Third Sector Funding Principles: CTA’s Response

Short-term funding arrangements and chronic underfunding damage many Community Transport operators and their staff, volunteers and passengers. What can we do to change this?

The Scottish Parliament’s Social Justice and Social Security Committee is conducting an inquiry into Third Sector Funding Principles as part of its pre-scrutiny of the Scottish Government’s Budget for 2025/26. Its focus has been on longer-term funding arrangements, full cost recovery, inflation-based uplifts, the real Living Wage and application processes.

We welcomed this work by MSPs, because our members frequently tell us that our sector remains widely undervalued and has suffered from historic underinvestment, especially over the last decade or more as austerity has hit home. In his recent guest blog for us, Dr Greg Stride explains how this has crippled the ability of local government to invest in local public services and the local third sector.

Many Community Transport operators depend on short-term, small-scale public sector grants, typically from their local authority, for their survival. Funding cycles of one-year or less are the norm. Delays in confirmation of funding or processing of payments are common. A lack of inflation-based uplifts results in effective real term cuts. Funding processes can make disproportionate and highly bureaucratic demands of applicants. There can also be a reluctance to contribute to core costs.

Community Transport delivers massive social, economic and environmental impact for public money, but needs more support to ensure it receives the funding it needs to nurture healthy communities; tackle exclusion, isolation and loneliness; reduce private car use and carbon emissions; and end transport poverty.

Members have told me that short-term funding arrangements and chronic underfunding negatively affects the:

• Morale, wellbeing and productivity of their staff and volunteers;
• Health and confidence of their passengers;
• Ability of their organisation to plan and develop with a long-term strategy;
• Ability of their organisation to recruit and retain talent in the workforce; and,
• Successful and smooth delivery of their services.

Our main grant from our council hasn’t changed in two decades. We’re always expected to do more with less. How can we afford to keep up with paying the real Living Wage? 

Community Transport operator 

Charitable groups, in general, want to pay higher wages, even just in terms of staff retention and morale. But they are constrained by lack of funding. 

Community Transport operator 

We heard that [the dial-a-ride] was going to stop [due to council cuts] – I’m really quite worried. I broke my hip and wrist in a fall, so I rely on the door-to-door nature of the bus. I can’t get to the bus stop myself and don’t get out much other than this. You get used to seeing the same friendly faces each week and we get a blether too. It’s a brilliant service. I don’t know what I’ll do without it. 

Community Transport passenger

Therefore, our submission to the Committee on behalf of our members argues that the Scottish Budget 2025/26 should:

• Deliver a fair funding settlement for local government, which ends austerity and empowers councils to invest in essential public services, like local buses, and deliver fairer, longer-term funding arrangements for local third sector organisations, like Community Transport operators;
• Move towards fairer, longer-term funding arrangements for the third sector across the board, including the Community Transport sector, which feature inflation-based uplifts and contribute to core costs;
• Fully fund Fair Work First and the real Living Wage through all public sector grants and contracts, such as the Network Support Grant;
• Improve the accessibility, openness and transparency of funding processes to create a more level playing field for all organisations, regardless of size; and,
• End late notifications and late payments for public sector grant recipients.

Campaigning for bigger and better investment in community solutions to our national challenges is one of CTA’s policy priorities, as reflected in our successful push for more Plugged-In Communities funding, our Manifesto for the recent UK General Election and our Review of the Network Support Grant. That’s why we’ve long supported SCVO’s campaign for fair, multi-year funding from national government, local government, the NHS and other public bodies or agencies for all of the third sector.

Our fast-approaching Funding Summit will be another major milestone as we take this agenda forward. We’ll be talking about working with local authorities and independent funders, we’ll be sharing examples of successful campaigns and we’ll be giving you the chance to ‘Meet the Funders’.

I really hope you can join us on 9 September. It’d be great to meet you there. See you in Stirling!

You can read our response to the consultation in full here.