Voluntary organisations should put more emphasis on selling their services rather than relying on grant funding, according to a report published by charity consultancy Four Gables.
The Answer is Together: a study into Funding Diversification in West Yorkshire said that voluntary sector organisations need to reflect on their "reason to be" in the light of the increasing scarcity of grant funding.
"They need to reassess their purpose, value, clients and the way they operate - for some it will be a matter of getting sharper at getting the funding; for others the way forward may be in trading," the report said.
Interviews with the 50 sector staff who took part in the research revealed that the shortage of grant funding had created an over-competitive environment.
"The competitive environment precludes collaborative working and collective decision-making and action," the report said.
Steven Leach, consultant at Four Gables, said voluntary organisations should take a more businesslike approach to how they run their operations.
"Each organisation should re-evaluate its future in terms that are more commercial in outlook," he said.
The report echoes remarks by former Charity Commission chair Geraldine Peacock, who told the annual conference of the Charity Finance Directors' Group in June that charities should look for chances to sell services.
She pioneered income generation at Guide Dogs, including a commercial sperm bank.