Natalie Zhivkova, WCVA’s Policy & Insights Manager, explains the importance of working in partnership amidst financial instability.
Not a day goes by without a mention of the cost of living crisis. Inflation is everywhere, budget cuts and funding freezes are a big concern in the public sector, while diminishing discretionary income worries businesses. But are we forgetting an important building block of Wales’ foundational economy along the way?
THE STATE OF THE VOLUNTARY SECTOR
The voluntary sector in Wales is estimated to contribute around £6,630m to our nation’s social and economic wellbeing. On the frontline of supporting the most vulnerable in society, we are experts in converting relatively small investments into high social impact. But as we continue to see record high service demand and escalating complexity of service user needs, we are concerned about our future ability to deliver essential services.
Voluntary organisations are under a considerable amount of pressure due to:
- The effects of inflation on ongoing operational costs
- Insufficient clarity, certainty and communication from funders
- Funding freezes and a lack of public contract uplifting in line with inflation
- Severe staff and volunteer retention and recruitment challenges
- Reductions in public giving and income-generation capacities
WCVA’s sister organisation in England, the National Council for Voluntary Organisations, reports one in five charities say they could be forced to ‘disappear’ this winter, leaving the people and communities they serve at risk. A staggering 85% of charities predict that this winter will be as tough, or even tougher, than the last. And as many as 27% said they already believe they won’t be able to meet the increasing demand for their services.
These findings are mirrored in Wales. A survey of over 300 Third Sector Resilience Fund recipients found that most respondents expect staff recruitment and generating trading income in the next 12 months to be ‘highly challenging’, with increases in salary and staff costs described as ‘extremely challenging’.
THE CHALLENGES OF DELIVERING PUBLIC CONTRACTS
93% of respondents to our recent survey on public contract delivery told us they are subsidising contracted and grant funded services, with 37% choosing not to bid or apply for a new contract or grant and a further 23% unlikely to retender when their current obligation ends.
43% of surveyed organisations have actively reduced staff numbers, 37% have reduced the number of referrals they accept, and 30% have reduced opening hours to fit within the financial limitations of their public contracts or grants.
Only 6% of respondents delivering NHS contracts have received an uplift to match the statutory increase in pay for NHS staff, and just 13% of those delivering statutory care services for local authorities have received an uplift to increase care staff’s pay.
Besides the impact on service users, the voluntary sector accounts for 10% of employment in Wales. There is an urgent concern about the combination of loss of European Union funding and the volatility and under-pricing of public contracts. These have led to specialised voluntary sector staff increasingly working on short-term contracts and being paid less for the same work as staff in the statutory sector. This results in high staff turnover and increased training costs. Moreover, it asks a profound question about the implications of insecure employment and funding cuts in a sector that employs predominantly women.
THE VALUE OF WORKING IN PARTNERSHIP
The voluntary sector provides a unique network of accessible, local, specialised support for people and communities across Wales. We play a crucial role in prevention and early intervention by providing wrap-around support services complementary to public provision.
Public services have come to depend more and more on voluntary organisations and volunteers in their day-to-day operations. Consequently, any further loss of voluntary sector funding would risk compromising its sustainability and imposing knock-on effects beyond the sector itself.
There is a shared concern about abrupt reductions in funding and a worry that a multitude of public bodies could simultaneously reduce funding to the sector as a cost-saving measure.
The impact public funding decisions have on the voluntary sector should not be an afterthought, but an important consideration. Voluntary organisations were crucial in helping Welsh society through the COVID-19 pandemic and continue to play an important role in supporting the most vulnerable today.
Public funders and decision makers must ensure the voluntary sector is not disproportionally impacted in this crisis by:
- Implementing the principles of the Code of Practice for Funding the Third Sector when making any budgetary decisions
- Assessing funding decisions against the wider context of ongoing cuts and ensuring a co-ordinated approach that does not disproportionately affect the voluntary sector
- Being transparent about decision-making processes and making funding data publicly available
Third Sector Support Wales has made official submissions to the Minister for Finance and Local Government and the Minister for Social Justice and Chief Whip. We will be continuing our engagement with other portfolio holders in the coming months. We need to work together to get through this crisis and ensure no one is left behind.
KEEP IN TOUCH
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