PricewaterhouseCoopers found 84 per cent of more than 300 chief executives it surveyed in the not-for-profit sector doubted they would have the necessary resources.

PwC partner Mark Reading said despite a 60 per cent increase in government funding over the past six years to $41 billion a year, 40 per cent of the sector believes social outcomes have deteriorated.

"These results make clear that the way government is currently funding charities isn't working," Mr Reading said. "Funding is currently awarded on an ad-hoc basis with no clear rationale."

Mr Reading said constant policy changes including "the deeply unpopular move" to abolish the new charity regulator had made it impossible for the sector to properly plan for the future.

He said overstretched federal and state government departments were increasingly relying on charities to deliver social services.

"Funding is not allocated based on performance, which means it doesn't always go to organisations who can actually deliver social outcomes," he said.

"The sector wants long-term strategic investments by governments, focused on delivering better outcomes. Above all they want certainty – in both funding and policy."

Andrew Young, chief executive officer at the PwC Centre for Social Impact, which conducted the research, said not-for-profit sector CEOs expect no improvement in their ability to deliver services to meet demand over the next 10 years.

"On average, they expect it to worsen," he said.

Of those surveyed, 71 per cent said they do not believe funding and other incentives reward the most effective social service providers.

"These are not inspiring findings considering how much Australia relies – and will increasingly rely – on charities to deliver social outcomes. We face huge challenges with demographic shifts and continue to see entrenched social issues with little or no positive change, or where things are getting worse," Dr Young said.

Dr John Falzon, chief executive officer of the St Vincent de Paul Society, has previously said charity groups should not be expected to fill the gaps left by the federal government.

"It is just not good enough to say charity will be there to fill in the gaps, because charity is not the answer," he said.

"Charities like Vinnies will always be there for people, but this is a real lack of strategic thinking and vision from any government that says let charities sort it out.

"Government has a responsibility to do what markets cannot and that is provide equitable access to those essentials of life such as housing, education and employment."

The PwC report said the not-for-profit sector is the fastest growing part of the Australian economy, having grown at almost twice the rate of the mining sector in the last six years.

In 2012-13, its turnover was more than $100 billion.

The report says simply increasing funding is not the answer.

"More than anything else, CEOs want the sector to be taken seriously," it said.

"This means fixing the way governments currently engage with [the sector]."