Competitive behaviour between charities has a negative impact on communities

28 Feb 2020 News

Competitive behaviour between charities has a negative impact on communities by undermining sustainability of organisations and reducing trust between service-providers, according to an interim report.

Rebalancing the relationship: Emerging findings and draft recommendations is part of a project between NCVO, ACEVO and Lloyds Bank Foundation for England and Wales intended to address competition and collaboration between larger and smaller charities in contracting. 

The project began last year. There was an open call for evidence as well as a selection of interviews and the views of steering and advisory groups reflecting a broad range of charities. Around 150 organisations have been engaged in the project so far.

'If we don’t act, the size and shape of the voluntary sector will change'

There is concern in the voluntary sector that organisations’ own competitive behaviours have a negative impact on the sector, people, and places, according to the report.

It acknowledges that the broader commissioning and procurement environment, created by funders, hampers charities but says “but we cannot afford to wait for commissioning to change”.

A number of charities expressed a concern that others appeared to be driven by market growth and succumb to mission drift, or failed to consider the impact of their strategies on the sustainability of other organisations valued by beneficiaries.

The report also found organisations, with incomes ranging from £500,000 to £50m, have “difficult experiences of working with organisations bigger than them”. 

Nonetheless, “frustrations” about working with others were expressed by both smaller and larger organisations.

Smaller organisations subcontracted often describe a loss of autonomy, while some larger organisations “struggle to adapt to the ways of working of the partner organisation”. For example, in the lack of process and procedure in place, particularly for safeguarding and GDPR. 

The report finds “good organisations are closing or shrinking”. This is resulting in “communities becoming disenfranchised and people losing the relationships, support and representation they need”.

It warns that “if we don’t act, the size and shape of the voluntary sector will change”. 

“Whether organisations are large or small, national or local, they are working to tackle issues that are entrenched and systemic. This means we need a diverse ecosystem of organisations of all types and sizes to play their part with and alongside each other,” the report says.

Recommendations 

The report has put forward some draft recommendations. It suggests organisations “recognise the power they have to effect change even while working within a challenging system”.

They should also consider the impact on an existing provider and beneficiaries before deciding whether to bid.

It also recommends organisations focus on “serving the community not the commissioner” and “adopt a ‘just because you can, doesn’t mean you should’ mindset, which focuses on improving impact not just growing scale”.

‘I hope this report is the jolt the sector needs to take these issues seriously’

Sarah Vibert, director of policy at NCVO, said: “We’ve known for a long time that there were concerns about how organisations compete for government funding, but this significant study unveils the extent of the impact.

“I hope this report is the jolt the sector needs to take these issues seriously and it should be on the board agenda of all public service-providing charities. While recognising that some elements of commissioning and procurement practice are hampering us, we also need to recognise our responsibility to strengthen the whole sector, not just our own organisations.

“We still have the opportunity to fix this and create a truly sustainable ecosystem of service providers that enables charities of all types and sizes can provide truly excellent support and services.

“Making sure they can continue to do so has to be the responsibility of trustees and senior managers, who need to reflect on how their organisation is either supporting or eroding the health of that overall ecosystem of different organisations.”

A consultation before final recommendations are made is open until midday 27 March

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