Charities win less than 5% of government contracts, new analysis shows 

22 Apr 2022 News

Charities, community interest companies and other non-profits have been involved in 7,330 government contracts, worth £17bn, over a four-year period.

This equates to just 5% of the total value and volume of contracts awarded, although some charities, such as Barnardo’s, are securing significant funding from the public sector. 

The Office for Civil Society, part of the Department for Digital, Culture, Media and Sport, commissioned Tussell to analyse the scale and proportion of public sector procurement conducted through voluntary and community organisations and social enterprises (VCSE). 

The report, UK Public Procurement through VCSEs, 2016-2020, published this week, looks at four financial years between April 2016 and March 2020. VCSEs have won £4.8bn from public sector contracts in each of the last two years from around 2,000 agreements. 

Local government awards more contracts than any other part of the public sector, and VCSEs have a greater representation in areas such as homelessness services than others. 

The vast majority, 82%, of VCSE organisations in the analysis are registered charities. The rest are either community interest companies or other non-profit organisations. There were limitations in identifying social enterprises, and researchers relied on organisations including making their status clear in their name.  

Which parts of the public sector fund VCSEs? 

Local government contracts with VCSE organisations were worth £2bn in 2020, down from £2.8bn in 2018. VCSEs win around 1,200 contracts a year from local government.

This compares with contracts worth £0.6bn from central government in 2020, down from £1bn in 2018. 

Meanwhile, NHS contracts were worth £2bn in 2020, up from £0.4bn in 2018. But this is from just 300 distinct contracts. 

Decline in number of new VCSEs winning a contract 

In 2016 there were 1,042 VCSEs which won their first public sector contract in that year. This figure has fallen every year, reaching 587 in 2020. 

The report suggests that this could be explained by the fact that it has only been mandatory to publish details of lower value contracts since 2015. 

More than half (56%) of VCSEs named on a public sector contract have only won one contract in the period covered by the research. Some 41% won between two and 10. 

A small minority of VCSEs (108) have won more than 10 contracts, and just 10 have won more than 50 contracts. 

Services delivered by VCSEs

In absolute terms, the social care and health market is the largest for VCSEs, delivering £11.6bn to the sector over four years. 

This is followed by disability (£2.4bn) and employability (£1.1bn). But in these three sectors VCSEs won less than half the total value of contracts available. 

Just two of the eight sectors looked at for the report were dominated by VCSE contractors. These were domestic violence and sexual abuse, with VCSEs winning two-thirds of the contracts totalling £500m. The second was homelessness where VCSEs won 69% of contracts, again worth £500m. 

Which charities have won contracts? 

In the health and social care sector Barnardo’s has won the most contracts (62) worth £814m over the period. 

This is followed by Change, Grow Live with 40 contracts bringing in £385m for the charity. 

In the offender rehabilitation sector Prison Advice and Care Trust won the most contracts (22) but others had fewer contracts bringing in more money overall. 

Humankind charity had two contracts, totalling £64m. One of its contracts from Staffordshire County Council in 2019 was worth £55m and was the largest single award in this sector. 

Barnardo’s was awarded £732m from 13 disability contracts, with most of this coming from a contract with one council. 

In the domestic abuse and sexual violence sector the largest award was £84m to Nottingham Citycare Partnership CIC. 

Victim Support won £35m through 18 contracts and Refuge won £16m from 14 contracts. 

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