More than 7 out of 10 charities say that their contracts to help long-term unemployed people into work could fail because they are not financially sustainable, a report has found.

The report, by the National Council for Voluntary Organisations (NCVO), found that 47% of respondents felt their Work Programme contracts were at risk of failure within the next 6 months and a further 26% thought they could fail before the end of the contract.

Additionally, the report found that nearly half of the charities (48%) were subsidising the delivery of the Work Programme from their own reserves.

The Work Programme makes payments to organisations that help long-term unemployed people to find a job. Contractors receive a small fee when someone joins the scheme, but only pick up the full fee once a person has been in work for an extended period of time – up to 2 years.

The NCVO has previously warned that the Government’s welfare-to-work initiative could leave many charities feeling squeezed out and financially vulnerable.

Sir Stuart Etherington, CEO of NCVO, said: “The sustainability of these contracts is a major cause for concern. This programme is clearly not working for many charities involved in its delivery. More worryingly, this will have a damaging knock-on effect to the many jobseekers who desperately need the specialist support that charities can deliver.

“Despite concerns about contract viability, charities are still working hard to provide a quality service and are dipping into their own reserves rather than neglect people that need their help. It’s still early days and 2013 will prove critical to the overall success or failure of the Work Programme - we have a small window of opportunity to get this right and ensure that this scheme delivers for jobseekers.

“We are calling on the Government to investigate the current funding arrangements to determine why so many contracts under the Work Programme are at risk of failure and why some charities are subsidising this work."

David Perkins, manager of Prospects, The National Autistic Society’s employment service, added: “For too long we have been aware that the Work Programme and Work Choice are not delivering for people with autism and other disabilities. The fact that charities set up with the intention of supporting disabled people into work are floundering due to its failures means society is losing out on the skills and talent of thousands of disabled people at a huge cost to the public purse.

“With 2.61 million people already unemployed in the UK and 59% of adults with autism telling us that they don’t believe or don’t know if they will ever get a job, the Government must ensure that the right support is in place for those with autism. Otherwise they risk depriving some of society’s most vulnerable of making the valuable contribution to society that they want and deserve.”