More than half of voluntary organisations based in London had to dip into their reserves to cover running costs in the past year, according to new research.
The London Voluntary Service Council’s latest Big Squeeze report, Surviving Not Thriving, says that 54 per cent of organisations in the capital's voluntary and community sector had to use their free reserves to remain operational between 2011 and 2012.
The report, which provides a snapshot of the economic climate faced by the sector and those who rely on its services, has been produced annually since 2009. The latest one says that 66 per cent of voluntary and community organisations based in London have reported an increase in demand for their services, but 60 per cent have experienced cuts in funding.
The report, based on 252 responses from voluntary organisations surveyed in May and June, says that 41 per cent of respondents reported having to shut down services over the year. A further 29 per cent said they expected to have to close services in 2012/13.
The report says that 71 per cent of those surveyed said they expected demand for their services to increase over the next year. Half of those polled said they thought they would not be able to cope with it.
Lin Gillians, chief executive of the LVSC, said that many voluntary and community groups were successfully adapting to the tough financial climate, but she was alarmed by the number of reported service closures over the past two years.
"The higher proportion of preventive and specialist services that have closed suggests we are building up long-term social problems that will take much more money to address in the future," she said.
The report recommends that voluntary sector organisations in the capital should make better use of technology to deal with the situation and consider entering into partnerships, collaborations or mergers with other organisations to improve efficiency.