As government budget cuts start to bite, a new survey shows a substantial drop in charity leaders’ confidence in the financial situation of their organisations.

And a growing percentage expect the general situation of their organisation to worsen over the next 12 months.

The Charity Forecast Survey, published today by the National Council for Voluntary Organisations (NCVO), shows that confidence levels stand at an all-time low since the survey began two years ago.

Commenting on the findings, Sir Stuart Etherington, chief executive of NCVO, said: "This latest survey shows that there is widespread concern across the voluntary and community sector about future prospects.

"Of course we know that there will be budget cuts, but these cuts must be managed intelligently. It is crucial that the Government continues to recognise and value the role that voluntary and community organisations play in supporting some of the most disadvantaged people in our society.

"In the meantime, we are asking the sector to share their experiences on how the cuts are affecting them and offering our members guidance on coping during these very testing times."

Key findings from the quarterly survey include:

· Confidence levels regarding the financial situation of respondents’ own voluntary sector organisations are now at their lowest at -30 per cent, a significant decline since levels peaked at 21 per cent in May 2008.

· Charity leaders’ confidence in the sector economy stands at -80 per cent, a fall in 19 percentage points since the last survey in February 2010.

· The percentage of charity leaders reporting that they expect the general situation for their organisation to worsen over the next 12 months has increased by nine percentage points from May 2009.

· Just under one-quarter (24 per cent) of charity leaders expect their organisation’s financial situation to improve over the next twelve months.

· Nearly two-fifths (37 per cent) of charity leaders reported that they have plans to increase the extent of the services their organisation offers.

· Over four-fifths (85 per cent) of charity leaders expected the economic conditions of the voluntary sector to be negative over the next 12 months, an increase of seven percentage points from the last quarter.

NCVO is launching a new service to support voluntary and community organisations facing cuts.

Getting Ready for Cuts, part of NCVO’s consultancy programme, provides one-to-one support to help organisations prepare for change, identify options and develop practical plans.

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