Wessex Community Action’s Response To Challenges Facing Our Local VCSE Sector

Three Wiltshire charities have permanently closed in the first months of 2026 - a stark and deeply concerning signal about the pressures facing our local voluntary sector. Carer Support Wiltshire and Relationships Wessex both ceased operations on 31 March, following Home-Start South Wiltshire, which closed on 26 February after 27 years of service. Together, their closures mark the end of decades of vital community support, and our thoughts are firmly with the beneficiaries, staff and volunteers affected.

Although each organisation served different communities, all cited the same underlying issue: mounting financial strain and an inability to secure the funding required to operate sustainably. This mirrors what we are hearing consistently from voluntary and community sector leaders across the county. Other well-established charities are also under pressure - WE Hear You recently launched an emergency appeal to avoid closure, while Wiltshire MIND is urgently fundraising to protect its young people’s counselling service.

As a charity dedicated to championing and supporting Wiltshire’s voluntary, community and social enterprise (VCSE) sector, at Wessex Community Action we know how essential these organisations are. They strengthen families, offer guidance through crisis, protect our environment, and pioneer new ways of delivering support. Wiltshire’s charities, community groups and social enterprises contribute towards our collective wellbeing, resilience and local economy. The VCSE sector is not an optional extra; it is woven into the fabric of our communities and is never more needed.

We write this article to recognise that importance - and to sound the alarm. This sector requires intentional, long-term investment and recognition as the civic infrastructure it truly is. Below, we outline the challenges facing local organisations and the affirmative actions needed to secure their future.

Challenges Facing The VCSE Sector

Core funding was cited as a ‘significant challenge’ by 37.5% of respondents in our 2025 State of the Sector survey. This was echoed nationally in the Charities Aid Foundation UK Charities Insight Report 2025. When asked about their top three challenges 79% of charity leaders mentioned at least one finance-related challenge, a category which included: achieving financial sustainability, increased competition for funding, or the balance between restricted and unrestricted funding.

The Nottingham Trent VCSE Barometer report of January 2026 also stated that income generation has been the most frequently cited concern in the Barometer for the past three years with eight in ten organisations identifying it as a key challenge leading them to suggest that this “reflects a funding environment shaped by constraint and uncertainty, driven by rising costs, shrinking public budgets, and volatile income streams.” In a report of wave 12 findings key areas of concern for financial pressures included: many organisations not receiving full-cost recovery when funding awarded, public service contracts and grants frequently failing to cover the true cost of delivering services, inflation and rising employment costs with insufficient uplifts to reflect increases and the uncommonness of multi-year funding agreements, organisations using reserves to meet operating costs, decreases in income from local authority grants and grants form trusts and foundations and an overall increase in competition for funding.

Alongside the challenge of funding has been the challenge of rising costs. The CAF report also found increasing costs were cited by 44% of charities as one of their key challenges. Amongst the costs to recently increase for charities have been the Employers National Insurance Contributions (ENICs). The impact of these are explored in the Nottingham Trent barometer report with 68% reporting that the rise had had a negative impact on their organisation. In Wiltshire Beyond Dementia (formerly Alzheimer’s Support) estimated the cumulative impact of budget changes would be to increase costs by £200,000.

Employers National Insurance was among the increased costs highlighted by Dorothy House Hospice in January 2025 when it was reported that rising costs were having a “major impact” on financial sustainability, with the cost of running the hospice has risen from £46,000 a day three years ago to £52,000 a day

Completing the triad of key challenges is rising demand. In our 2025 State of the Sector survey over two thirds reported demand had increased over the previous 12 months, with just over a quarter reporting that this had increased by ‘a lot’. The CAF survey similarly reported that the majority of charities, some 83%, had experienced an increase in demand over the past 12 with 45% reporting this had been by ‘a lot’

Financial Sustainability

Operating in this environment of increasing demand and rising costs against a changing funding environment has led to a significant challenge to financial sustainability. One response has been the use of reserves to meet operating costs. The Nottingham Trent Barometer found over half of organisations reporting the use of reserves in this way in the past 12 months. Our 2025 State of the Sector put this at a lower, but nonetheless concerning figure with 27.5% of respondents reported using unrestricted reserves to meet current operating costs, an increase from 2024 when the figure was 20.0%

Ultimately charities experiencing a shortfall face closure and the closures we have experienced recently in Wiltshire may be seen as part of a pattern nationally. Indeed, a September 2025 article in the Independent highlighted that charity commission figures showed an increase in UK charity closures of 74% from the previous year. A June 2025 article in Civil Society, based on a survey of over 700 charities with incomes under £1m, warned that nearly half of small charities fear that they are at risk of closure within a year due to their financial situation with one in 10 organisations reporting they had less than six months’ funding left, presenting a familiar picture: of increased demand without increased funding, and for some a significant reduction in public donations, alongside rising operational costs.

In response to the announced closures Wessex Community Action ran a short survey to ask if other organisations were similarly concerned, receiving 21 responses between 12 February and 19 March. When asked to describe their current financial position thirteen (61.9%) rated it as ‘fair’, seven (33%) as ‘poor’ and one (4.8%) as ‘Very poor’. When asked ‘how likely is it that your organisation will be operating this time next year?’ just under half, ten respondents (47.6%), felt confident enough to answer that this is was ’Very likely’ and a further six (28.6%) answered ‘Quite likely’. Two respondents however, (9.5%) answered that it would be ‘Quite unlikely’ and one respondent (4.8%) ‘very unlikely’. Additionally, two respondents (9.5%) answered they ‘don’t know’ which may possibly reflect a degree of uncertainty over the future – The precarity experienced by charities was summed up by one respondent who said:

“The picture can change so quickly depending on the success of funding applications but it is precarious and requires making plans for costs reductions and managing team expectations. Not easy at all!!”

Another respondent re-iterated the concerns that utilising reserves to meet operating costs was an unsustainable long term position:

“We are using our reserves to meet operating costs, and have done for the last few years. This is not sustainable. In spite of all the cost cutting measures – reducing staff, scaling back services etc – we will still be budgeting a shortfall again next financial year. As a sector we cannot continue to meet the ever increasing needs, picking up and plugging the gaps in community based services, without proper funding.”

We also asked what impacts financial pressures had had on organisations. The main reported impact was a reduction in service levels with over half of respondents 11, stating that they had reduced service levels in the past six months as a response to financial pressures. Staffing was another key area of impact with seven respondents reporting having not recruited to some vacant posts, with three planning to do this over the next six months. Only two organisations reported making redundancies in the past six months however, four indicated they were planning to do so in the next six months. One organisation added that that for two years trustees had decided not to award a cost of living increase to staff.

In an environment of increasing demand this can be a paradox as one respondent commented:

“We are having to reduce costs, but demand for the service continues. We have had make a redundancy, and we now all need to do extra work, but on the same hours, overtime is very much limited.”

Supporting The Sector

As the Council for Voluntary Service (CVS) for Wiltshire, Wessex Community Action (WCA) our role is to provide support for the sector. We have advocated for the sector with statutory partners such as Wiltshire Council and the Integrated Care Board (ICB), emphasising the value our sector brings. We have also played a leading role in ensuring the voice of the sector was heard in the development of the Wiltshire council and Voluntary, Community and Social Enterprise Sector Partnership Framework 2026 – 2029. This ensured that key priorities in the framework include commissioning and expanding and increasing funding opportunities to keep the VCSE sector sustainable.

We have offered opportunities for organisations to engage with funders such as our meet the funder event in January this year. This provided organisations with the opportunity to speak one-to-one with key funders and are committed to providing up-to-date news on available funding with a dedicated monthly funding newsletter soon to be launched. Additionally, we provide advice and guidance to organisations, including our ‘fit for funding’ support, and through our networks and forums aim to create spaces where relationships and trust are strengthened across and beyond the sector. Finally we are re-launching a charity leaders breakfast to provide a space where sector leaders can come together and provide mutual support.

Our Call To Action

There is still much more to do. We urge all partners to work collaboratively so the sector can withstand current pressures - including the emerging challenge of an oil price shock linked to the conflict in Iran - and continue delivering the support our communities rely on.

1. Invest in local infrastructure support. Local VCSE infrastructure is, as NAVCA describes, “the hidden wiring that makes places work.” It strengthens community voice, builds organisational capacity, brokers equitable partnerships and enables inclusive volunteering. Sustained investment here strengthens the entire ecosystem.
2. Commit fully to the new Wiltshire Council and VCSE Partnership Framework (2026–2029). This framework represents a vital step forward. We ask all partners to engage actively and maintain momentum, particularly around commissioning, funding and shared priorities.
3. Ensure grants and commissions provide full‑cost recovery, including inflationary uplifts. Organisations should not be forced to choose between delivering underfunded work, drawing down reserves or reducing services. Fair, realistic funding enables stability and impact.
4. Design funding programmes with multi‑year commitments wherever possible. Longer‑term funding gives organisations the confidence to plan, invest and focus on delivery rather than survival.

Finally, to our members and VCSE partners: we ask for your support in promoting and completing our 2026 State of the Sector Survey. This annual snapshot is essential in helping us understand the sector’s health and advocate effectively on your behalf.

The months ahead will demand clarity, collaboration and commitment from all of us. Wiltshire’s VCSE sector has long been a source of strength, innovation and compassion — but it cannot continue to absorb growing pressures without meaningful, long‑term support. By acting together, we can ensure that the organisations at the heart of our communities not only survive but thrive, continuing to deliver the services, relationships and opportunities that make Wiltshire a place where people can live well. As the CVS for Wiltshire, we welcome the opportunity to work with all stakeholders to strengthen the health and resilience of this vital sector.

If you would like to explore how we can work together, please contact Neil Cotton, Director of Partnerships, at partnerships@wessexcommunityaction.org.uk.

References:

BBC News: Charity ‘will cost £200k more to run’ after Budget, 27 November 2024 Wiltshire charity ‘will cost £200k more to run’ after Budget – BBC News

Business Live: Hospice charity Dorothy House facing ‘critical’ financial shortfall, 7 January 2025 Hospice charity Dorothy House facing ‘critical’ financial shortfall | Business Live

Charities Aid Foundation: UK Charity Insights Report 2025 Charity Insights Report 2025 | CAF

Civil Society 23 June 2025, Nearly half of small charities fear risk of closure within a year, research says

Dorothy House Hospice: ‘Together in Adversity’ campaign raises £1,00,000 for Dorothy House, 1 April 2025 Together in Adversity campaign raises £1million for Dorothy House

Evans, Dr. B (2026) Financial Pressures and the Funding Landscape. Evidence from Wave 12 of the VCSE Barometer, Nottingham Trent University Research Insights & Analysis – VCSE Data and Insights National Observatory

Independent: 21 September 2025 Charity closures soar by three-quarters as stalling donations and cost of living crisis blamed | The Independent

NAVCA (2026) Local VCSE infrastructure: What does good look like? What does good local VCSE infrastructure look like?

Wessex Community Action (2025) State of the Sector Survey https://www.wessexcommunityaction.org.uk/wp-content/uploads/2026/04/2025-State-of-the-Sector-Survey-Report-Final-Nov-25.pdf