A survey published by the umbrella body today reveals that, of 98 organisations polled, 46 say their contracts are "at risk of failure within the next six months" and 25 say they are "at risk of failure before the end of the contract period". Only 27 respondents say their contracs are "viable for the whole contract period".
The survey offered charities those three options when asking them to describe their existing Work Programme contract.
The report says that 48 charities – just under half of those polled – are subsidising the delivery of the Work Programme from their own reserves.
The NCVO wants the government to investigate the existing funding arrangements to determine why so many contracts are at risk of failure and why charities are subsidising the work.
Sir Stuart Etherington, chief executive of the NCVO, said: "The sustainability of these contracts is a major cause for concern. This programme is clearly not working for many charities involved in its delivery. More worryingly, this will have a damaging knock-on effect on the many jobseekers who desperately need the specialist support that charities can deliver.
"Despite concerns about contract viability, charities are still working hard to provide a quality service and are dipping into their own reserves rather than neglect people that need their help. It’s still early days and 2013 will prove critical to the overall success or failure of the Work Programme. We have a small window of opportunity to get this right and ensure that this scheme delivers for jobseekers."
Joe Irvin, chief executive of local infrastructure body Navca, said the "flawed" commissioning process had led to some charities being forced to close. "But the real tragedy is that people out of work who want help finding jobs are being denied the support they deserve," he said.
St Mungo’s, a charity that provides housing and support to homeless or vulnerable people, withdrew from the Work Programme in April this year after it received no referrals from prime contractors on the scheme.
Charles Fraser, chief executive of St Mungo's, said: "Our biggest concern is that in its current form the Work Programme is not reaching those furthest from the job market. At first we found that homeless people weren't being referred to the programme. But now we're discovering that if and when they are on the programme, support is dire. Even our clients who are nearer the job market are concerned.
"The basic principle of the Work Programme is to help the long-term unemployed, but to do this it needs more flexibility."
The full report, The Work Programme: perceptions and experiences of the voluntary sector, is available here.