Five things the government could do to really support small charities

30930962770_a68e502cd6_zThe government responded to new research highlighting how ‘broken commissioning threatens the survival of small charities’ with a programme of support to help small and medium charities to successfully bid to deliver public services. Others will have their own views….but suffice to say I was underwhelmed by their approach.

But if incubators and Crown Representatives aren’t the answer, how could the government respond meaningfully and effectively to the challenges faced by vast swathes of the not for profit sector?

Here I suggest five ways the government could offer genuine support to small and medium sized charities:

1. Stop believing that ‘business’ is inherently better than ‘charity’

Charities and not for profits must be entrepreneurial to thrive, but to suggest that aping big business is the way to do this is misguided and damaging. ‘Big Business’ remember brought us delights such as Enron, the global banking crisis, PFI and countless other examples of how not to do things. There are economies of scale that are helpful to achieve, but charity performs a hugely important – and socially distinct – purpose to commercial enterprise. Social enterprises are a hugely important part of the social economy (particularly those that are genuinely enterprising and actually deliver social impact) but not every charity ought to be a social enterprise.

We should not judge charities by the business acumen and financial efficiency – though that’s not to say strong financial management and entrepreneurialism are unimportant. Charity must deliver social benefit. They should be ‘charity-like’.

 

2. Make ‘The Grant Making Tango’ compulsory reading for commissioners and funders

Written in 2004 and as compelling today as it was then. Julia Unwin sets out the need for funders to be clearer about what impact they are seeking from their funds; maintaining activities or services, building organisations or systems change. She also makes the case for different funding styles to support this; giving, shopping and investing.

Too many funders and commissioners are unclear about the approach they are taking and precisely what impact they want to have. Understanding the differences and being clear about intent will inform the way charities (and others) are invited to bid and reduce the amount of time wasted trying to second guess vague specifications and guidelines.

 

3. Start doing more ‘investing’ – let charities find solutions to problems

If commissioners knew best how to solve a particular social challenge then I’d have thought they’d be best placed to deliver that solution or service. The fact is that smaller charities and community groups are experts in their fields. They are often closer to their beneficiaries (many of them run by their beneficiaries – or at the least directed by them) and well equipped to identify the best ways to tackle those challenges. Commissioners are paying for someone better placed then them to deliver the solution. Why then should we try to impose the most appropriate way to deliver the solution?

Invest in the groups and organisations that are best equipped to find solutions and then trust them to get on with it. Provide support, challenge, question, encourage and work with them to ensure they have every chance of success…but let them do what they do best – support people and causes that need their help.

 

4. Don’t allow grants to be seen as the commissioners’ Cinderella

For too long grants have been seen as the poor relation of contracts. The Orwellian mantra of ‘contracts good, grants bad’ has eroded confidence in grant-making as a valid mechanism for supporting the delivery of social outcomes. It must stop. Grants are often more effective, more efficient and less bureaucratic than the dead hand of public sector procurement.

The real villains here are inappropriate use and poor practice – whether in grant-making or in procurement. Done poorly grant-making is expensive, burdensome and unlikely to deliver real impact to beneficiaries and procurement is no different. Let’s stop judging a particular approach and start appraising the way it’s done. Good grants and good contracts.

 

5. End austerity – fund public services adequately and start investing in prevention

The elephant in the room here is the fact that our public services are chronically underfunded and charities are being asked to pick up the pieces. Local government funding has been cut savagely over recent years and is only getting worse. Take Adult Social Care for example, one of the biggest costs in our Welfare State. It may need reform and there are plenty of things that can be done to improve the way we deliver it, but there is simply not enough money to meet rising demand. There’s no realistic prospect of investing properly in preventative measures when councils are struggling to merely meet their statutory duties. If the government wanted to alleviate the pressure on small charities, it should fund public services properly and not expect the care of millions of vulnerable people to be provided ‘on the cheap’ by someone else.

 

I’m not so naïve to believe that these five things on their own would fix the ‘commissioning crisis’. Nor would they mean an end to the challenges faced by small and medium sized charities. In fact it’s my view that the constant hand-to-mouth existence faced by many small charities is what gives them their cutting edge and drives innovation and improvement. However the government are serious about wanting to offer support to these organisations, they may want to consider these actions. And….the bit I know they’ll really love, they could do numbers 1-4 without it even costing them any more money.

 

Small charities in crisis but fear not…here comes the government

commissioning20report20coverThe excellent ‘Commissioning in Crisis’ report from the Lloyds Bank Foundation for England and Wales recently set out how ‘broken commissioning threatens the survival of small charities’. And just a week later the Minister for Civil Society, Rob Wilson, announced a programme to help get small charities into the public service supply chain.

Excellent – responsive government, sensitive to the needs of small charities and acting on available evidence in a decisive and timely fashion, right?

Maybe.

Or perhaps it’s merely encouraging more small not for profits down the road of wasted hours, time and thankless bureaucracy in the forlorn hope of winning contracts?

To help me make up my mind (and mindful of the political dimensions of interpreting evidence), I thought I’d start by taking a look at what Commissioning in Crisis says.

Much of the report’s content will not come as much surprise to anyone who has worked for or with small charities (or for that matter a SME). Phrases like unacceptable hoops, poor scrutiny and irrelevant requirements are sadly all too familiar to those who have ventured bravely down the public service procurement path. It is worth mentioning at this stage that this type of bureaucratic time-wasting is not the preserve solely of government. At their worst charitable trusts and foundations ae also guilty of poor processes and systems that place huge unnecessary burdens on applicants. It is by no-means widespread and substantial effort to improving things has been made over the past 20 years or so….but not to the extent that charitable grant-makers can start pointing out the inadequacy of government without impunity.

My perspective here may not be unique, but I have worked as a grant-maker; I have developed commissioning processes in local government and I have applied for numerous grants and public service contracts within small charities. In my experience, public sector procurement is far far worse than almost all charitable grant-makers application processes.

What is not new, but has now reached epidemic proportions, is the shift away from grants towards contracts for no other reason than the new public management orthodoxy says grants are bad and contracts are more efficient. It is a widely held view and one that I have absolutely no sympathy for. The evidence to justify this politically-motivated approach is noticeable only by its complete absence. I am not for one minute suggesting that contracts are inappropriate in some circumstances, what I am saying is that they are used crudely and inappropriately far too often.

The solution offered by the Minister is – as Gethyn Williams pointed out – very reminiscent of government policy circa 2005…but without the money to back it up. We have a Public Service Incubator, a commissioning kitemark and a voluntary, community and social enterprise crown representative.

I had never heard of a ‘crown representative’ before but it turns out it’s something that was introduced in 2011 in order to ‘help the government to act as a single customer.’ Strategic suppliers – which appears to mean big business – have Crown Representatives. The likes of Serco, BAE Systems, Tata Steel and Lockheed Martin have named individuals on a document on the Cabinet Office website. There’s also one for the banking industry, one for the energy industry and one for SME sector.

Clearly someone feels that’s a model which is working so well it ought to be replicated for the not for profit sector. I wonder whether the Federation of Small Businesses would care to comment on the efficacy of the approach?

In 2005 we didn’t have Public Service Incubators we had a national training programme through the ‘Partnership in Public Services’ programme.

An article in Third Sector magazine from 2006 says this:

The Government has pledged to make procurement processes fairer and more proportionate by drawing up a set of standard contracts for public bodies contracting services from the voluntary sector.

Sound familiar?

The fact is that huge budget cuts and increasing demand on public services has made things far worse, not better, in a great many instances.

Smaller charities may well be facing a crisis; indeed it is one that has been rumbling on since 2008/9. The belief that the solution is to spend time learning to navigate the labyrinth of public sector procurement processes and compete for an ever-diminishing pot is misguided. Surely the solution is to change the system rather than suggest everyone learn how to play by the broken rules of commissioning?

I’m not suggesting that’s an easy task for central government or local government. But I’d like to think that if we put our minds to it, we could come up with a better solution than a commissioning kitemark and crown representative. And maybe it involves small charities and community groups getting on with delivering social benefit without necessarily delivering public services.

Social Value Commissioning

Yesterday Collaborate and the Transition Institute published a new report, Social Value: a commissioning framework that I have written together with my Lambeth Council colleague Anna Randle.

report cover

The report is intended to add to the growing body of thought and interest in social value and help move things forward. In the report we suggest how we think social value can be implemented in a practical way by a public body, within the context of commissioning, spending cuts and rising demand on public services. It is based on our experience, research and aspirations at Lambeth to be a Cooperative Council.

Lots has been said about social value and what it is and there is a great deal of interest in it, particularly within the public sector and the not for profit sector. There is also a great deal of confusion. Many local authorities are grappling with the practicalities of actually taking account of social, environmental and economic value in commissioning and procurement decisions, as they are now required to do under the Public Service (Social Value) Act 2012.

At present too much of the debate about social value is focussed on procurement, social clauses in contracts and approaches that attach monetary value to everything. Social value is still seen by many as being an additional expense the public sector must absorb in taking account of environmental and social benefits and costs.

Whilst all these things may well be part of an effective strategy to reflect social value in investment decisions, they are by no means the whole picture. Anna and I argue that social value is far more than this narrow interpretation. For us social value is about:

  • Commissioning a broad range of outcomes
  • Recognising and responding to community assets and the needs and aspirations of local people
  • Fundamental transformation of how we work – whole system change
  • Acknowledging and understanding the connections and tensions between priorities
  • Becoming more sophisticated in how we measure the difference our investment decisions make

Fundamentally, social value is about securing maximum impact on local priorities from the use of public resources.

The implications of our interpretation of social value on how local authorities act is potentially profound. We go on to suggest a range of practical and conceptual steps that councils can adopt in order to realise this:

  • By framing social value in terms of the changes that the community and its elected representatives want to see.
  • By recognising community assets and the contribution local people can make to achieving the changes they value.
  • Developing a common outcomes framework which is applied consistently across the whole organisation.
  • Establishing an agreed sequence or priority order to corporate outcomes – acknowledging we can’t have everything we want all at once.
  • Using Theory of Change or logic models to set out the path by which we see change happening – from inputs to activities and outputs, through to outcomes and impact.
  • Using Social Value Procurement Frameworks, but only as a stepping stone towards more fundamental change.
  • Considering additionality and developing cost effective strategies to assess the degree to which demonstrable impact can be attributed directly to our own activity and investment decisions.
  • Being prepared to abandon redundant metrics that only help us measure outputs.
  • Considering the ways in which the council may need to change to support social value commissioning, recognising practice that is at odds with realis­ing local priorities and considering ways to redesign the system to be more supportive.

We are not suggesting that we yet have all the answers to realise our ambitions to deliver social value commissioning, or that it will be an easy path to achieving this. However we hope that with this report we can help expand the extent of people’s aspirations and expectation of what social value means. If we can do that, then there is a real prospect of public funds being used more efficiently to deliver outcomes that better reflect the aspiration and ambition of our communities.

If you’d like to discuss social value commissioning do get in touch