Drawing on the findings of a year-long empirical study of 15 charities in the county of Merseyside, this article examines some of the implications for charities of entering into the ‘contract culture’. Although not the focus of the empirical study as a whole, the particular aim of this article is to consider the effect of the contract culture on the typically small charity. After a brief consideration of the legal status of charities funding documents within the contract culture, a number of problems faced by small charities that are embraced by the contract culture, together with their legal consequences, are examined. A number of survival tactics for small charities are then discussed. In the light of the publication of the government Compact on relations between itself and the voluntary and community sector, a plea is made for more equal partnerships to be forged between charities and their funders within the contract culture.