Voluntary Service Overseas has warned it might have to cut about 200 jobs because of uncertainty surrounding an £80m government grant.
The charity was awarded the Volunteering for Development grant four years ago by the Foreign, Commonwealth and Development Office. It underpins VSO’s work among nine million people.
The grant supports a range of development programmes in global health, education and improving livelihoods, and access to basic services for some of the poorest and most marginalised people.
The charity said the £80m V4D grant would affect about one-fifth of its programme of work if it is not renewed by the government when the funding comes to an end on 31 March.
As a result, VSO said it would immediately halt its Covid-19 response work in 18 countries, closing up to 14 of its country programmes and making nearly 200 of its 770 staff redundant.
The charity was unable to put a figure on the number of UK staff that could be affected.
According to its latest accounts, VSO’s total income was £60m in the year to the end of March 2020, down from more than £80m in 2015/16. Government grants and contracts accounted for more than three-quarters of the 2019/20 total.
The uncertainty follows the closure of the VSO-led International Citizen Service in February, which offered overseas volunteer placements for 18- to 35-year-olds, including many from disadvantaged backgrounds.
The programme was also ended because of uncertainty about funding.
Concern has already been raised in the sector that large-scale cuts to funding for overseas aid will lead to many charity closures.
In a statement, VSO said: “The cut in UK aid from 0.7 per cent to 0.5 per cent of GDP has not yet been subject to a parliamentary vote. VSO understands that there are difficult financial decisions for the government to make.
“However, the lack of decision-making is threatening a great British institution that has a huge development impact and has been positively building the UK’s influence in the wider world over the past 60 years.”
In response, a government spokesperson said: “The seismic impact of the pandemic on the UK economy has forced us to take tough but necessary decisions, including temporarily reducing the overall amount we spend on aid.
“We are still working through what this means for individual programmes and decisions have not yet been made.”
Charity leaders rounded on the government in November after it announced it would break a manifesto commitment by making billions of pounds in cuts to international aid.