Social Justice and Social Security Committee
Budget scrutiny 2025-26 - Third sector funding principles
Every year the Social Justice and Social Security Committee looks at what the Scottish Government could consider when developing its budget.
This year, the Committee has heard of concerns about funding challenges faced by the ‘third sector’.
The ‘third sector’ includes charities, social enterprises, voluntary organisations, and public social partnerships.
Increasing demand and wider economic issues are significant challenges for Scotland’s third sector:
- the COVID-19 led to greater demand for third sector services and support
- the impact of the cost of living crisis on household budgets has led to individuals and families seeking help when they did not need it before
- third sector organisations are spending more on their running costs as inflation has seen prices rise
The Committee wants to examine how the Scottish Government’s approach to fair and efficient funding can contribute to the continued effectiveness of the third sector.
Background
A significant amount of the third sector’s funding comes from public sector contracts and grants. This includes contracts and grants from the Scottish Government and local authorities.
Continued economic challenges mean it is unlikely the third sector’s financial outlook will improve over the short-term.
In response to these challenges, there have been calls from the sector to have access to:
- longer-term funding of three years or more
- flexible, unrestricted core funding – this helps organisations to provide security, plan effectively, and fulfil good governance requirements
- sustainable funding that includes inflation-based uplifts and full costs, including core operating costs
- funding that accommodates paying staff at least the Real Living Wage
- accessible, streamlined, proportionate, and consistent approaches to funding applications and reporting
- timely process and payments
- partnership between the funder and funded organisation
Your views
A call for views will be open between Wednesday 19 June and Friday 16 August 2024.
The Committee will wants to hear from both funded and funding organisations.
It would like to understand what can be done now to make the funding process more efficient, so available funding can be used more effectively.
Share your views with the Committee