OK, so maybe the expansion of public spending in the UK over the last 13 years was extraordinary. But so was the tax-income from the growing financial sector. That the public deficit was still allowed to grow so large on serves to show that the highly profitable sectors weren't taxed enough. The City managed to scare the government into thinking it would take flight if taxes were raised and would leave Labour's social transformation plans with no money to go on.
With the current retreat of public spending expected to go on across industrialised countries over the next 5-10 years what are NGOs to do to sustain their work? Reliance on government funding has created a lot of jobs in the sector but also dependence on the political whims of changing governments. The whims over the last 13 years were relatively positive with regards to the availability of funding, now they are not so charities are squealing in fear. Not that charity work over the last 13 years has made much difference on anything but the individual level. Most social charities' fallacy has been that they have accepted the terms of the market economy and focus on either issues of access to opportunities and on encouraging individual action in the form of "raising aspirations"/"helping people fulfil their potential". The lack of a structural understanding and approach to the problems of poverty, social exclusion or racism for example have confined the work of most social welfare charities to the role of temporary patches and their directors to managers focussed on running services smoothly and cost-effectively rather than visionaries. The approach of using the tax-income from a few boom-sectors of the economy to finance an expanding social-welfare programme is inherently flawed as the highly profitable sectors keep on creating and exacerbating the problems that the charities are trying to fix - wage exploitation in low-earning and low-skilled jobs, perpetual unemployment, a consumer society.
Coming back to charities - some might be able to rely on private donations to sustain their work. Most will enter the increased competition for an ever-shrinking market of public and trust-funded projects. Many charities will go under or merge. Even until now, serious money has only come from the state or from very very large scale operations by national charities so how could one expect the private donor and trust fund market to pick up the slack.
If we are to think then about a potential solution, the question is about alternative sources of income for charities to substitute the public money. Doing what charities do well they could try and sell the services they do well like training, "art by homeless people", people participation, advice etc. all this might generate some money but it will be peanuts in comparison to current funding levels and private businesses do this much cheaper and maybe even better, so charities would have to become pretty much private businesses to deliver the services effectively.
No, in order to take serious strides towards implementing any kind of social change agenda charities have to find access to serious amounts of capital which can regenerate itself as well as generating operating capital for the charities' programmes. So the question is - where could this money come from? Should charities invest in highly profitable industries to "suck" profits out of the system and divert them towards their progressive work? Of course such a situation with charities as shareholders would suffer from the same fundamental flaw as the New Labour approach detailed above - the source of the funds generates the very problems the charity is trying to remedy. Thus rather than aiming to abolish itself as all charities should strive to, the charity would actively sustain the negative situation that it should abolish. Of course, if one denies the links between profit-extraction and social exclusion or poverty this line of argument fails. OK so maybe charities would have to find "ethical" sources of profit to create independent sources of wealth.
The point is though - for serious social change work an organisation needs an independent financial basis and cannot be dependent upon fluctuating public sector funding or the often small-fry and restricted trust-fund money.