CHARITIES are seeing a sharp drop in income and many are being forced to dig ever deeper into their reserves to keep going, according to new figures.
The annual snapshot survey of charity income carried out by the Scottish Council for Voluntary Organisations (SCVO) blamed funding cuts and low interest rates for the fact many charities are now spending more than they have coming in.
SCVO said that despite modest income growth for the larger charities and housing associations in 2011, turnover remained depressed.
Smaller and medium-sized charities appear to be hurting the most.
Those with a turnover of £12,500 or less had an overall income of £47 million last year, but spent £65m between them, a deficit of £18m.
Meanwhile, charities with a turnover ranging from £50,000 to £100,000 a year brought in £96m between them but fell £22m short of breaking even as they spent a total of £118m.
SCVO said the plight of smaller charities was particularly concerning, as 51% of those turning over £12,500 or less and 48% of those turning over £12,500 to £25,000 are in deficit.
While these charities are small, they are numerous – making up 68% of the sector altogether.
Overall, the income of the charitable and voluntary sector was £4.5 billion in 2011, with expenditure of £4.3bn.
This represents modest growth, as the sector's overall income in 2010 was £4.4bn.
However SCVO said that strong growth in certain sectors – notably housing associations which between them generated a surplus of more than £120m in 2011 – was masking a sharp drop in income for many charities.
Larger organisations have lost contracts, or seen existing work cut back, while major trusts have seen income fall due to low interest returns on their investments.
Excluding credit unions and housing associations, charities' turnover remains below the level it was at two years earlier, with £3.21bn turnover in 2011 compared to £3.22bn in 2009.
The problems of the wider jobs market also appear to be mirrored in many charities.
While the SCVO figures show staff numbers up to 138,000, from 136,600 in 2010, the number of full-time jobs fell, with more temporary contracts and a significant drop in the hours staff were being asked to work.
Assets and reserves of charities increased slightly to £9bn, but again SCVO said the growth in the value of assets held by housing associations and a few large charities is hiding a "major erosion" of assets owned by smaller organisations.
SCVO chief executive Martin Sime said there was a serious risk that struggling charities would be forced to close.
He added: "As income falls short of expenditure, particularly for smaller charities, organisations are being forced to use what assets and reserves they have left to keep their doors open for as long as possible. With limited reserves, which many organisations already dipped into last year, charities are running out of ways to compensate for the funding drain.
"Organisations are working hard to maintain the high- quality services they provide to communities across Scotland and keep their staff. With ever- growing demand set to sky-rocket as the UK welfare cuts kick in, third-sector organisations are facing an impossible conundrum. Something will have to give to secure a sustainable future for the sector."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article