New Philanthropy Capital has just released a new report, Preparing for Cuts, that warns that the UK government’s current round of budget-cutting could slice up to £5.1bn ($8.2 billion Cdn) from non-profit and charitable organizations. The community sector draws about one-third of its revenues from government in the UK. The UK government has announced a new initiative called Big Society to strengthen the third sector, but the spending cuts appear to be moving in the opposite direction.
According to New Philanthropy Capital: “Nearly a quarter of charities in the UK are funded by government: 13% get over half their income from government, and for some this figure rises to more than 90%. Total government funding to the voluntary sector amounted to £12.8bn in 2008/2009—a third of the sector’s income.”
“The coalition Government plans to cut public services by 25% to 40%. NPC therefore expects the sector’s income to drop by between £3.2bn and £5.1bn—too big a gap for trusts and foundations or funding from the public and philanthropists to fill. To weather this storm and adapt to the changing circumstances, charities will need support from non-government funders.”
“In this report, NPC looks at how funders can respond to these changes and support charities through the challenging times ahead. Funding will be harder, and decisions tougher, but practical measures can save time and money. The report suggests that sharing knowledge with other funders, keeping in close touch with grantees, and choosing charities by looking for evidence of effectiveness can help funders to help charities maximise their impact.”