Matthew Smerdon, deputy director of the Baring Foundation, told delegates at last week's NCVO annual conference in London that charities were subject to ever-more closely prescribed contracts that limit their ability to act freely.
"It worries me when I hear sector figures say 'if we worry about independence, we are barking up the wrong tree' and say that talk about charity values is navel-gazing," he said.
Smerdon added that he was left shaking with frustration at the ignorance displayed towards the sector by members of the House of Commons Public Administration Select Committee during its hearing on commissioning public services from the third sector, which he attended last year.
Small charities were quick to voice their concerns about the threat posed by collaborating with the state during the debate on independence at the conference.
Hal Hewitt, director of Ipswich Housing Action Group, said the sector was getting "massacred by competitive tendering". He said: "Our influence on what's happening around us is getting less and less. The more the Government talks about embracing civil society, the more it destroys it."
Bob Woods, from Barnardo's, speaking in his capacity as Unison branch secretary, said competition for contracts put charities under such financial strain that many organisations were asking staff to sign less favourable contracts. "They are known as Martini contracts," he said. "They mean you can work any time, any place, anywhere."
John O'Sullivan, chief executive of St Johns Housing Trust in Lowestoft, Suffolk, said he was staggered at the acquiescence of charities to local authorities that had consistently ignored advice from central government on working with the sector. "We need to wake up," he said. "Otherwise in 10 years' time we will have to re-invent ourselves because we won't exist in the same way."