The charity sector could be facing cuts in income of up to £5bn over the next 18 months, the think tank New Philanthropy Capital has warned.
A new NPC report, Preparing for Cuts, estimates that the sector’s income could drop by between £3.2bn and £5.1bn after the comprehensive spending review and examines how funders can best support charities that are facing decreasing government funding and increasing competition for contracts.
The report says charities should not be afraid to ask trusts and foundations for funding for activities that may be seen as complicated or boring.
Iona Joy, head of charity analysis at NPC and author of the report, said it would be important for charities to plan carefully for different financial scenarios, and those that could show funders they have thorough financial plans would be able to convince them that they are at less risk of going bust.
"For smaller charities without the skills in place, this can be tougher," she said. "But if someone on their trustee board has financial nous, they should be getting help from them on this.
"Charities will need to explain to funders what they need, and these things can be complex and not very exciting," she added. "They should prepare their case carefully and explain what will happen if they don’t get the funding but also the impact of the funds if their activities do continue."