Charities will lose £2.8bn in public funding between 2011 and 2016, according to the National Council for Voluntary Organisations.
A new report by the NCVO, published today, called Counting the Cuts, analyses data from the Office for Budget Responsibility.
It says total public funding for the voluntary sector will fall from £11.8bn in 2010/11 to £10.89bn in 2015/16, if central and local government bodies pass on funding cuts proportionately.
Public funding will fall to £11.62bn in 2011/12, £11.43bn in 2012/13, £11.25bn in 2013/14, £10.99bn in 2014/15 before dropping to £10.89bn in 2015/16, the publication says.
The cuts add up to £2.8bn in reductions over the period, the report says.
Counting the Cuts says the OBR estimates total local authority spending on all sectors, worth £125bn in 2010/11, will fall by 8.9 per cent over the whole spending review period.
It says if this cut were to be passed on proportionately to local charities, their funding from local government would fall from £6.6bn in 2010/11 to £5.9bn in 2015/16, a decrease of £580m.
The report applies the same methodology to central government funding. It says if central government departments make proportionate cuts to the voluntary sector, it will lose £330m over the period.
The report says the impact on the sector is likely to be "significantly greater" than the figures in the report, because they are based on an assumption that cuts will be applied evenly and proportionately to the voluntary sector.
"In reality, we are aware of many cases where significantly disproportionate cuts are being applied to the sector," it says.
"NCVO has never argued that our sector can, or indeed should, be immune from cuts," it says. "However, the scale, speed and implementation of cuts is having a significant impact on our sector. The way that cuts are being implemented and the particular pressure on local government finance threatens to reduce the sector’s capacity at the very time that demand is increasing and government wants the sector to do more."
Karl Wilding, head of policy and research at the NCVO, said: "Many charities are unwilling to speak out for fear they will jeopardise other funding streams but we face the perfect storm of an increase in demand and nearly £3bn public sector cuts."
The report calls for central government to publish a "comprehensive and robust analysis of its total spending on the voluntary and community sector, the impact of cuts to the sector and an evaluation of the resultant cost/benefit to government". It also calls for a "clear and meaningful implementation of social value clauses in public contracts".
Hannah Terrey, head of policy at the Charities Aid Foundation, said: "We cannot expect philanthropy to completely fill the gap because many charities delivering vital services are working in areas that have not traditionally attracted significant public donations."
The report also says:
- Responses to requests made by Compact Voice under the Freedom of Information Act show that half of the local authorities that responded are making disproportionate cuts to the voluntary and community sector.
- The biggest cuts to voluntary sector funding from central government will be made by the Communities and Local Government department, the Home Office, the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport. The biggest increase will be made by the Department for International Development.- The research published last week by False Economy, which showed councils would cut voluntary sector funding by around £110m this year, is a "significant underestimate" because it only applies to grant funding.