£4.6bn shortfall is predicted by NCVO

National Council for Voluntary Organisations
National Council for Voluntary Organisations

The National Council for Voluntary Organisations predicts in a report that inflation and falling income will lead to a £4.6bn annual shortfall in voluntary sector finances by 2018/19.

In A Financial Sustainability Review, it says the sector will need to find savings of £4.6bn just to maintain the same spending power it had during 2012/13.

The twin trends of shrinking income and rising demand for services have already led many organisations to prioritise short-term service delivery over long-term capacity-building, says the report.

It warns that increasing numbers of charities are set to suffer from a "capacity crunch" -the point at which they have used up all their spare capacity and are unable to free up new resources through increased efficiency.

The effects of inflation alone mean that the sector will have to generate £3.1bn through increased income or efficiency savings by 2018/19, it says. To put that into context, if the savings were to be achieved solely from staffing costs it would require charities to reduce their spending on staff by 25 per cent.

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