Charity outlook mixed

Workforce data in the recently launched UK Civil Society Almanac 2009 show a clear increase in the number of voluntary staff working in the social work care sector over the past 10 years, with an extra 130,000 joining the third sector.

This isn't a transfer of staff from the public to the voluntary sector, but is the result of massive growth in the social care sector. In 1997, half the employees in social work were in the public sector. By 2006, employees were spread almost equally between the public, private and voluntary sectors.

For the first time we've been able to break down the voluntary and community sector data by industry. Although the social services category covers a range of charities, these organisations have distinct characteristics. A large proportion of their income is governmental, and they are more likely to receive this through service delivery contracts. Although some may see this as an overdependence on contracting, at least a contract guarantees income for its duration and provides security to charities that are unlikely to attract new donors in a recession.

A more worrying characteristic of these voluntary organisations is an apparent lack of reserves available to support them through short-term drops in funding and to bridge funding gaps. Charities in the social care sector have reserves equivalent to 18 months' expenditure on average, but our research reveals that reserves are likely to be concentrated in a small number of charities. More than half of all charities - 98,000 organisations - have less than a year's expenditure as funds. These organisations will be hardest hit by funding shortfalls because they are unlikely to own the property from which they operate and do not have free reserves on which to fall back.

As we enter the recession, the UK civil society Almanac 2009 waves a few red flags: any move towards insourcing by purchasing authorities or harder bargaining on price will concern the less resilient organisations that cannot fall back on reserves. But we can be optimistic: skills shortages, which have dogged social care organisations for some years, should reduce because of an influx of highly skilled employees into the jobs market. As voluntary organisations, we must ensure that commissioners understand why we should still be delivering social care. Projects such as the Office of National Statistics/National Council for Voluntary Organisations quality measurement framework on the quality of social care, not just the volume of output, will become increasingly important.

David Kane is a research development officer at the National Council for Voluntary Organisations