A new report from the Health and Social Care Alliance Scotland (the ALLIANCE) reveals that the vital role of the third sector is under threat amidst the rising cost-of-living, as the organisation calls for the government to commit to fair funding and targeted support.

The ‘Stretched to the Limit: Scotland’s Third Sector and the cost-of-living crisis’ report details how already insecure third sector funding has been further eroded by a failure to keep pace with inflation.

The third sector intermediary, the ALLIANCE says its report paints a picture of a sector under ‘intense stress’ and urges the Scottish government to back up ‘warm words’ with stable, long-term funding.

More than four in five (84%) third sector organisations say they are facing increased demand for their services, while 61% have reported a reduction in funding via grants.

Organisations in rural areas have been particularly impacted according to the report, where rising costs of fuel for transport and funding that has failed to grow in real terms in years have hit hardest.

In the most difficult cases, organisations reported having to give up office spaces or make redundancies to make ends meet – and the ALLIANCE says there is consensus that all levels of government must do more.

Sara Redmond, ALLIANCE Chief Development Officer, said the report gives a “further, deeply concerning, snapshot” of challenges exacerbated by the pandemic and cost-of-living crisis that have faced the third sector for years:

“Despite the challenges in recent years, the sector has proven innovative and resilient, delivering vital services to people from all walks of life in a way that other sectors can struggle to replicate. It is more vital than ever that the Scottish government back up warm words about how valuable the third sector is with long-term, stable funding that ensures continued provision of services and fair pay for the over 130,000 staff employed in the sector.”

Today’s report follows the call from the ALLIANCE for Glasgow City to reverse planned cuts to community link workers (CLWs) – the majority of whom are employed by the third sector –  which it says will widen inequalities.

Top of the ALLIANCE’s priorities for the third sector organisations it represents now is to progress fair funding, as well as ensure the Fair Work agenda goes beyond funding just the Real Living Wage, and is comparable to council employees in similar roles.

A total of 88% of survey respondents said they would benefit from longer-term funding arrangements which was also key feedback during the conference workshop.

While reports have previously laid bare the struggles facing hospices, disabled people and carers amidst the fuel crisis, the ALLIANCE now details that 72% of third sector organisations responding to its survey report higher energy bills.

Specifically, organisations from rural Scotland report being hard-hit by rising costs of fuel for transport, and that funding from commissioning bodies had failed to improve in real-terms for years.

Organisations said that inflation was ‘simply making the problem worse’ and that third sector pay struggles to compete with alternative statutory or private options.

The ALLIANCE is now calling for tailored support for organisations operating in rural Scotland as well as targeted support for energy bills and a commitment to lower energy tariff arrangements for the third sector.

It also calls for a human-rights based approach to procurement and grant funding and says the government should invest more widely in services like social security and home energy efficiency programmes.

While highlighting essential role of third sector workers, the ALLIANCE calls for investment in services that reduce demand for acute interventions from the public and third sector, such as additional social security support and home efficiency programmes.

Read more: Independent Living Fund to reopen next year; Hospice chiefs: “Let's discuss fair funding”; Carers at a health and poverty tipping point; Unpaid carers “spiralling” in cost-of-living crisis

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