Financial distress at welfare associations threatens millions

Top associations of independent welfare organizations warn of cuts to social services due to financial strains. More than 80 percent of those surveyed expect reductions in aid for youth, the elderly, and the sick. Diakonie President Rüdiger Schuch sharply criticizes the federal government and calls for greater financial support.

In Berlin, top associations of independent welfare organizations have sounded the alarm. A survey by the Bundesarbeitsgemeinschaft der Freien Wohlfahrtspflege (BAGFW) indicates that more than 80 percent of providers anticipate cuts or closures of social services due to tight finances, such as family and health aid.

The Diakonie is among those affected. President Rüdiger Schuch voiced sharp criticism of the federal government and demanded increased financial commitment. "Whoever orders social work must also pay for it fairly," Schuch told the RedaktionsNetzwerk Deutschland (RND). "We cannot make tariff increases and inflation disappear through higher efficiency – in the end, those in need pay the price through service reductions."

The affected associations include, besides the Diakonie, the AWO, the Paritätischer Wohlfahrtsverband, Caritas, the DRK, and the Zentralwohlfahrtsstelle der Juden in Deutschland. For 65 percent of those surveyed, funding issues were so severe in the past two years that services had to be restricted. The share that had to completely eliminate services rose by five percentage points compared to 2024 to 20 percent.

Schuch called the figures alarming and warned of the consequences. The institutions would have to make cuts where it hurts the most: in aid for people. "Saving on the social sector is one of the most expensive forms of budget consolidation, because the societal follow-up costs of a divided society are unaffordable," he said. He accused the government of losing touch with reality. The Diakonie manages around 34,000 offers and has ten million contacts annually, often knowing about problems earlier than ministries.

In welfare services, the economy works differently than in industry: Every euro invested by the state flows directly to those in need and contributes to cohesion and democracy. Voluntary engagement, which the government aims to promote, is also at risk. Nearly 70 percent of those surveyed expect a decline if professional structures are cut. "Without professional structures and spaces, there is no stable voluntary engagement," Schuch warned.

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Press conference photo of health insurance chief Andreas Gassen calling for abolition of voluntary services to save 1 billion euros amid 12 billion euro gap.
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Health insurers' chief demands abolition of voluntary services

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Andreas Gassen, chairman of the Kassenärztliche Bundesvereinigung, calls for the complete elimination of voluntary additional services provided by statutory health insurance funds to achieve savings. He estimates the potential savings at nearly one billion euros per year. This comes amid a looming financing gap of twelve billion euros in the statutory health insurance system.

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Following optimism ahead of the meeting, the Bundestag-Bundesrat conciliation committee has agreed on a compromise for Health Minister Nina Warken's savings law to stabilize health insurance contributions and avert hikes from 2026. States and federal government expect Bundesrat approval on Friday.

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