(Version June 2006)
On 21 March 2006 the Charity Commission hosted a conference on the delivery of public services by charities. Over 160 people attended the event in London, including representatives of charities, government departments and other organisations with an interest in the issue.
The Directory of Social Change provided invaluable assistance both with administration of delegate booking and with facilitation on the day of the conference.
The conference was intended to raise awareness of the Commission’s key messages on public service delivery amongst practitioners, funders and grant givers; to learn from the sector’s experience; and to discuss the impact of public service delivery on the charitable sector. It was not intended to be an end in itself; we anticipated that the discussion would help to inform the development of future guidance, identify where additional guidance is needed, and identify any issues on which the Commission should take action.
The Commission would like to thank everyone who attended and contributed to the conference, particularly those who made keynote speeches or facilitated workshops. The presentations and discussions were stimulating and challenging.
A number of key themes and issues emerged in the presentations and during the discussions in plenary sessions and workshops:
Charities expressed dissatisfaction with progress in implementing full cost recovery and longer-term funding. There is perceived to be a gap between central government policy (as expressed in the Compact and reports by Treasury and the NAO) and the reality of the funding situation, particularly in respect of funding by local authorities and the NHS.
A few charities (mainly larger ones) did report success in obtaining full cost recovery and shared their experience of successful approaches to negotiation.
Most charities expressed strong objections in principle to subsidising statutory services. In particular, grant giving charities want to fund additional provision, not the “basics” which they feel should be the responsibility of the State.
There are also serious questions about the sustainability of charities subsidising public services, and the impact this may have both on the charitable sector and on the services themselves. New figures from NCVO indicate that charities and other voluntary organisations may be using up reserves in order to bridge funding gaps in public service delivery, which cannot be sustainable in the long term.
Procurement and contracting
Charities’ key concerns about contracting with public authorities, particularly local government and the NHS, were inflexibility and inequality. Examples of inflexibility included authorities’ insistence on using their own standard contracts rather than Compact-compliant models, bureaucratic commissioning processes and setting unrealistic specifications for services. Inequality was illustrated in different approaches to commissioning from private sector and charitable organisations, with contracts to charities operating more like grants (administrative costs having to be justified and surpluses being subject to clawback).
There are signs of a clash of cultures and misunderstanding between the public and voluntary sectors. There are numerous initiatives to increase the capacity of the voluntary sector to tender for and deliver services, but participants felt there is also a need to educate public sector staff, especially in procurement, about the nature and role of the voluntary sector. (This is also a recommendation in the recent PAC Report Working with the Voluntary Sector (2006).)
Partnership working between charities was put forward as a model for successful service delivery, but building partnerships requires investment of time and resources to build successful relationships, and does involve some risk. Charities do not want to feel pressured into inappropriate partnerships.
More importantly, charities indicated that they want to work in real partnership with statutory bodies to deliver better services, rather than simply be treated as contractors.
It is essential for charities’ involvement in public service delivery to be driven by their mission, not by funding opportunities and not by government policy.
There is a need for longer term thinking about the funding of services. Is the use of charitable funds to subsidise public services in anyone’s interests in the long term? There is a risk that public authorities will become dependent on charity funds to fill gaps in public funding, jeopardising the future of charities and the welfare of beneficiaries.
Government is encouraging increased participation of the voluntary sector in public service delivery as a means to reform public services, but is government clear about what it wants to achieve and how? Will simply transferring services from one sector to another lead to the improvements and reforms it is seeking, particularly if the mechanisms of transfer inadvertently stifle capacity to innovate?
The role of charity
Similarly, the key challenge to charities is whether they simply accept the transfer of services from the public sector, or whether they aspire instead to use their experience and influence to transform those services. Service delivery by charities is not a prerequisite for reform; charities can bring about improvements by influencing the design and delivery of services using their knowledge of clients’ needs.
It is important to remember that charities do not exist to deliver public services, and public service delivery is not the only way that charities further their mission.
Many smaller charities look to larger charities and umbrella bodies as sector leaders with a key role in arguing the sector’s case to government. Some, however, feel that these larger charities have compromised their independence by taking on government contracts. The Commission does not share this view, but believes it is up to these sector leaders to demonstrate their independence and ability to influence government.
The role of the Commission
The Commission is neutral as to whether charities involve themselves in delivering public services. It is a decision for the trustees, taking account of the needs of beneficiaries. The Commission has set out the legal position for charities that choose to deliver public services, and also advised on good practice issues such as full cost recovery, in its Policy Statement on Charities and Public Service Delivery.
The key challenge for the Commission is to continue to evaluate its role in the debate whilst ensuring that its policy remains not merely aspirational but also practical. This will involve, for example, examining the barriers to charities bidding for, and obtaining, full cost recovery.
There were numerous calls for the Commission to take a stronger role in championing the sector, and Andrew Hind undertook to consider this. We must make a distinction, however, between championing the public interest in a healthy sector, and lobbying on behalf of the sector; the latter does not sit comfortably with our role as regulator and also encroaches on the role of sector umbrella bodies.
The Commission will:
Chair’s opening address (15kb PDF) (Lindsay Driscoll, Charity Commissioner)
Challenges and Opportunities (24kb PDF) (Julia Unwin, Independent Consultant and former Charity Commissioner)
Count me IN…or OUT? (3.43mb PDF) (Rev Michael Shaw, Executive Director, John Grooms)
A Grassroots Perspective from NACVS (41kb PDF) (Kevin Curley, Chief Executive, NACVS)
Risk management and risk transfer are of particular concern. Effective risk management is key to effective service delivery.
It is important not to over-simplify the issues around larger versus smaller and national versus local in relation to quality, capacity and added value in service delivery. There is not just one ideal solution.
Building partnerships is one potential route to managing risk and increasing effectiveness in tendering for and delivering services, but brings its own risks. There are costs in developing partnerships and making them work; these need to be recognised and planned for.
There may be a need for new guidance from the Commission on the extent to which charities can work in partnership with commercial bodies.
Much of central government’s focus still appears to be on the transfer of services to the voluntary sector, assuming that this will lead to transformation (better quality and value for money). In order to really transform services, however, charities need the opportunity to influence the design and commissioning of services, engaging in positive dialogue with commissioners and procurers at an early stage (but not necessarily delivering services themselves).
Lack of full cost recovery continues to be a barrier to sustainability and long-term planning. It needs to become a higher priority across government. The sector also needs to get better at negotiating.
Measuring impact is key to demonstrating the effectiveness of services. The NACVS measuring effectiveness toolkit (available from the NACVS website - http://www.nacvs.org.uk/resources/toolkits/me) was highlighted.
There is a risk that the sector could allow itself to be driven by government priorities and policies. It is essential for charities to focus on their beneficiaries’ needs.
Charities and Public Service Delivery: an overview (60kb PDF)
(Lindsay Driscoll, Charity Commissioner, with David Unwin, Charity Commissioner; Alice Holt, Head of Legal Services; Philip White, Head of Liverpool legal team; and Elise Millington, Legal Advisor)
Grant Givers and Funding of Public Service Delivery (47kb PDF)
(Neal Green, Senior Policy Advisor, Charity Commission)
Financial Issues: a practical guide (63kb PDF)
(Chris Harris, Director of Finance and Resources, Action for Blind People)
(Case study based on Action for Blind People)
Introduction to Full Cost Recovery (300kb PDF)
(David Hunter, Policy Officer, Acevo)
Charities and Public Service Reform: Terms of Engagement… (43kb PDF)
(Trudy Muwanga, Sustainable Funding Officer, and Belinda Pratten, Policy Officer, NCVO)
Fears of job losses in the public sector can create a barrier to a good working relationship with the voluntary sector.
The application of TUPE is not well understood by charities. It may represent a significant risk to charities taking services (including staff) from the public sector, particularly in relation to pension provision.
The government’s agenda for reform of public services needs to be informed by broader thinking about transformation, rather than simply transfer.
There has been a great deal of discussion about upskilling and increasing the capacity of the voluntary sector, but the skills and capacity of the public sector to understand and work with the voluntary sector also need to be developed.
Charities want their relationship with government to be based on dialogue not monologue.
Contributions from participants suggest that charities are more successful at achieving full cost recovery, and even making a surplus, than generally pessimistic reports suggest.
The voluntary sector needs to work together more – negotiating as a sector – not just as individual organisations.
The issues raised in this session will be used to inform the next steps outlined in the summary and conclusions set out above.
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