The budgets, expected over the coming year, will allow people to select which services they receive and who provides them. Etherington believes the scheme may catch some charity care providers unprepared.
"A lot of voluntary organisations are geared up to pick up big public sector contracts, but what about single contracts?" he said.
Yorkshire-based disability care organisation the Wilf Ward Foundation said the initiative provided opportunities for charities.
"Providers will have to rethink how they design services," said Karen Roberts, director of operations.
"There's potential for the sector to do well out of this, though. We're flexible, and we have people's best interests at heart."