Gareth Jones looks at the funding of the charity sector and some of the reasons why its future could be perilous.
The future funding of the voluntary sector appears to be back on the agenda. Last month Cass Business School held a good old-fashioned “symposium” on the subject, although grape-wielding slave girls were conspicuous by their absence.
Instead, social investment and repayable finance were high on the agenda, albeit with a healthy awareness that these are not for everyone.
Meanwhile, a report from NPC has warned that charities face “a perilous future” unless they consider more mergers and work collaboratively to win contracts. “Troubled times lie ahead,” says the author.
Minds are no doubt being concentrated by George Osborne’s spending review. By the time you read this it will already have taken place, but at the time of writing it is clear that planned cuts of up to 30 per cent at the Department for Communities and Local Government will have big consequences for local authority funding.
So happens next? Actually, we’ve been here before. Five years ago similar themes were discussed: move away from grants and towards social enterprise models; form consortia to win contracts; merge with other charities to save on back-office costs and reduce duplication.
These things have happened to an extent, but we’ve not seen the revolution that is necessary to prevent charities either scaling down their services or closing down entirely.
There are good reasons for this. Social enterprise models, for example, only work for certain activities and in certain locations. Indeed, as Warren Escadale argues in his piece about social enterprise models in the North West, the strength of local economic activity is often not sufficient in some regions for many of these innovative approaches. And fears remain about repayable finance, which is only practical if you are sure you can generate a regular income from your investment.
Mergers, meanwhile, often come up against personal and ideological barriers, and undermine the diversity of provision that makes the sector great. Joining consortia can also mean an unacceptable loss of control over how you conduct your activities.
Perhaps this time the severity of funding restraints will force more drastic action. However it seems likely that, despite many in the sector showing a laudable willingness to talk about positive solutions, there is an elephant in the room.
That is that these “solutions” are likely to be woefully inadequate in the face of planned cuts, the size of the charity sector is set to shrink still further, and beneficiaries will suffer.
Uncertainty for fundraising
Just as small and medium-sized charities find themselves most under threat from public funding cuts, so too are they bearing the brunt of the planned new Fundraising Preference Service (FPS). While it now appears that the “summit” is merely an update rather than a decision-making forum, it is easy to understand why charities outside of the “big 50” are getting exercised.
This summer’s fundraising scandals have been almost entirely the making of the larger charities, yet the problem has been framed as one of regulation, which requires a solution for the entire sector. And while the larger charities may well lose significant amounts of funding as a result of the FPS, they will still find it much easier to locate alternative income streams and to reconnect with donors who have opted to “reset”.
The smaller charities are facing a severe restriction on their ability to fundraise being introduced via an as-yet unspecified process which will be conducted by an as-yet non-existent regulator. No wonder they are getting jumpy.
