This is a blog series on the role of sustainable funding in the VCSE sector, produced by our North East and North Cumbria Engagement Coordinator, Sian. In this second post, she reflects on what unsustainable funding can look like and how this impacts the sector.
Key highlights:
- The VCSE sector continues to adapt and to support each other through difficult times.
- Unsustainable funding can look like many things, including piecemeal funding, year to year contracts or a lack of funding opportunities in an area.
- There is continued concern around recruitment and retention.
How has this affected the sector more widely:
Throughout these periods of turbulence (see previous post), VCSE organisations have sought to help each other, for example, Connected Voice had a VCSE Sector Cost-of-Living fund, VODA have a Cost-of-Living resources page for the VCSE sector, as do the Community Foundation.
However, this does not mitigate or omit issues more widely. Over the past 5 years, austerity, Covid-19 and the Cost-of-Living Crisis have all contributed and compounded to create an unstable financial environment for the VCSE sector. So, how has this affected the sector overall and what can be done to move forward?
Inability to plan long term
Unsustainable funding affects the ability for VCSE organisations to plan long term, but what does unsustainable funding look like?
It could mean:
- A lack of funding opportunities in an area.
- A narrow remit for funding opportunities, which means certain groups cannot apply.
- A lack of clarity around whether funding will be continued into the future, putting organisations and their employees in a difficult position.
- A charity or one of their projects is relying on piecemeal funding, year to year contracts, which may not cover rising costs.
- A charity is relying heavily on public donations, something which dramatically decreased (see previous post) during Covid-19 and may be unsustainable during the Cost-of-Living crisis.
Not being able to have a long-term strategy or a strategy which is uncertain due to finances, creates a paradox of issues. To meet goals, a charity may need to collaborate with different organisations, outside of the VCSE sector and broker partnerships. However, organisations may be unable to do this because other partners are uncertain of your organisation’s longevity, and this could affect buy-in from different stakeholders and potential future investment from other funding sources.
For charities and organisations, it may also be the case that their organisation is entirely volunteer-led, meaning all of their finances go towards the service they provide. Relationships that are forged with service users over time, create a level of trust between service users and organisations. Charities can access the hardest to reach communities because of these bonds between staff and beneficiaries, which could be at risk of disappearing because of financial uncertainty. Organisation’s may need to consider rising costs and projecting costs for the future, not knowing if their funding is secure, creates the risk that the service will be no longer be financially viable. Project inconsistency make re-create a level of distrust and make it difficult to reach those communities again.
Increased anxiety
Everyone is struggling with the Cost-of-Living. VCSE organisations not being told what their funding might be with enough notice or securing piecemeal funding can lead to a rise in uncertainty for many reasons.
Funding uncertainty, can lead to:
- Shorter contracts for individuals and programmes. - Recruitment: Why are charities struggling to fill roles, and what can be done? (civilsociety.co.uk)
- Anxiety about retention.
- Worry around the cost of recruitment and difficulties in recruiting.
- If organisations are not informed of the funding they may or may not receive in advance, they may be required to put their staff on notice of redundancy.
- Funding and the need for funding leads to competition between organisations and can cause groups to gatekeep information or be reluctant to collaborate, when collaboration could benefit service-users.
Unfortunately, all of the above can lead to the closure of vital services. Where health and wellbeing is concerned, funding uncertainty can lead to fractured or a breakdown in the vital support from VCSE organisations that provide care and provision to vulnerable communities. For example, where VCSE organisations interact with health and care support in continuing the support for families and service users who may need care after discharge from hospital.
Wider issues
Extensive work and complex bids
Sometimes, VCSE organisations may find it difficult to say no to a funding opportunity, even if they are stretched. The opportunity for security is paramount to a charity’s ongoing survival or the survival of individual services. However, funding bids can be bureaucratic in their nature, meaning funding can be less likely to go to smaller organisations who are unable to spare the time for extensive work on complex bids. This can also mean that, in certain situations, funding may tend to go to the same organisations.
It is key to communicate
The uncertainty of not knowing if funding will be renewed, or continued in some form, means they may have to move forward with redundancy processes if there is no indication of future funding, whether this is because of a confirmation of no funding, or a lack of information about whether funding is available or not. This can lead to increased anxiety and it can feel fruitless planning services moving forward if the issue of funding is looming over the organisation. Therefore, it is better to know in advance, regardless of whether it is bad news or good.
In part three, Sian focuses on how the sector can move forward and what VONNE is doing to support VCSE organisations.