Small charities 'shut out' of bids by large charities, NCVO told

04 Apr 2017 News

Smaller charities are being shut out of bids to provide public services by larger voluntary organisations’ “sharp commercial practices”, according to complaints received by NCVO.

NCVO has previously received complaints from smaller charities regarding their inability to compete with large private sector providers.But, writing for Charity Finance, outgoing NCVO public services manager Nick Davies says these concerns have expanded in scope.

“Increasingly, the complaints we hear from charities are not directed at Local Authority A or a MegaCorp B, but at C: other charities,” says Davies, who stepped down from the organisation last month to join the Institute for Government as research manager.

“In particular, smaller voluntary organisations say that some large national charities are employing the sharp commercial practices that were previously the preserve of Serco and G4S.

“They cite aggressively pricing bids to undercut existing local providers, using voluntary income to subsidise the service, and using smaller groups as ‘bid candy’, sometimes naming them in bids without consent or knowledge.”

Davies says the complaints do not accuse larger charities of behaving “any worse” than private bidders but express disappointment that such practices are being used by the voluntary sector.

“The charge is that, by using sharp commercial practices, these charities are placing the interests of their organisation above those of beneficiaries,” he says.

He warns it would be problematic if charities offering cheaper bids would subsequently provide poorer quality services.

Providing public benefit is a requirement of charities, he says, while private companies are mostly concerned with turning a profit.

Davies suggests the real solution to the problem is a change in the way services are commissioned, with a focus on price incentivising the low-cost offers of larger organisations.

A reform of current practices will be slow, he says, although the Social Value Act offers an opportunity.

NCVO will continue to lobby for change, he says, but urges the sector to ensure its commercial practices are in-keeping with their principles in the meantime.

 

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