# Underfunding of public services has forced charities to crisis point: NCVO

- Link: https://fundraising.co.uk/2023/11/14/underfunding-of-public-services-has-forced-charities-to-crisis-point-ncvo/
- Published: 2023-11-14T07:49:42+00:00
- Author: Melanie May

**Charities in the UK have been forced into crisis by the underfunding of public
services with most now subsidising delivery with other income, NCVO is warning.**

Recent research by the [NCVO](https://www.ncvo.org.uk/#/) of 331 charity and voluntary
organisations found 73% saying they cannot meet the current demand for the public
services they deliver with the funding they receive.

The government’s reliance on charities to deliver services saw £16.8 billion spent
through grants and contracts with charities in 2020/21. However, charities are dealing
with increasing demand and higher operating costs, combined with no contract uplifts
in line with inflation.

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#### Grants & contracts failing to cover costs

40% say their grants or contracts never covered the true costs of delivery, while
44% say their costs have not been covered since at least 2020. And, since April 
2021, less than one in five (17%) charities have received uplifts to their grants/
contracts and almost half (44%) have not received any uplifts at all.

87% of charities say they are subsidising delivery of public service contracts and
grants with other charitable income, including public donations (67%), charity shop
income (25%), and their own financial reserves (11%).

For those charities that have had an uplift, the average increase from 2022 to 2023
was 2.7%, compared to the annual CPI inflation rate reported in April 2023 of 8.7%.

#### Charities stepping away from delivering public services

As a result of the underfunding, 31% of charities say they have decided not to bid
for a new grant or contract, or are considering not bidding. 26% have decided not
to retender for services they currently deliver, or are considering not retendering.
In addition, 12% have handed back a grant or contract before it finished, or are
considering doing so.

#### Open letter to chancellor

NCVO is calling on the chancellor to commit to properly funding public services 
delivered by charities in this year’s autumn statement. It has [published an open letter](https://www.ncvo.org.uk/news-%20and-insights/news-index/open-letter-to-chancellor-on-charity-funding/)
to the chancellor, which it is inviting charities across the country to co-sign.

In it, NCVO says:

_“The knock-on effect of this underfunding has forced charities into crisis. The
options are bleak – charities will either stop operating completely, cease delivering
much needed services or use charitable funds, including already stretched reserves
and donations, to subsidise public services._

_“This is unsustainable. Many are stepping away from delivering public services 
altogether because they can no longer afford to do so. This means people and communities
are not getting the support they need.”_

Sarah Vibert, CEO of NCVO, commented:

> “Charities and voluntary organisations are the foundations of public service delivery,
> providing vital support to people and communities. Many services, like homelessness
> interventions and support for victims of domestic violence or sexual abuse, wouldn’t
> currently exist without charities.
>  
> “For too long, the goodwill of charities has been taken for granted. Commissioners
> know charities will do everything possible, including subsidising public services
> with charitable funds, to prevent closing their door to someone. But this can’t
> continue. Charities are at crisis point and without increased funding public services
> are increasingly likely to cease, putting potentially millions of people at risk
> of not having their needs met.”

The release of this latest research follows the recent launch of NCVO’s [Cost of Giving Crisis](https://www.ncvo.org.uk/get-involved/cost-of-giving-crisis/)
campaign, which aims to create awareness of, and calls for action to support, struggling
charities this winter.