Local government funding of charities has declined by almost a quarter over the last decade.

Between 2009/10 and 2020/21 income for good causes dropped by 23%, analysis by think tank Pro Bono Economics has found.

It is estimated there has been a £13.2bn fall in council funding to charities since 2010, it adds.

This drop is set to get worse as “turmoil” in local government finances further threatens council funding for good causes, warns the think tank.

It found that almost three in ten charities that work with councils believe local government funding will drop over the next 12 months.

This is threatening the survival of charities, the research warns, as two in five that work with councils say grants and contracts are “critical to their operations”.

More than seven in ten councils surveyed are tenants of councils, the think tank’s research adds.

It is estimated the financial crisis in local government “is a moderate to high risk” for more than half of charities that work with councils. Money from councils is currently worth 13p in every £1 of charity incomes.

The warning has been made amid growing concerns over council budgets following a decade of cuts in their funding from central government and amid escalating spending on adult and children’s social care.

Mounting costs of special educational needs and disabilities (SEND) support for children is a particular concern. Last month Bournemouth, Christchurch and Poole council warned it could face insolvency due to high levels of SEND spending.

Earlier this month the Carers Trust warned that cuts to council budgets are “causing huge problems” for small charities.

It made the warning after one of its network charities West Norfolk Carers revealed it is to close after losing its funding from Norfolk County Council.

Funding gap

According to the Local Government Association local authorities across England face a £4bn funding gap.

The councils’ representative body is also warning that one in five council leaders expect to issue a section 114 notice over the next two years. These are issued when a council is facing financial challenges and is unable to carry out new spending.

“The fates of councils and many charities are entwined, and when one partner goes into difficulty, the other struggles too,” said Jansev Jemal, Pro Bono Economics director of research and policy.

“Charities have already seen significant withdrawal of support from local government over the past decade, and the current difficulties in local government finances mean that the loss of will continue to grow.

“These cuts are being announced at pace, and charities across the country are anticipating further escalation in the months ahead.

“The hidden impacts of the council funding crisis matter too. Charities are being evicted from their council premises, or forced to reside in unsuitable buildings, where roofs are falling in and floors are deemed unsafe.

“This will generate extra costs and disruption to charities at a time they can ill afford it, and hit the people who rely upon them the most.”

---