Contracts are getting tougher. Social investors are offering a sub-market return in exchange for social impact, and they will want to know what that impact is. And if you’re going to get involved in payment by results, you had better have some idea what results you can achieve."