Voluntary sector organisations will have to become more transparent and adaptable in order to maintain public support, according to Tessa Jowell, minister for the Cabinet Office.
Jowell, who was speaking at Acevo's annual conference in London yesterday, said public confidence in the nature and role of the sector had been significantly challenged since the banking crisis began.
"People now want and need to know more about how the money they donate and the money invested by government is spent," she said.
The relevance of charities was also being challenged by responsible consumerism and the power of digital media to mobilise people around causes, she added.
"A truly modernised third sector must respond to the current economic and fiscal realities by demonstrating to the public that it is capable of delivering the same quality of services for less, is not overly dependent on state funding, is capable of diversifying into new, more sustainable funding streams and is not undermined by any undue duplication of services or unacceptable variations in quality," she said.
"It must demonstrate the highest standards of transparency and accountability, publishing accounts online as a matter of principle and working to show that trustees have a wide range of skills and backgrounds and are truly representative of society."