This Briefing paper deals with two current issues relevant to the work of the churches and the rest of the voluntary sector – relating to funding issues and to a new legal framework for Scottish charities.

There are two reviews of Voluntary Sector Funding ongoing at the moment. The Scottish Executive has launched a consultation into Scottish Executive direct funding, and Parliament's Finance Committee is undertaking a two-pronged inquiry into voluntary sector funding, the first part of which will feed directly into this consultation. The second part of the Committee's work will look at broader issues around voluntary sector funding, such as funding from other public bodies.

The Executive's review of voluntary sector funding recognises the role of the sector and is motivated by a desire to "modernise" the relationship between public, private and voluntary sectors, and to invigorate the social economy. There are over 44,000 voluntary organisations in Scotland (of which around half are charities), with an annual income of £2.2bn, 100,000 employees and 700,000 volunteers, valued by the Executive as "a major service provider and important for building community capacity". Scottish Ministers have indicated their aim of seeing the sector as "on a par with CoSLA, the STUC, and the CBI in terms of its relationship with the Executive" (churches are not specifically mentioned).

The immediate consultation deals with direct Executive funding (currently running at £35m annually); indirect funding (almost ten times as much, via Scottish Homes, Health Boards, etc) will eventually be part of the wider review, looking at how these and local authority funders can work together in ways that meet their own needs and those of the voluntary sector. The whole review is being guided by the principles of (a) aligning funding with Executive priorities (such as the Programme for Government and Social Justice milestones); (b) involving the sector in developing new principles and procedures (eg performance management systems; (c) taking account of the Scottish Compact (between Executive and voluntary sector) and its Good Practice guidelines; (d) developing a stable funding environment including 3-year funding packages; (e) minimising bureaucracy; and (f) ensuring value for money and focusing on outcomes.

Comments are invited on the basic proposals that future funding from the Scottish Executive should be for

• activities carried out by voluntary organisations that demonstrably contribute to meeting the Executive's priorities and objectives;
• national infrastructure, networks, etc, which contribute to the capacity of the sector to work with the Executive in attaining agreed objectives and don't duplicate existing bodies;
• innovative projects (local or national) where the Executive has a particular interest in an experimental approach; and
• the development nationally of innovative projects which have proved successful.