The majority of Scottish charities are spending more than they are raising, having suffered income drops from funding cuts, according to the Scottish Council for Voluntary Organisations (SCVO).
While some larger charities and housing associations have achieved modest growth in income, most charities have still not managed to achieve the income that they were generating in 2009. As a result, many are spending some of their reserves.
The Scottish third sector’s total income did rise a little in 2011, from £4.4 billion in 2010 to £4.5 billion in 2011. Turnover, however, is still down, with a total turnover of £3.21 billion in 2011 compared to £3.22 billion in 2009.
Although the sector’s assets and reserves have increased slightly to £9 billion, “the growth in assets held by some larger charities and housing associations is masking major erosion of assets held by smaller organisations”, according to the SCVO.
The picture presented reflects that experienced by many other charities over the past few years – a drop in income combined with a rise in demand for their services.
Martin Sime, Chief Executive, Scottish Council for Voluntary Organisations, said: “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 skyrocket 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.”
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