CHEX response: third sector funding principles call for evidence
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What does fair and efficient funding look like for the third sector in Scotland? That’s the question the Social Justice and Social Security Committee asked earlier this year in their pre-budget 2025-26 scrutiny call for views on third sector funding principles.
We are very aware that fair and efficient funding and resourcing is an ongoing issue facing the community-led health sector and this policy response is part of the ongoing work of the CHEX team influencing policy in this area.
To inform this response, we conducted an online survey with the CHEX network, using some of the questions from the consultation that we felt were particularly pertinent to the community-led health sector.
This survey was completed by 34 individuals from a range of community and third sector organisations and we’d like to thank everyone who contributed.
Key points from our response
Longer-term funding of three years or more would provide organisations with the financial stability and sustainability they need to deliver their essential services. Core funding was a key issue raised by respondents, along with questions around what ‘core’ funding actually means.
Most community organisations recover core funding from adding on overhead costs and management fees to contracts and grants. So, although it’s described as ‘core’, it often ends up being tied to project or service delivery.
Flexible, unrestricted core funding would enable organisations to plan and align their work with their long-term strategies, affording more time to develop innovative approaches and build relationships and capacity.
Respondents also highlighted the importance of not making funding contingent on new ideas and increasing numbers of beneficiaries. Often, it's continuity that's important for achieving longer-term outcomes, and there needs to be more trust in third sector organisations to be able to ‘get on with the job’ without having to prove they are constantly innovating.
Respondents said that not only would these changes enable organisations to focus on delivering outcomes, it would free them up from form-filling, funding chasing, and allow space to flexibly adapt to change and “develop ahead of the curve”.
“It provides a bit of stability allowing projects to flourish and take away the need for the continual funding rounds which are stressful and time consuming therefore taking away from the good work we want to deliver” (Response to CHEX survey)
“It would help staff morale and retention, as job insecurity due to funding uncertainty is a major concern for charities and their staff.” (Response to CHEX survey)
Committee response
The Committee published its report yesterday and it highlights many of the issues we raised in our response, particularly around prioritising three-year-funding, as well as making provisions for inflation-based adjustments, streamlining and standardising application processes and improving the transparency of the grant-making decision process.
It is our view that, in order to effectively resource the suggestions in our response, and now in the report, thought needs to be given to how to increase the overall pot of funding for the third sector at a national level. Ultimately, this comes back to how we think about public services and the kind of society we want to live in.
Read a summary of our response as well as the full document.