Members of Holyrood’s Equalities and Human Rights Committee have voiced concerns.
Funding arrangements for the voluntary sector must be reviewed as a matter of urgency, MSPs have told Scottish ministers.
Members of Holyrood’s Equalities and Human Rights Committee made the plea as a new report warned the “competitive” nature of existing arrangements puts smaller organisations at a disadvantage.
MSPs also voiced concerns about the impact that only providing funding on a year-long basis could have – saying this makes it difficult for groups to deliver projects and maintain their workforce.
The committee said all public bodies must consider “innovative” ways that the voluntary sector could be financed.
Committee convener Ruth Maguire said: “The third sector provides huge value to communities right across Scotland. More funding would give greater stability to the support these organisations provide.
“Crucially, this will help not only those who benefit from that support, but also the many women, carers and people with disabilities employed by the sector.”
She added: “We’ve seen that the Scottish Government can move to a three-year equalities budget cycle, now we want other funders to follow suit and have asked the Scottish Government to set up a working group, involving key stakeholders, to examine longer-term funding models.”
Ms Maguire spoke out after the committee’s pre-budget report found that “the stretched nature of third sector funding and short-term funding cycles is causing fragility in some third sector organisations”.
MSPs added: “Reductions in local government budgets, and a lack of flexibility in where savings can be made, is also contributing to reduced funding for the third sector.”
The report went on: “Competition for funding to survive and continue supporting people could lead organisations to stray away from their purpose, leading to an erosion of third sector values.”
In addition, concerns were raised about the impact of the “competitive funding environment” on smaller voluntary sector bodies.
“Competition between organisations seems to be disincentivising partnership working, despite the apparent enthusiasm of all parties for closer and more trusting relationships,” the report said.
Ms Maguire said: “The committee would like to see a real drive to strengthen the third sector in Scotland with additional funding available to promote and facilitate co-operation and collaboration to provide the services that are so vital in realising equalities and human rights.”
A Scottish Government spokeswoman said: “We welcome the committee’s report and will consider its recommendations and respond in due course.
“The Scottish Government recognises the vital role the third sector plays in our communities in addressing social issues which is why we are providing £24.9m to strengthen the sector and identifying more opportunities for multi-year grant programmes.”