One in ten charities fear they'll have to close their doors this year, partly because of government cuts to their budgets. The warning comes as a widely-predicted black hole in funding for charities begins to take affect, with organisations experiencing a long period of uncertainty before new Big Society initiatives from the government get off the ground.
According to research by the organisation New Philanthropy Capital (NPC), around two thirds of charities are cutting frontline services and nearly three quarters are making staff redundant. The government has slashed the amount it gives to charities by more than a third, and although it has set up a Big Society Bank - now rebranded as Big Society Capital - it only started operations in April of this year.
Serious questions remain about whether it will support smaller charities, which are likely to find it harder to qualify for the "payment-by-results" system that replaces many of the old grants. Around half of the charities who responded to the NPC survey said the new payments system would adversely affect their finances.
Dan Corry, NPC’s Chief Executive, said: "This is a time of radical change for charities. Not only are they coping with some of the biggest spending cuts in British history, but the landscape is also changing fast.
"As the state pulls back we are seeing a real shift in the way public services are commissioned and delivered. Our survey suggests some charities will be able to gear up to play a bigger role, but we think others will find it tough and will go under."
The report will add to concerns that despite all its talk of the Big Society the government is failing to support the charitable sector. Ministers have been criticised for introducing a so-called Charity Tax in the 2012 Budget, which even senior Tories worry will curb the amount philanthropists donate to good causes.
The government's implementation of its Big Society agenda was criticised earlier this month in a report by the think-tank Civil Exchange, which warned that David Cameron's vision wasn't being rolled out evenly, with charities in deprived parts of Britain being hardest-hit by the cuts.
"We have a lot of stressed staff," says Graham Mynott, a project manager for a housing and legal advice charity called Keyhouse, based in Bradford. "You start to see cracks. We’ve tried to be creative, trying to find other funding streams, diversify our funding, and do more joint working with other organisations. But for a long time we’ve relied on contract work so we don’t have a long history of churning out grant applications.
"There is money around—but it’s about having the time and resources to actually pursue it."
It says a lot that David Cameron has not used the words "Big Society" in a speech for nearly a year, in fact it's hard to remember the last time any of the ministers actually working on the projects used the phrase. One of its biggest proponents, David Cameron's director of strategy Steve Hilton, left government last month for a sabbatical, amid reports of cross-words with senior civil servants, and ministers admit that the funding models for some of its major initiatives - relying largely on private sector investment - are unproven.