Exclusive: voluntary organisations struggling as grants for local government and NHS contracts fail to cover costs

Charities are on the brink of insolvency after subsidising heavily underfunded local authority and NHS contracts to the tune of hundreds of millions of pounds donated to them by the public, voluntary sector leaders have warned.

Donations, will legacies and charity shop profits are being used to prop up thousands of state-funded services in danger of closure, including care homes, homeless shelters, addiction projects and physical rehabilitation support schemes.

The vast majority were subsidising the cost of providing public services. Nearly half had not received an uplift in the value of the contract in the past two years, despite increasing demand and rising wage and energy costs.

Contracts were often only viable by freezing or cutting staff pay and conditions. One charity made a senior member of staff redundant, then took them back on as a volunteer to do their old job to keep vital services afloat.

A social care charity started a public fundraising campaign, and sold a building it owned, to raise the cash to maintain a service the council would only part fund. “[We are] not sure we can carry on unless something changes,” it said.

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