Third of charities 'could go bust'

MORE than a third of charities have no cash reserves and drastic cuts could lead to many going bust, researchers have said.

Prime Minister David Cameron hailed the potential for "the biggest, most dramatic redistribution of power" from the state to individuals as he launched his Big Society agenda last month, signalling that voluntary groups and social entrepreneurs may take over some public services from the state.

But charities, unions, and Labour politicians raised doubts about how the plans would be funded while budgets were being slashed.

Figures released by the National Council for Voluntary Organisations (NCVO) showed 36 per cent of "operating" charities, those that provide services, have no cash reserves to help them survive any cuts.

This includes one in five major charities, who are household names with yearly incomes of more than 10 million, the NCVO figures showed.

Among small charities, those whose yearly income was between 10,000 and 100,000, it was even worse with more than half having no reserves.

Sir Stuart Etherington, NCVO chief executive, said: "These figures show how vulnerable many community and voluntary organisations will be in the testing and unpredictable times ahead.

"Without a financial safety net, vital services for local people and communities will be at risk.

"This really demonstrates the need for public sector funders to work with voluntary and community organisations where cuts are necessary, to make sure they are properly planned and implemented.

"As the recession has driven up the need for many frontline services, it is critical that the sector retains its capacity for supporting some of the most vulnerable people in society."

The research was based on Charity Commission data with a sample size of 171,704.