Charities often do not ask foundations for enough money when they make grant applications, the former chair of the Barrow Cadbury Trust told delegates at the Labour conference earlier this week.

Ruth Cadbury (pictured), who is now MP for Brentworth and Isleworth, told delegates at an event on local authority commissioning that charities also too often under-bid to fulfil government contracts.

Speaking at the fringe event run by Social Investment Business and Social Enterprise UK called Local Authority Commissioning in an Era of Austerity: Can Social Value Deliver More Bang for Your Buck?, Cadbury said: “In my experience, when the third sector bids for grants or projects or contracts, they don’t put the full cost of their back office in”.

She said: “When working in the third sector I saw examples of even larger organisations under-bidding and ending up being very slim in terms of core services. And that can be a real risk to the robustness of that organisation.”

Cadbury said that when she worked for the Barrow Cadbury Trust, whenever it was providing funding for projects it would always make sure that it wasn’t just funding the project.

“We would ensure that they had enough central support to sustain that project, and look for that organisation to have a future,” she said.

Transferring risk

In a discussion during the session, John Low, chief executive of the Charities Aid Foundation, said that commissioning often involved the state transferring risk to charities.

He said: “In the case of commissioning, you are transferring the risk from local authority to another organisation for the delivery of something designed by the local authority. Is that something that is the right way to be thinking?”

The benefits of commissioning to social enterprises is often discussed, he said, but “in reality, it is just a matter of off-loading the risk from government funded sources onto the poor old third sector that has to carry the risk again”.