The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB.
Part B: Exploring the impact of funding challenges on voluntary sector intermediaries
This section confronts six of the biggest affected areas from the impact of funding issues and challenges faced by voluntary sector intermediaries, which include an inability to plan for the longer-term, governance under pressure, constrained service delivery, reduced financial sustainability, diminished wellbeing of the workforce, and limited capacity to do the job. This section details what senior leaders said on the impact of funding challenges their organisation.
An inability to plan longer-term
Those interviewed discussed the restrictions that annual funding places on their ability to think and plan for the long-term, diminishing organisations’ confidence and causing frustration that they cannot make the impact they would like to have. Organisations feel they cannot operate on a strategic basis with short extensions to funding.
Voluntary organisations said:
“The annual funding cycle means we’re restricted in how we can strategically plan. It makes it difficult to support our membership and do what we want to do.”
“It’s so difficult to plan with year-to-year funding. We’re wrestling with what to do with our Articles of Association – they need to change as our membership approach has changed – but can we truly prioritise this when there are more urgent, pressing matters?”
“It’s so tricky to plan ahead with funding how it is, even without the pandemic. We cannot plan beyond March, and we’re just second guessing everything. It’s very difficult.”
“We cannot operate on a strategic basis and how we’re funded makes a big difference for our confidence.”
“We’re in a period of short extensions, so we’re not able to sit down and thing about next year. We’ve had two years of very short-term funding, or just adding to the initial three years we had.”
“We could have done more with new initiatives and supporting government’s mission if funding was less short-term.”
“We try not to let the short-term funding arrangements impact on delivery, but of course we’re subconsciously focused on the short term.”
Governance under pressure
Those interviewed are tasked with supporting their Trustee Boards to run organisations in a responsible and effective manner. Annual accounting requires organisations have the resources needed to continue operating on a going concern basis. Uncertainty places significant pressure on leaders and those with a legal duty to demonstrate this.
Voluntary organisations said:
“I have to ask my board for a lot – I’m asking them to approve my annual budget when the biggest chunk of our funding is missing and not confirmed.”
“Our funding from the Scottish Government is my number one concern as a leader – there’s risks with trustees, with the auditors, and also with staff team assurances.”
“It’s a constant worry for our board.”
“Independent examiners want to know we’re going concern and have Scottish Government funding for the year coming up. We need to provide this information when its needed.”
“Delays in funding have a real impact in terms of cashflow. We have healthy reserves for a small organisation, but delays have impact on what we can really spend money on over and above rent and salaries.
“It’s a huge governance issue for our board – we manage our independent examiner, board, and staff okay. As a leader, we manage their fears but cannot say all is fine.”
Constrained service delivery
Organisations feel that their ability to deliver services for their members and wider communities are constrained by gaps in support, wasted time in repetitive funding negotiations, fragmented funding sources, and outdated reporting mechanisms that do not focus on successful outcomes or prioritise activity that can have the most impact.
Voluntary organisations said:
“There’s an implicit and explicit requirement in our funding arrangement to do what the Scottish Government wants us to do, rather than what our sector or our members want.”
“If we closed, which is possible, there would be an even greater diminishing voice in our sector, which gets hardly any funding. We’re there to speak not only for voluntary sector, but entire sector – that’s not recognised or funded.”
“We try to limit impact and assume the funding will come in. We get on with the job and work towards our strategy and vision. But time is taken up with uncertainty in negotiations and putting a jigsaw together, rather than delivery.”
“We have funding in place but its piecemeal and there are gaps in the support we can provide because of this.”
“There’ always a challenge around whether you get one pot and not another. It distracts us from day job and it’s an uncertain jigsaw that takes so much time to piece together.”
“The challenges we face impact on projects we can support through grants, such as staff turnover, time management and planning caused by insecurity.”
“It’s simple – we had to pull back on an area we were working on, such as a service level agreement with a local authority, because the local authority did not distribute funding provided by the Scottish Government.”
“Outdated reporting means we’re unable to be as flexible and adaptable as we would like to be to respond to the changing needs of our members. We’re limited by the structure of our funding arrangement.”
Reduced financial sustainability
Challenges in securing core funding from sources beyond the Scottish Government means that any delay to funding or static inflexible funding will put the financial sustainability and sometimes even the survival of organisations in harm’s way. Most organisations are coping okay, but this is unsustainable, and a sudden change could have significant consequences.
Voluntary organisations said:
“We’ve been funded by the Scottish Government for a long time but there is a lack of security. Our funding agreement wasn’t completed until the end of April and into the new financial year.”
“The Scottish Government are bad at offering funding agreements before the end of financial year, and this causes an annual worry about our financial position.”
“We’re often told by government that ‘this is just normal; I’ve told you you’ll get funding.’ They have no concept of the stresses this causes on me and on staff.”
“The annual cycle doesn’t have too much of a negative impact. Our subscription income is year by year but at least we have this, and we are not completely hand to mouth. We’ve not got a major cashflow issue.”
“Whether you can deal with this is dependent on a charitable body having reserves. Even then, the short-term nature leads to turnover of staff – they leave for new roles.”
“There’s a constant question about financial sustainability, despite being important infrastructure for the sector and recognised as such in our government agreement.”
“Delays cause a huge problem. We have a savings account with a 60 days’ notice period – we must make a decision to draw down money or whether we can we keep going. Our cash got so low, but we had enough to pay salaries.”
Diminished wellbeing of the workforce
The most significant impact that these funding challenges and indeed the cumulative impact of consequences covered in this section relates to the wellbeing and consistency of these organisations’ workforces, the lifeblood of any organisation. Staff morale at all levels surfaced as an area where the impact of funding challenges is felt, from those on short-term contracts to the demands of managing these tensions felt by senior leaders. The word ‘sanguine’ was used in multiple interviews when describing the situation; leaders are experienced and familiar with the annual anxiety caused by uncertain funding arrangements, but this is optimism in a bad situation.
Voluntary organisations said:
“Staff morale is a big issue. The funding cycle is not good for job security. Our staff go through this hassle every year, although the money comes through in the end.”
“Where is the funding model of support to look after staff in different roles and capacities? Where is fair work and flexible work?”
“Online during pandemic has helped to extend reach as a national body, but I don’t have a team – I can’t necessarily do what I would want to.”
“Being a leader just now is a stressful existence. I’m firefighting and treading water and more of CEO time is being spent on the nitty gritty operational work to get through rather than focusing on the long term to support a buoyant sector.”
“It does have an impact on me as a leader. I try to keep positive and spend time on what we can control.”
“We got funding for a year but once it came in, I had to start a new funding application. I had a year to play with once funding came in, but I didn’t have a holiday because I needed to spend the summer on funding applications. There’s so much stress with applications failing.”
“Junior staff are concerned while leadership are sanguine – we’re just used to it!”
“The entire team are aware of how precarious it is, but we’ve never put people on notice of redundancy. If funding is not set, we work with the management team and board to manage this. This does impact on people and leaders will take the brunt.”
“I feel sanguine about the challenges because I’ve been in this boat before elsewhere in the sector. Going through rounds and rounds of funding is just the norm, but not necessarily right.”
“Fixed term contract to fixed term contract is not helpful. We can’t appoint on open contracts, and it’s always difficult to recruit for fixed term with extension subject to funding. It’s been difficult to recruit lately because of this – we’ve used some of our surplus to offer extended jobs.
“We’ve just had to focus on cost cutting as it’s been a tight year. We’ve had to give up our previous office space to save some funding.”
“We cannot sustain this level of grant funding and staff levels. The Scottish Government are appreciative, but we’re always asked to do more.”
“Staff understand what’s happening. I try to share as much with staff as I can, but I don’t want staff to worry about their jobs and security – it’s not their role to worry and it’s not fair.”
Limited capacity to have the most impact
While limited capacity could fall under constraining service delivery, the capacity issue was a key topic raised during the interviews, particularly in relation to finding additional funding from other sources to ensure sustainability in the short-term. Those interviewed also spent a great deal of time chasing the Scottish Government for a decision or has experience of spending lots of time adjusting to new monitoring and reporting approaches that often change without any real strategic thought as to how these could be improved in partnership.
Voluntary organisations said:
“A lot of our time is spent on fundraising – it’s stressful, especially keeping colleagues in the job. Before we have been okay but it’s getting harder.”
“Administratively, all the looking for funding and chasing Scottish Government decisions takes up time. The additional work following up civil servants is also a burden – we don’t want to come across as a pest, but we must keep at them.”
“A lot of time and energy is spent on keeping things afloat, all the while not achieving the impact we want to achieve.”
“We keep an eye open for odd funds, but this is stressful and takes up much of our time.”
“New civil servants come in all the time and decide that reporting is going to be different, done in their way. New templates are issued to us, new catchups arranged, and this all takes time. After a while, we switch back to old ways of reporting and the cycle continues.”