Charities providing public services ‘face £1bn funding cut’

New research warns that almost one-third of charities are facing ‘significant financial challenges’ and another third say they might have to consider reducing or closing services

(Photograph: Alex Green/Pexels)

Charities provided frontline public services have suffered from an estimated £1bn-a-year funding loss since the last Spring Budget, according to a new report.

Departmental increases included in the 2023 Spring Budget have “not flowed down to charity frontline services”, according to the report published today by the Charity Excellence Framework, which offers management and funding services to charities. 

CEF arrived at the figure by analysing the government’s yearly investment in the sector in light of the UK’s rate of inflation as of June this year.

In the Spring Budget in March, Chancellor Jeremy Hunt pledged £101.5m for English charities and community groups over a two-year period and £18.5m for charities in Scotland, Wales and Northern Ireland.

Although the budget included a pledge for departmental spending to grow at a rate of 4 per cent, only 6 per cent of respondents to CEF’s public funding survey – which consulted 266 charities in receipt of public funding – said they had seen an increase in line with or above inflation. 

Some 94 per cent of grants were cut, the report notes, with 39 per cent of those being either significantly reduced or not renewed. 

A further 20 per cent of charities’ public sector contracts were cut, and half of the contracts were either below inflation or saw no increase, researchers found. 

The majority of survey respondents expected the funding situation to worsen, with 78 per cent saying they believe things will become worse or deteriorate. 

Just 6 per cent said they were confident that the situation would improve.

Almost one-third of respondents reported facing “significant financial challenges”, and another third said they might have to consider reducing or closing their services. 

CEF recommends that additional funding should be made available in next year’s Budget to support frontline delivery of services, and urges grant-makers to work collectively to ensure their funding is co-ordinated and focused on areas of greatest need.

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