For decades, charities have warned that contracts and grants are not keeping up with inflation. This problem has become much worse over the past few years due to rapidly rising prices

The underfunding of government grants and contracts is unsustainable.

Sarah Vibert, Chief executive, NCVO

The inflation rate began to rise above the Bank of England’s 2% target in May 2021. It peaked at 11.1% in October 2022. There has been little to no increase in the overall value of contracts and grants in this time.

Contracts aren't covering the true costs of delivering public services, let alone providing any surplus to improve support to communities. Charities are increasingly subsidising public services with voluntary income and reserves. They’re risking their long-term sustainability to meet urgent needs now.

This means that:

  • people and communities are at risk of losing the services and support they rely on
  • charities are finding it harder to provide support and services to people who need it
  • government is facing a shrinking, less resilient market. This reduces quality, choice, and innovation in public services.

This trend has worsened due to cuts to local government funding. Since 2010/11, local authorities have experienced unprecedented reductions in spending power.

Some 83% of survey respondents said that underfunded grants and contracts are making it more difficult to recruit and retain staff and 38% are also seeing an impact on volunteer recruitment and retention. 

Read survey findings in full HERE.


You must be logged in to access this item