The Scottish government will reduce its third sector budget from £27m this year to £24.5m in each of the next three financial years, according to its spending review, published this week.
The draft spending plans for the three years to 2014/15, which were announced on Wednesday by John Swinney, the Scottish government’s finance secretary, explain how it will deal with a real terms reduction of 12.3 per cent in its budget from the UK government.
Papers released alongside Swinney’s speech show that the third sector budget, which "helps to grow and strengthen the sector", will fall from £27m in 2011/12, to £24.5m in each of the years from 2012/13 to 2014/15.
Funds allocated to the Office of the Scottish Charity Regulator will fall from £3.3m in 2011/12 to £3.1m in 2012/13, £3m in 2013/14 and £3m in 2014/15, the papers show.
The document says the government will allocate £500m over the three-year period to fund a "decisive shift to preventative spending". The funding will be distributed by local authorities and the NHS by means of three funds: the change fund for older people’s services, the early years and early intervention change fund, and the reducing reoffending change fund.
"Focusing on preventing problems by intervening earlier is not only the right approach to many of the social and other issues facing us in Scotland today; it also secures better value for the taxpayer," the document says.
"The third sector has a crucial role to play in delivery, because of its specialist expertise, its ability to engage with vulnerable groups and its flexible and innovative approach."
The Scottish government said it would "encourage the social enterprise model whilst ensuring the third sector’s important role in developing programmes of preventative spend are realised, enhancing its potential for improving employability prospects, better care for the elderly and providing opportunities for young people".
The Scottish Council for Voluntary Organisations called for the third sector to be given a bigger role in funding decisions for preventative programmes.
John Downie, director of public affairs at the SCVO, said: "Boosting funding for preventative initiatives over the next three years indicates that the Scottish government wants to do things differently.
"We welcome the move as investing in preventative programmes, particularly in adult social care, early years and tackling reoffending, is the best approach to choke off demand for expensive health and care services that we can’t afford."
Downie said that in order to ensure the new strategy was successful, the third sector "must be given a role to play in decision-making around the allocation of change funds.
"We also must ensure that sufficient emphasis is given to genuinely preventative approaches that reduce demand rather than redirecting it to different patterns of service."
"Scotland cannot afford to miss out on this opportunity of doing things differently by allowing the funds to be hijacked by acute services or local government structural reform."