The NCVO have just released another brilliant report, this time reviewing the voluntary sector’s operating environment. Titled “The Road Ahead”, the comprehensive report draws our attention to Brexit, the declining public trust in Charities and the role of Technology among others. The points which grabbed my attention most included:
“Brexit will dominate the political agenda and almost completely monopolise the attention of decision makers. This will undoubtedly distract from existing policies such as devolution and the reduction of public spending, which will continue to be pursued” (NCVO). In my honest interpretation of this, while the masses are focused on debating Brexit, the VCSE sector will continue to suffer unopposed by any mass objection or intervention.
We are also told that “the Charity Commission plans to implement the new powers it was granted by the Charities (Protection and Social Investment) Act 2016. Some of the provisions, particularly those on automatic disqualification, could have far-reaching implications given their wide scope. In particular, their application to trustees risks undermining the positive and supportive message about volunteering, and could have a negative impact on people’s willingness to take on such an important role” (NCVO).
The most concerning trend in recent years (for me) shows no sign of positive change – as the poorer and most in need demonstrate more demand for support from the VCSE sector, support for the sector itself continues to decrease. “The combined effect of public spending reductions, changing local authority finances, reduced public service provision and lower incomes for poorer households is likely to increase demand for many forms of charity services” (NCVO).
Public opinion on charities continue to demonstrate positive and negative signs simultaneously. Predominantly due to negative media attention, the latest figures from the Charity Commission indicate that public trust in charities has dropped from 6.7 out of 10 in 2014 to 5.7 in 2016. In strange contradiction to this though, the same survey demonstrated that the vast majority of the general public believe charities play an important role in society, and almost two-thirds agree that most charities are trustworthy and act in the public interest.
The final point I want to highlight is one which I have repeatedly experienced across my work with multiple VCSE organisations, is the clear need to inject digital skills widely into the sector. The report cleverly draws attention to the fact that “The ability of voluntary organisations to use digital technology is partly linked to their ability to employ people with digital skills... This is challenging for organisations, particularly small ones that are struggling with funding. They will need to draw in trustees and volunteers who can contribute specialist skills and expertise” (NCVO).
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Last October the NCVO released a report reviewing the financial sustainability of the voluntary sector. One of the aims of the report was to identify the trends that have emerged within the income of the voluntary sector since the recession. The findings are extensive, however I'd like to focus on two interesting areas; 1. Small charities and 2. The support the sector at large receives from government.
Government grants are at an all-time low. Grants from central and local government fell by a massive 49.3% (£2bn) between 2007/08 and 2013/14. Furthermore, income from government contracts has also fallen (£1.7bn) since its 2009/10 peak. “Despite positive developments like the Social Value Act review and government contract transparency clause pilots, there remain significant barriers for charities seeking to engage with public service contracting”.
The review stated that “Government policy has for some time been to move away from grants and towards contracts as a funding modality. Many of these contracts are large scale, awarded on a lowest cost/price basis, and require upfront financial investment and/or the ability to manage significant financial risk over the contract duration. These and other aspects of contracting are proving especially challenging for the small – and medium-sized charities that constitute the bulk of the voluntary sector”.
Smaller charities’ income has been the worst affected by government spending reductions and as such these smaller charities in particular are not benefiting from the general trends in economic recovery we have seen since the recession. “They are experiencing a ‘capacity crunch’ that limits their ability to adapt, or to even engage with funder programmes designed to improve their sustainability”.
Despite the hardships and reduced support from government, charities have demonstrated a significant amount of innovation and entrepreneurship during the economic downturn and recovery. “Charities have sought to diversify their income away from government sources towards income from individuals, which includes donations, fundraising, fees for services, and legacies”.
“Income from individuals has grown £2.3bn in the last five years and donations have recently recovered to pre-recession levels, this has become a significant proportion of total sector income. However the significant growth has been driven by fees charged by charities for services, relying on this as a major source of future income growth may be unsustainable or undermine organisations’ charitable aims in some parts of the sector”.
For example, a small charity working with beneficiaries who may be financially disadvantaged and coming from low-income environments faces a clear and obvious dilemma when considering charging for services. If they do charge for the service, many beneficiaries in need may shy away, if they don't charge, the charity may not have the financial resources to provide the service at all. It seems that by continually cutting funding, government seems to be passing even more responsibility (including the moral dilemma) to the small, often grass roots organisations who exist purely to help those in need. It's no wonder that some in the sector are left feeling emotionally deflated.
View the full report here
“Social enterprise is an approach, a way of trading through adopting a set of principles that include having a clear social and/or environmental mission, generating the majority of your income through trade and reinvesting the majority of your profits to further the social mission”. Social Enterprise UK
On 31 January 2013 The Public Services (Social Value) Act 2012 was passed fully into force, requiring public bodies to consider how the services they commission might improve economic, social and environmental well-being.
The act states that the authority must consider:
(a) How what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
(b) How, in conducting the process of procurement, it might act with a view to securing that improvement.
The Government’s definition of social value is: “a concept which seeks to maximise the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves”.
The Act presents a wonderful opportunity for social enterprises and charities to gain leverage when tendering for work/grants to meet the social challenges faced across the UK. The Act means that authorities must consider the social value of the services they commission, and that they can also be held accountable for not doing so. In theory, the Act should support tenders and grant applications from social enterprises and voluntary/community providers, who are first and foremost providing social value through their services.
The Act was introduced by Chris White MP in 2010, who said “The aim of the Act is to support community groups, voluntary organisations and social enterprises to win more public sector contracts and to change commissioning structures so that a wider definition of value rather than just financial cost is considered.”
I like language which is direct, authentic and clear, hence my definition of social value reads more like a question: Does the work you do (either directly or partly through your profit, knowledge and resource sharing) benefit those in need, the environment or other life on the planet, or is it self serving?