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ESRC research says cuts are likely to hit charities harder than expected

The charities that rely most heavily on public funding at present are those working with the most disadvantaged people and in the most deprived areas, according to initial findings of research funded by the Economic and Social Research Council (ESRC). The funding cuts they face could therefore have a disproportionate affect on some.
Professor John Mohan of the Third Sector Research Centre, who led the study, reports that around one third of voluntary and charitable organisations in England receive public money to support their work. Of these, over 20,000 organisations say that the public sector is their most important source of income. “It is very clear that public funding is more important to voluntary organisations than previously thought,” said Professor Mohan. “And this is particularly true for those organisations working in deprived areas and with disadvantaged people.”
The study found public funding is received by:
• almost 70 per cent of third sector organisations working with socially excluded or vulnerable people;
• 60 per cent of those working with offenders, victims of crime and people with mental health needs;
• over 50 per cent of voluntary organisations whose work includes helping the homeless and asylum seekers.
“What is concerning about these figures,” says Professor Mohan, “is how much these organisations rely on public expenditure, and that many of them work in fields that, historically, have attracted little charitable funding.”
The study has also found substantial regional variations in the extent to which third sector organisations receive public funding. Just over a third of organisations in London and the south-east receive state funding, compared with 42% of organisations in the North West and 43% of organisations in the North East.
In disadvantaged areas of the Midlands and the North (such as in parts of Nottingham and Knowsley) the proportion of organisations that describe the public sector as their most important source of income is around 30%.
The study has also found that public funding is unevenly distributed across the sector, with most of it concentrated in a small number of large organisations. Two thirds of organisations with income over £5 million receive public money, whereas organisations whose income is under £10,000 per year are much less likely to draw on public sector funding.
“The picture is complex,” admits Professor Mohan. “And there is no straightforward answer as to how public expenditure reductions will affect individual charities or localities”. Nevertheless, the study concludes that policymakers need to take particular care in judging the effects of government cuts over the next few years.
The study analysed data from the National Survey of Third Sector Organisations (NSTSO), a representative sample of 48,000 third sector organisations in England, which was carried out in 2008. The findings are presented in a Third Sector Research Centre working paper ‘How dependent is the third sector on public funding?’ paper 45.