Continued high inflation has put charities delivering public service contracts at “crisis point”, NCVO warns

The National Council for Voluntary Organisations (NCVO) has warned that with the funding they receive, 73% of charities can’t meet current demand for the public services they deliver.

Ahead of the Autumn Statement, the organisation has written an open letter to the Chancellor of the Exchequer calling for support, urging the Government to increase long-term funding to public bodies.

According to the NCVO, charities have said for “over a decade” that contracts and grants are not keeping up with inflation or meeting the true costs of delivering public services.

Outlining findings from its latest survey, the NCVO revealed that 40% of charities said their grants/contracts “never covered the true costs of delivering”, while a further 44% said that their grants/contracts have not covered their costs since at least 2020.

Since April 2021, less than one in five survey respondents (17%) had received uplifts to all or most of their grants/contracts.

Almost half (44%) had not received any uplifts at all, and 38% had seen a minority of their grants/contracts uplifted, the survey found.

Where there were uplifts, the survey revealed that charities saw an average uplift of 2.7% across all their grants and contracts from 2022 to 2023.

“Compare this to the annual consumer price index inflation rate reported in April 2023 of 8.7% and the problem is clear”, said the NCVO.

The organisation noted that charities are “being forced to subsidise underfunded grants and contracts” with their own donations and legacies, enterprise and trading income, new or increased charges for people using their services, income from investments and reserves.

The NCVO warned that the impact of continued high inflation has put charities delivering public service contracts at “crisis point”, and made the following five recommendations for government:

1. Increase long-term funding to all public bodies so grants and contracts meet charities’ true delivery costs.
2. Require long-term funding is used to uplift all existing and new grants and contracts to fully cover the costs of delivering public services.
3. Establish better oversight and awareness of the state of public services, including through increased responsibility for this within the Cabinet Office.
4. Take a wider and more holistic view of what constitutes ‘financial distress’ for providers, and encourage all public bodies to do the same. This would allow commissioners to take action before providers are forced to step away from public service delivery.
5. Work in true partnership with voluntary organisations, increasing both collaboration and innovation in service of communities, and encourage all public bodies to do the same.

HM Treasury has been approached for comment.

Lottie Winson