There has been a growing perception that funding for the third sector has not only changed in recent years – in terms of where it comes from, how it is accessed, and what it can be used for – but that it has significantly reduced. In particular, ‘grant’ funding from Local Authorities appears to have faced the greatest decline, with more ‘restricted’ types of funding replacing the more flexible ‘unrestricted’ forms. In response to this, the Finance Hub commissioned BRAP to seek evidence to confirm whether this perception was ‘fact or fiction’.

BRAP made contact with 90 Local Authorities across the nine English regions, from which telephone interviews were conducted with key staff in 77. In addition, 15 third sector organisations were also consulted. Whilst the vast majority of Local Authorities failed to have detailed information available about the levels of funding supplied to the third sector, of the 27 that did, evidence shows that a total of £36,464,052 was distributed via grant aid three years ago. In the 2006/07 financial year, this amount had been reduced to £31,709,359, approximately 87% of that three years before.

When the estimated figures from a further ten Local Authorities were added, the amount three years ago was shown to be £37,647,052 having reduced to £ 32,928,059 in 2006/07. This was again approximately 87% of the previous amount. Even allowing for the estimated figures of the latter figures, evidence suggests a trend of declining funds. This decline may be greater if inflation is allowed for.

The findings suggest that underpinning these changes have been the shift towards a ‘contract culture’ and commissioning, greater competition for a dwindling pool of relevant funds, and the growing influence of Local Strategic Partnerships, Local Area Agreements and Government policy.