Cuts by the UK’s recently elected coalition government are likely to lead to a drop of between £3.2 billion and £5.1 billion in the income of the country’s non-profit sector, according to a new report published by New Philanthropy Capital (NPC). The gap is too big for trusts and foundations, which provide £2.7 billion, to fill, says Preparing for Cuts, nor are individual contributions likely to make it good.

The worst affected will be those organizations heavily or entirely dependent on public funding. Such charities will have to adapt their strategies by, for instance, reducing their public service provision and increasing low-cost volunteer-led activities, or looking for partnerships with other non-profits or even private sector providers. There will be implications for funders, too, as charities approach them for different types and levels of support. As competition for resources becomes fiercer, they will have to make difficult decisions about whom to fund. Evaluation and demonstrable effectiveness will become still more critical in this harsh climate, concludes the report.

Overall, says Ilona Joy, head of charity analysis at NPC and author of the report, ‘Funders should expect to see a sharp rise in applications, with many charities making requests that take funders outside their comfort zone.’

For more information
To download Preparing for Cuts: How funders should support charities in a world of government and changing funding structures, go to http://www.philanthropycapital.org/publications/improving_the_sector/grantmaking/preparing_for_cuts.aspx