The economic turbulence had a major impact on charity leaders in 2011 as they struggled to deal with funding cuts and staff disputes.
Many managers spent the early part of the year agonising about what impact swingeing cuts to local authority budgets would have on their organisations.
They joined central government in urging councils not to pass on "disproportionate" cuts, but often their pleas went unheeded.
Liverpool City Council’s decision to trim its voluntary sector budget by 48 per cent – from £37m to £19m – was particularly devastating.
Many councils did not finalise their budgets until the final few days of the financial year, which left charities with little time to adjust to new funding arrangements – a clear breach of the Compact.
Eric Pickles, the communities secretary, used the NCVO conference in February to threaten legal action against councils that treated charities badly.
Seven months later, Pickles’ department published Best Value Statutory Guidance, a document that says councils have a duty to consult on funding changes and must give at least three months’ notice of reductions.
Best Value gives statutory force to some of the principles in the Compact, the voluntary agreement between the public and not-for-profit sectors which is not legally enforceable. Many leaders hope it will provide better protection against badly-managed public sector cuts in 2012 than the Compact did in 2011.
But the Commission for the Compact closed at the end of March as part of the government’s quango cull. In his final interview as Commissioner for the Compact, Sir Bert Massie questioned the government’s commitment to the agreement and the ability of Compact Voice, which represents the voluntary sector, to fill the void left by the commission’s demise.
The summer saw the start of the Work Programme, the Department for Work and Pensions’ scheme to tackle long-term benefit dependency. This led to a series of claims and counter-claims about the extent of charity involvement in the scheme.
Charity leaders argued the voluntary sector was under-represented and often used as little more than "bid candy" by private sector prime contractors. Some threatened to withdraw.
Employment minister Chris Grayling took a different view: he announced that about 300 charities were involved and the programme would provide a "massive boost" to the big society. The announcement was made on 1 April.
At the end of the year, Grayling said the programme was running well and the Merlin standard code of conduct provided protection for sub-contractors. But a Public Administration Select Committee report in December said charities had "serious reservations" about the programme .
The harsh economic climate was never far from the management agenda and some big charities came perilously close to strikes. Management and unions at homelessness charity Centrepoint, whose patrons include Prince William, averted action over pay and redundancies and staff at Action for Children called off their threat to strike over a proposed pay freeze in return for a one-off £60 payment for all employees.
But Scottish social care charity Quarriers did experience a 24-hour walk-out over proposed pay cuts.
Charity leaders’ pay did increase, but by less than the rate of inflation, according to the annual pay survey by chief executives group Acevo.
The survey results, published in November, showed that chief executives’ average pay had increased by 3.5 per cent to break the £60,000 barrier for the first time – more than £10,000 higher than it was in 2005. The highest salary reported this year was £167,000.
Most prominent voluntary sector leaders remained in their jobs, probably due to the state of the economy, but local infrastructure group Navca announced its chief executive, Kevin Curley, will retire in 2012. Joe Irvin, a former adviser to Gordon Brown, will succeed him.