What Is Fair Funding and Why Does It Matter?

Fair Funding is about making sure voluntary sector organisations have the right kind of funding to do their work well and support the communities they serve.

Across Scotland, charities, community groups, and voluntary organisations deliver vital services, tackle inequality and respond to local needs. But the way organisations are funded can sometimes make it difficult to plan ahead, retain staff, cover rising costs or invest in their work.

Fair Funding aims to change this.

It means creating a funding system that is fair, flexible, sustainable and accessible – giving voluntary organisations the stability and resources they need to make a lasting difference.

So, what does Fair Funding mean?

Fair Funding isn't simply about organisations receiving more money. It's also about how funding is provided.

There are four key areas:

1. Multi-year funding

Organisations need to be able to plan for the future.

Funding for three years or more gives organisations greater stability and allows them to plan projects, recruit and retain staff, build partnerships and focus on delivering services – rather than constantly worrying about where their next year's funding will come from.

Longer-term funding is already recognised as beneficial by the Scottish Government and parties across the Scottish Parliament. However, there is still more to do to make multi-year funding the norm.

2. Sustainable funding

Funding needs to reflect the real cost of delivering services.

As the cost of wages, energy, rent, materials, and other essential costs increases, funding that stays at the same level effectively becomes worth less each year.

Fair Funding means funding should include inflation-based uplifts and cover the full cost of delivering work, including essential core and operating costs.

It should also enable organisations to pay their staff at least the Real Living Wage, with pay increases that recognise the important contribution of voluntary sector workers.

3. Flexible funding

Not everything an organisation does can be neatly fitted into a specific project.

Unrestricted and flexible funding gives organisations the freedom to use money where it is most needed. This could include paying essential staff, maintaining premises, investing in systems or responding quickly when the needs of their community change.

This flexibility also helps organisations plan effectively, maintain good governance and build stronger, more resilient organisations.

4. Accessible funding

Applying for funding shouldn't be an obstacle in itself.

Fair Funding means having clear, proportionate and consistent application and reporting processes, with funding decisions and payments made in a timely way.

It also means recognising that grant-makers and grant-holders are partners. Funding processes should be designed to support organisations rather than create unnecessary bureaucracy.

Transparency is important too. There should be clear and proportionate information about how funding decisions are made and how public and charitable money is being used.

Why does Fair Funding matter?

The voluntary sector plays a crucial role in communities across Scotland. Organisations provide services, create opportunities, support people through difficult times, and often respond quickly when new challenges emerge.

But organisations can't do this effectively if they are constantly facing uncertainty about their funding.

Fair Funding gives organisations the stability, flexibility and resources they need to focus on what matters most: supporting people and communities.

It can help organisations:

• Plan ahead with greater confidence
• Recruit and retain skilled staff
• Invest in their services and infrastructure
• Respond to changing community needs
• Meet their governance responsibilities
• Provide better continuity for the people they support
• Build stronger and more sustainable organisations

What needs to change?

Fair Funding calls for a shift towards a funding system that recognises the true value of Scotland's voluntary sector.

That means moving towards:

Longer-term funding – generally three years or more

Flexible funding – including unrestricted core funding that allows organisations to decide where resources are most needed

Sustainable funding – covering the full cost of delivering services, including core costs, with inflation-based uplifts

Accessible funding – with straightforward, proportionate and consistent application and reporting processes, timely decisions and payments, and a stronger partnership between funders and funded organisations

It also means greater transparency around funding decisions, so organisations and the public can understand how money is allocated and spent.

Fair Funding is about building a stronger voluntary sector

Fair Funding isn't just about making life easier for organisations. It's about creating a stronger, more sustainable voluntary sector that can continue to support Scotland's communities – now and in the future.

By changing the way funding is provided, funders can help organisations move away from short-term survival and towards long-term planning, innovation and impact.

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