New figures suggest that one in three operating charities have no funding in reserve.

And the median reserve level for those in receipt of state funding is only one month’s worth of expenditure.

The assets and reserves figures published today by the National Council for Voluntary Organisations (NCVO) suggest that drastic cuts could threaten the survival of many organisations providing vital services.

The research also showed wide variation in reserve levels for different types of voluntary organisation.

While housing associations typically hold nearly 20 months’ (19.9) worth of expenditure in reserve, at the other end of the scale this level falls to 4.5 months for employment and training organisations and only 1.4 months for playgroups and nurseries.

Commenting on the findings, Sir Stuart Etherington, chief executive of NCVO, said: "These figures show how vulnerable many community and voluntary organisations will be in the testing and unpredictable times ahead. Without a financial safety net, vital services for local people and communities will be at risk.

"This really demonstrates the need for public sector funders to work with voluntary and community organisations where cuts are necessary, to make sure they are properly planned and implemented.

"As the recession has driven up the need for many frontline services, it is critical that the sector retains its capacity for supporting some of the most vulnerable people in society."

Other key findings include:

The sector’s level of free reserves is estimated to be worth £46 billion in 2007/8.

The sector’s net assets are worth a combined £96.6 billion, including tangible fixed assets such as buildings.

Overall the sector has an average of 17 months’ expenditure in reserve, but this average is driven up by the significant unrestricted assets held by research bodies and grant-making foundations.

NCVO is now examining options for taking this work forward, including in-depth qualitative research and collating case studies.

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