Archives for the month of: February, 2013

By Tony Okotie, Chief Executive of Community and Voluntary Action Tameside

As an infrastructure organisation supporting local voluntary, community and faith groups in Tameside, here at CVAT we are seeing the widespread and serious impact of austerity on the sector. The groups we are working with are constantly reporting the increasing levels and complexity of the demands they face whilst funding is ever more stretched. This is of course something we ourselves recognise. Salami slicing and pushing to get more for less can only go so far. The critical challenges right now involve protecting the space for innovation, real community development/empowerment (a whole other blog there!), specialist services and commissioning that develops the sector in a sustainable way.

So haven’t we got more than enough to keep us occupied without adding our support for this campaign into the mix?

Speaking up for and with the sector is core to CVAT’s mission and vision. We want to make sure that the voices of so many inspiring organisations – and the people that they work with – are heard by decision makers whether at a local level (where most of our advocacy happens) or nationally where we can play our part. So it is vital we get behind broad and timely national campaigns like Back Britain’s Charities, and that we use the privilege of our role to encourage other groups to do the same.

Here are 5 good reasons we believe that it is important to support the 5 asks of the Back Britain’s Charities campaign:

1. The campaign strategy, of asking a range of audiences including charities, businesses and the public as well as government to take action has the potential to make a real impact.
2. Modernising and improving something already in place (Gift Aid and Payroll Giving) and something that the Government is already looking at changing is hard to oppose.
3. A mix of funding streams are being recognised (donations, grants and contracts), something all charities should consider in pursuing sustainability
4. Businesses need to be brought into this debate – and they are being. Tameside 4 Good is CVAT’s work on connecting the charity and business sectors locally and demonstrates how it can be practical, and easy for businesses to back Britain’s charities
5. Now is definitely a time to be pragmatic in our campaigns and backing Britain’s charities certainly is pragmatic.

Finding ways to protect the voice of the sector at this time is no small challenge. But this is a ready made opportunity to say something meaningful locally and connect to a national impact as well. As my favourite quote goes: ‘If you think you’re too small to make a difference, you’ve never been in bed with a mosquito!’

by John Hannen, Policy & Partnerships Manager, GMCVO

We’ve seen many in the sector welcome the introduction of the recent Social Value Act on the basis that this groundbreaking piece of legislation will open up new opportunities in public service delivery for smaller voluntary organisations. In this post I’ll look at the challenges we’ll face in actually realising this but also to place the social value delivered by public sector commissioning in context.

Firstly it might be useful to look at what the Social Value Act actually does. It has been described by many commentators as a “nudge” act. Public sector commissioners can already seek to purchase social value through commissioning but due to this Act, now they will all have to consider how their purchasing mechanisms might deliver social value. The act of consideration alone however will not be enough and there is always the possibility that a commissioner will still be able to take a limited “tick-box” approach to service commissioning. Bad commissioning will still be bad commissioning whatever the legislative framework. In order to make social value meaningful, it will be important to ensure that there is a strong leadership push to deliver social value within the public sector. In many ways the job is only half done and to really see through a change, we need to lobby and persuade councillors, GPs, PCCs to take a view on social value in their organisations and set a clear direction for commissioning. We have been presented with a framework to achieve social value but we still have a challenge to ensure commissioners see it as a high enough priority to properly deliver it.

However, even with strong political commitment locally there are still significant challenges. In his recent post on this blog, Mike Wild of MACC discussed the “Graph of Doom” and the future fiscal challenges local councils face. Demand on services is rapidly increasing, as the population ages whilst health inequalities grow, yet many public bodies face cuts for the next five years at least. By 2019, the LGA expect there to be a £16.5bn black hole in local government finances. This will present two significant challenges to the delivery of social value: firstly that services will be withdrawn from many areas of existing delivery, secondly that pressures on costs will become more of a priority.

As councils adjust to cuts in spending they may have to withdraw from some activities entirely. This can be seen already with Newcastle City Council cutting its entire arts budget and Derby Council making cuts of 83% in their supported housing budget. This will mean that large areas of provision, where the voluntary sector already plays a key role, will no longer see state delivery of services. Whilst the Social Value Act might give us a larger slice of the pie, that pie is rapidly shrinking.

Even where services continue to be delivered there are still further challenges. It’s not enough to deliver high value services to be competitive but it is vital to be affordable. As local authorities try to deliver more with less, out of necessity they will be looking to deliver services at scale and reduce costs wherever possible. The need to consider social value under this act won’t be accompanied by a requirement to fund services to a level where organisations delivering high levels of social value might be able to effectively compete. Larger prime contractors may be required to look to bring social value into their supply chains but if their own contract is priced in a way that makes the management of a complex supply chain unaffordable then no matter how good they are, there will be few opportunities for smaller providers. Add payment by results into the mix then, no matter the priority given to the delivery of social value, voluntary sector providers may not wish to take on the risks inherent in delivery contracts.

So, to gain the most of the Social Value Act we need commissioners to view social value as a priority, strong local political leadership, to address needs where public bodies maintain a statutory responsibility and to offer a competitive price. Even then we face further challenges as the private sector will not stand still. Businesses wishing to deliver public services in future will clearly be required to demonstrate that they can deliver social value but they won’t be limited to delivering this through sub-contracting relationships with voluntary organisations. Larger businesses may merge with or take over social enterprises in order to widen their offer, they may hire staff with the appropriate skills from voluntary organisations, they may institute local employment schemes and they may even offer small grants schemes for community organisations. In many ways the Social Value Act creates an incentive for businesses to become much more socially responsible and if that comes to pass it will be a wonderful thing and a singular achievement. However, such a change won’t necessarily lead to increased contracting opportunities for smaller voluntary organisations.

Ultimately, with the cost pressures on the public sector and the challenges statutory bodies face as they seek to address increasing demand, many organisations may find delivery of social value through public commissioning processes harder rather than easier in the future. We also need to question how useful a mechanism for delivering social value commissioning is in the first place. Jay Kennedy of the Directory of Social Change recently made a powerful challenge to the voluntary sector on issues of commissioning and independence. When we deliver public services through contract we deliver services we have not designed and are accountable to the commissioner of those services rather than our beneficiaries. With newer contracting processes we become accountable to large private sector primes. This isn’t an argument for withdrawing from commissioning but recognition of the challenges commissioning processes bring along with the opportunities. Organisations should still consider commissioning but do so with their eyes open and pay particular regard to exactly what proportion of their activities are funded through this method.

Research over recent years has suggested to us that, even after a decade of increased investment from the public sector into the voluntary sector, nearly 80% of our local sector receives no public funding yet is able to deliver significant levels of social value. Many of them deliver magnificently with low levels of resources pieced together from a range of sources. As organisations we can undertake a wide range of activities to deliver on our missions and through that social value. We can ask for donations, we can undertake fundraising activities, we can apply for grants, we can trade directly with the public, we can charge membership fees, we can recruit volunteers, we can mobilise our service users to participate in the delivery of the services that supports them and we are more effective at delivering in these ways than other sectors. We shouldn’t just be pursuing the options that bring in the highest levels of resources in order to self perpetuate but instead engage in the activities that deliver the most for our beneficiaries and make us most accountable to them.

The Social Value Act may well generate opportunities to deliver social value but the challenge we need to address is how our organisations might have to change in order to be competitive enough to win such contracts and whether we can actually do more good by focussing on the kinds of activities no one else can undertake. When delivering social value, commissioning is not the only route.

By Dil Daly, Age Concern Liverpool & Sefton

This blog looks at the impact of the austerity measures and in particular, the retraction in public sector spending on charities. I am concentrating on medium sized charities partially because I work for one (and hence have first hand experience) and partially because I believe that the public sector funding cuts have affected these charities more than their larger and smaller counterparts – feel free to correct me if I’m wrong.

Over the past decade, medium sized charities have tended to earn the majority of their income from managing and delivering contracts for services funded by the public sector, usually local authorities. The current austerity measures, all over the country, but particularly in the North of England, have resulted in a high percentage of public sector contracts, with voluntary sector agencies, being significantly reduced or completely eliminated. Many charities have been affected, in particular those providing preventative and non-statutory services.

Contemporaneously most local authorities, as a result of the reduction in financial allocation flowing to them from central government, have been forced to implement a mixture of raised eligibility criteria and higher charges for services leading to a reduction in the number of people either able or willing to access public sector funded services. 

The consequence is that charities are faced with diminishing funds, increased demand for their provision and pressure from local authorities to reduce the unit cost for any public sector funded contracts which they still retain. I don’t have any magic answers to these problems (my own charity has suffered very large cuts in income from contracted services) but I do have some details of measures my charity has adopted to enable us to go forward with more optimism into the future.

1. The first and potentially most controversial change is a move towards charging the end user the economic cost for some of the services provided to them. This change was thoroughly scrutinised by my Trustees who were worried that some beneficiaries would not be able to afford the services they need. Eventually, after much debate, they decided that it was better to provide the service at economic cost and assist the poorer beneficiaries with advice and assistance to aid affordability rather than cease to operate vital services or be restricted from introducing new services which are wanted and needed.

2. Next we have embraced non-primary purpose commercial trading with guidance and support provided by a national social enterprise called advant~age. Many charities operate some form of trading, but it is often in the form of primary purpose trading e.g. selling training courses about their particular specialist area. Utilising products and sales channels provided by advant~age we are now selling an ever expanding suite of commercial products incorporating travel insurance, commercial insurances, stairlifts, funeral plans, wills, power of attorney, equity release etc. Product sales can be face to face or made just by encouraging supporters to purchase via a link from our website to the advant~age site. It has been simple to set up and operate as advant~age does all of the hard work in sourcing the products and providing sales support. Last year we made over £16,000 commission from trading in advant~age products and we are anticipating this sum increasing each year.

3. Finally we are reducing expenditure where we can in the traditional manner. We are scrutinising all cost centres and budget lines to see where we can make savings, however small; but to be honest there has been very little saved in this way, as we were already pared to the bone. More success has been gained by becoming much more assertive in our approach to purchasing. Internally, our staff have become price Rottweiler’s – they just won’t let a supplier go until they have cut their charges. As suppliers lose contracts as a result of business customers shrinking or going to the wall in the recession, so they become more willing to negotiate on price. We have also had substantial amounts of expert professional help with this as through our 800 Group charity consortium, we have been able to utilise the services of a dedicated purchasing manager who undertakes aggregated purchasing for the seven charities and has saved the 7 charities collectively over £250,000 in 2011/12.

Our belief is that the combination of these strategies will ensure that we have greatly reduced reliance on external bodies for our future financial survival; which brings me neatly to the title of this piece – “Unchaining the Wolf”. One collateral aspect of the reduction in public sector funding going into charities, I believe, will be a reduction in the reluctance of charities to speak out forcefully against the local authority/public sector when warranted. In the recent past, a certain element of self censorship has existed as charities have been wary of “biting the hand that feeds”. In essence we have tended to become a little too cosy with our funders and respond like lap dogs, doing our master’s bidding on demand. In future, the golden chains of funding won’t be there to make us think twice and I can foresee charities being far more prepared to challenge statutory authorities more vigorously. What has been termed the civil society is soon going to become far less civil and far more prone to standing up for itself and its beneficiaries. The lapdogs will revert to their true nature. Watch out local and national government, the wolves are slipping their chains.

Thanks for reading – and please do respond