The campaigning group the National Coalition for Independent Action has warned of a growing gap between large and small charities and an increase in the "silencing of dissent" from the sector by government.
In a final report published to mark the closure of the NCIA, the group, which was set up in 2006 and opposes the perceived loss of the independence of charities and the reduction of grant funding to cover core costs, sets out how it sees the state of the voluntary sector.
The group, which is closing because it hopes that the space it leaves behind will be occupied by "new approaches and initiatives", also warns of worsening pay and conditions for voluntary sector workers.
"There is a growing gap between the larger charities and the rest," the report says. "The former are better equipped to play the procurement game and many have moved into competing with each other and local groups for services contracts. Some of these charities are aggressive and predatory in their approach, driven by ambitions for market share rather than social purpose."
It adds: "Open dissent, even mild informed criticism, is now widely seen by local and national state agencies as unacceptable, and certainly viewed that way by many MPs and government ministers.
"This environment is created by legislation, calls for clampdowns by hysterical backbench MPs, pressure on the Charity Commission to ‘toughen up’ and restricting central government funding to supine and compliant leadership bodies.
"At local level the hegemony is assured through formal contractual mechanisms and many other more informal means. Across the landscape, voluntary services have suffered a massive loss of ability to think, act and speak independently, and especially to speak plainly and passionately where injustice and privation are being visited on their users and beneficiaries."
The report says the group believes that something different is needed "beyond our attempts to jolt voluntary groups into more active resistance to the damage that is being done".
It says: "This will need new people, new resources, new ways of working and new channels of communication. So we have decided to stop what we’re doing and hope that the space will be occupied by such new approaches and initiatives."
Alongside the report, the NCIA has published an open letter signed by a group of charity employees, union representatives and academics, which expresses regret that the NCIA is to close and pledges to advance its views.
Signed by more than 60 people – including Kathy Evans, chief executive of Children England, Jay Kennedy, director of policy and research at the Directory of Social Change, and Maurice Wren, chief executive of the Refugee Council, the letter says: "Over the past 10 years, NCIA has rung an alarm bell alerting us to the progressive silencing of charities and voluntary groups as a force to resist the impoverishment of people and communities, the loss of rights and the privatisation of public services.
"While we have not always agreed with NCIA’s positions, its voice has been essential in reminding us of the duty to dissent within civil society. A duty often lost in the clamour for public service contracts and insider influence.
"We say thank you and goodbye to NCIA, and affirm that we will continue – in our own ways – to advance NCIA perspectives for voluntary groups independent from, and unfettered by, powerful outside interests, and committed to stand visibly and practically in solidarity with those facing injustices; to speak plainly about these injustices; and campaign vigorously for their end."