SCOTLAND'S charities are struggling to cope with rising demand and costs at a time when many are facing a funding battle.

A new state-of-the-sector survey reveals charities face problems planning ahead due to short-term funding and budget cuts. However, it also shows a society dependent on charities supporting the victims of austerity.

The figures are released today by the Scottish Council for Voluntary Organisations (SCVO), based on a survey of 268 charities.

They show that more than three quarters (77%) of charities and third sector organisations expect demand to increase in 2014. Meanwhile, 60% expect costs to rise but the majority do not expect income, numbers of staff or pay to increase in tandem.

Yet despite the difficult economic environment, 41% of third sector organisations grew in size in 2013 - a fact experts put down to money being pumped into the sector to mitigate the effects of welfare reform.

John Downie, SCVO's director of public affairs, said: "The Scottish Government has put quite a lot of money into welfare mitigation, which may explain some of the growth and why charities in Scotland are weathering the storm better than down south, where the sector has been devastated by cuts."

Many charities are looking at ways to meet increased demand, but cannot expand services without expanding their income, he added.

He also said SCVO's own community jobs scheme had found temporary work for 5000 people in the charity sector, half of whom had been kept on.

SCVO chief executive Martin Sime said: "Charities are showing great resilience and the ability to innovate and adapt quickly to meet challenges. The sector can make an even bigger difference to people's lives if we take a more strategic and longer term approach to funding, so that charities can plan ahead.

"This means charities can make a real difference to the lives of even more vulnerable people and communities across Scotland."

While 70.6% of charities said they were planning to develop new projects in the next 12 months, 10.5% said they were looking to close some services or projects.

Just over one-third (35%) of charities believe their financial situation will worsen next year, while almost six out of 10 (58%) believe the financial situation for the sector as a whole in Scotland will deteriorate.