Charities and funders face big decisions after a “seismic shift” in public service commissioning, according to a new report by the charity think tank NPC.
Times of Change: Briefing on public sector commissioning, published today, said commissioning contracts for charities have grown by £6.5bn in a decade while grant funding has shrunk by £2.2bn.
"The commissioning and wider funding environment is changing rapidly—and it is an issue that will continue to evolve and affect the charitable sector in different ways over time,” the report said.
“With some leading charities turning down millions in commissioning contracts, funders will need to grapple with these changes as they make effective decisions for the future.”
The report said funders faced “legitimate concerns” that they could “end up substituting for government work” as a result of the state’s withdrawal of providing statutory services. It also raises concerns that funders could subsidise “private profit if they support charities who act as sub-contractors to companies”.
According to the report, funders surveyed raised concerns about “the shift from grants to contracts” and the resulting impact on a charity’s work.
“These concerns range from the uncertain volumes of work and unstable income sometimes associated with sub-contracting to the risk of ‘mission drift’ as charities juggle their aims with the demands of contract,” the report says.
Sally Bagwell, senior consultant for NPC said there were “loads of issues but no easy answers”.
“In the last ten years we have seen a seismic shift in the way public services are delivered,” she said. “National and local commissioners give out charity contracts worth far more than ever before, and the sector has changed accordingly.
“These changes pose a substantial challenge for funders. There are lots of questions about how contracts might affect charities and their relationship with funders, but very little consensus. Ultimately funders need to keep the social impact they can achieve front and centre of each funding decision. Despite the increasingly complicated funding environment, it is needs of beneficiaries which should be uppermost in their minds.”
