CRISIS point is looming for many charities and social enterprises in Helensburgh and Lomond, unless urgent changes are made to the funding process for organisations.

That's the view of the chief executive of the Argyll and Bute Third Sector Interface (TSI), the support organisation for the region's third sector.

Kirsteen Murray has issued the stark warning as charities and volunteer-led groups face up to the threat of financial oblivion following the coronavirus lockdown and the complete suspension of all fund-raising activities.

The disruption caused by Covid-19 has meant that around one in five respondents to a recent survey by the Scottish Charity Regulator (OSCR) are fearing for the future of their organisation, at a time of unprecedented demand for the health and social care services they provide.

Ms Murray, who took on her role in 2018, says that the pandemic has prevented solutions from being found for long-term structural problems in the way in which third sector organisations receive funding.

When the temporary emergency grants handed out during the past few months dry up in the autumn, Ms Murray believes some of the more than 100 registered charities, social enterprises and community groups in Helensburgh and Lomond may not survive.

She told the Advertiser: "There should be no doubt that before coronavirus, there were very significant problems for a number of third sector providers of health and social care services in Argyll and Bute in terms of their future viability.

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"Coronavirus brought challenges to many third sector organisations, but they rose to the challenge, many adapting the services they provided during the emergency and working closely together at local level as part of an exceptional community response.

"During the crisis there have been multiple sources of short-term funding to help third sector organisations and there should be no organisation which has taken advantage of that funding which should have been adversely impacted by the crisis, however, short-term funding is just that, short-term.

"Most health and social care providers will run out of short-term funding by about September, then they are back to where they started; desperately worried about the future."

Typically, third sector organisations are paid to provide their services on the basis of their direct staff costs, plus only 10-20 per cent on top to cover everything else – including offices, utilities, telephones, insurance, governance, training and PPE.

Decisions about these services in Argyll and Bute are made mainly by the Health and Social Care Partnership (HSCP), however, in recent years, Ms Murray says, there have been a number of issues with the arrangements in place through the HSCP to purchase services from the third sector, which means that many providers were already in a very difficult place prior to coronavirus.

"The first problem has been with the number of arrangements where providers have never had any contract, but have survived on year-to-year grants," Ms Murray continued.

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"Many providers have told the TSI that their grants have not changed in value for up to 10 years. In that time, all of the rises in costs have had to be borne by the provider organisation, government legislation has required provision of stakeholder pensions, utility prices have shot up, and fuel costs, which are a particularly relevant cost in Argyll and Bute, have also increased significantly.

"Some of these providers tell us that they have been increasingly topping up their public sector contracts from project income or from their reserves.

"Another problem with current arrangements with the HSCP is that as third sector organisations are squeezed financially, they are unable to increase salaries for their staff members, yet the same public sector organisations that commission them to provide these services give annual rises to their own workers.

"This creates a second class workforce in Argyll and Bute – yet third sector workers spend in our local shops and restaurants in just the same way as public sector workers, and are an important part of our circular economy in the region.

"Another problem with annual arrangements is that the HSCP does not agree its budget until March or April each year, meaning that grants run out on March 31.

"But third sector organisations often are not told if they will have any income, or the level of that income for the next year until well into the first quarter, meaning that organisations are providing services at their own risk, and using their own reserves, in that period."

A formal commissioning strategy, which would set out which services would be purchased in the future and allow suppliers to plan ahead, was presented on the agenda of Argyll and Bute Council's Integration Joint Board (IJB) in March.

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The IJB directs the work of the HSCP, however, the paper was not taken forward earlier this year due to the start of the coronavirus emergency, leaving charities and social enterprises across the region in limbo.

Ms Murray added: "We feel that this plan by the council sets out a general willingness to work very cooperatively with the third sector, but it falls short of committing to fair contract terms including minimum three-year contracts and contracts that reflect cost-of-living increases.

"Our main concern is that while substantial progress has been made over the past 18 months, now that everything is on hold, it will be 2021/22 before the sector sees significant progress.

"We need change now, because many organisations fear for their survival beyond the autumn."

Judy Orr, head of finance and transformation at the HSCP, said: “We work very closely with our colleagues in the Third Sector Interface and we would like to thank them for everything they do for the people of Argyll and Bute, especially over the last few months with the challenge that we have all faced with Covid-19.

“We already provide a significant level of funding to them which greatly assists them in delivering services in our local communities on our behalf.

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“At the same time, however, it is important to recognise that the HSCP is also facing major financial challenges, and we are having to make significant levels of savings year on year so that we can continue to deliver a wide range of health and social care services for the people of Argyll and Bute.

“We will of course continue to work closely with the TSI and all our other stakeholders over the coming months and years, including in the development of our commissioning strategy, which was paused due to the Covid-19 pandemic.”

An Argyll and Bute Council spokesperson added: “We value the vital services provided by charities and the third sector, and the role that they play across Argyll and Bute.

“Whilst we recognise the value of longer-term contracts and budget certainty, the council also requires longer-term financial certainty to enable us to look at those options.

“Covid-19 has inevitably caused delays but we are working to get back to normal as soon as possible.”

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