VONNE (Voluntary Organisations Network North East) — Written evidence (CHA0123)
Questions
1. What is the role and purpose of charities in civic society in England and Wales?
- How has this changed?
There is now widespread involvement with public service delivery which some see as a threat to the sectors dependence, voluntarism and reputation for innovation and challenge.
- What makes them distinct from other organisations doing similar work?
Charities are formally registered and subject to Charity Governance rules and regulations via the Charity commission as oppose to other voluntary sector and social enterprise groups which include faith, community and grassroots groups.
- What role can charities play in community cohesion and civic action?
From the wealth of literature that demonstrates the merits of small and medium sized charities, the following insights are of particular interest. • Many smaller charities are rooted or embedded in their local areas, which brings with it an intimate knowledge and understanding of those areas’ strengths and needs; allows them to draw upon a willing workforce of local volunteers; and means that they can act as ‘anchors’ within their communities, providing stability and flexibility and being responsive to local needs. • Small and medium-sized charities can also play a key role in building and nurturing social networks, and in creating positive and enabling relationships between people who live and work in a particular community. They can help to boost levels of local social capital by building local capacity, and by developing links both within particular communities and between communities and other networks, including national and local government and their agencies. • Many smaller charities are considered uniquely placed to engage directly with those who are hardest to reach, because their independence, situation within the community and ability to draw upon local volunteers fosters greater levels of trust. Many smaller charities are longstanding and well-known local institutions, with an established history of helping individuals and communities through difficult times. Such organisations are considered experts in working ‘holistically’, or in a ‘person-centred’ way that is responsive to individual and local contexts.
Useful reports:
• Taken for granted? The needs of small voluntary and community sector organisations in a big society era (2013) by Ed Cox and Katie Schmuecker – a study setting out the importance of grant-making in the context of reducing statutory funding and ‘social finance’
• Charity Street: the value of charity to British households (2014) by Alex Glennie – a quantitative analysis of the ‘value’ of charitable voluntary and community organisations to particular households in England
- How does the sector benefit from volunteering?
The VCSE sector has a track record of working in a person centred, holistic, long term, relational and locally-rooted way. At its best, the VCSE sector does not just deliver to individuals, it draws upon whole communities: for volunteering and social action which addresses problems like loneliness and stigma, and for the expertise of lived experience in designing more effective, sustainable services and systems.
-- What challenges do charities face in trying to fulfil their role in civic society?
The Think Tank IIPR North have identified the Key emerging issues concerning civil society as follows:
• The on-going impact of austerity and the demand-pressures this is placing on voluntary and community sector organisations;
• Access to finance, funding and assets, including the role of grants, loans and emerging forms of ‘social finance’;
• Challenges concerning statutory service provision and commissioning and contracting with third sector organisations and the costs of ‘failure demand’;
• The role of individuals and communities in building ‘social capital’ and the soft capabilities which support social transformation;
• Community rights and emerging opportunities around neighbourhood planning, asset transfer and local service delivery;
• The role of civil society in local decision-making and more participative forms of local democracy and social change;
• The diminishing role of voluntary sector infrastructure organisations and its impact on VCSE collaboration and ‘voice’.
Against a backdrop of rising demand and the long-term reduction in grants in favour of contracts, the income that the voluntary sector as a whole receives from government has fallen, and smaller organisations have been hit particularly hard. For example, between 2008/09 and 2012/13, charities with annual incomes of £100,000–£500,000, and of between £500,000 and £1 million, experienced large falls in their income from contracts (of 32 and 37 per cent respectively), while larger charities fared much better (NCVO 2016). • Since 2010, the nature of public service delivery has changed significantly, with a shift towards the use of competitive commissioning models in which all types of provider compete to deliver public services. There is compelling evidence to suggest that large organisations, including some large charities, are increasingly dominating the market for public service provision, to the detriment of small and medium-sized organisations.
Civil Society Support & infrastructure
As funding for civil society organisations in general shifts towards outcome-based commissioning and contracts, those that work ‘behind the scenes’ rather than on the frontline are generally, although not always, more likely to struggle to find either public or private funds to carry on. And where dedicated finance for civil society support (infrastructure support) does exist, changes in public policy have threatened a ‘significant unsettlement’[1], towards a new market-based approach (Macmillan 2013). In addition, awareness among frontline organisations of what is available is frequently an issue, as is the measurement of the impact and effectiveness of support offered, which remains a “contested area” (Wells and Dayson 2010).Civil society support is inconsistently funded and structured across the North of England, which leads to wide variation in the availability and quality of services offered. What is more, there is considerable unsettlement in the funding available for this kind of ancillary service. Many local support organisations are adapting well to new circumstances. But many others are struggling to do so. More broadly, there is little evidence of a strategic approach to funding civil society support as a key partner to a strong voluntary sector.
- How can these challenges be overcome?
1. Although there are limits to the extent to which any measurement will capture the contributions that they make to society, small and medium-sized charities need to be able to provide better evidence of their value and impacts. While the tools and methods for doing so already exist, most of these charities need more and better support from umbrella organisations in order to use them, as well as greater capacity to introduce methods for monitoring and evaluation. Grant funders who typically support such charities could consider innovative ways of funding this kind of work within, or in addition to, existing grants.
2. Commissioning and procurement teams within local authorities, clinical commissioning groups and other public agencies should be made more accountable for delivering social value. Legislation already provides for this: under the provisions of the Public Services (Social Value) Act 2012, authorities in England and Wales are required to consider how the services they commission and procure might improve the economic, social and environmental wellbeing of their area. However, in practice, implementation of the Act has been hampered by uneven awareness and take-up; inconsistencies in its implementation because of poor understanding; and the lack of a clear means of measuring social value (Cabinet Office 2015). More could be done to strengthen the Act by, for example, requiring authorities to ‘account’ for the social value that they generate, rather than just having to ‘consider’ it.
3. Those organisations that have moved away from, or are moving away from, grant-giving in favour of commissioning or more complex forms of social finance need to review the impact that this has on small and medium-sized charities that might not be able or willing to engage with such forms of funding. These charities might still provider greater social value-for-money than those that are more adept at bidding for funding and providing formal evidence of outcome improvements. Although commissioning based on hard
Reference: IPPR North | Too small to fail: How small and medium-sized charities are adapting to change and challenges
A sustainable and responsive infrastructure
Government, local infrastructure and independent funders should consider the recommendations set out in Change for Good and subsequent work from the Independent Commission on the Future of Local Infrastructure.
https://www.navca.org.uk/assets/000/000/063/Change_for_Good_36_pp_final_aw_original.pdf?1449496913
NHS commissioners and local authorities should providing funding and guidance for suitable infrastructure to better connect personal budget and personal health budget holders with a range of providers, including small and start-up organisations, and facilitate the development of a more diverse range of services accessible by and co-designed with local communities.
Pressures and opportunities
2. What are the main pressures faced by charities currently, and what impact have these had?
The North East Third Sector Trends Study (2015) identified that Third Sector Organisations (TSOs) located in the poorest areas were more than four times as likely to have lost significant levels income in the last two years (30%) when compared with the richest areas (7%). Medium sized TSOs operating in poorer areas are much more likely to have had falling income (40% in the poorest areas compared with just 6% in the richest). 42% of Organisations in the poorest areas said they were heavily dependent on public sector funding and this is where the major loss of income had been experienced.
The VCSE in the NE is heavily dependent on public sector funding particularly in our most deprived communities and in this environment of funding cuts many local grass roots organisations are finding their funding cut, we are also starting to lose vital infrastructure support that those organisations rely on for support. We are seeing the closure of CVS/LDA organisations and volunteer centres at a time when we should be investing in this support to ensure our local asset base of community support can survive and thrive and we can build ‘ civil society’ to plug the gap reduced state funding is creating and promote the prevention and social action agenda.
An ongoing shift in public funding models, away from grant-funding and towards contracts for service delivery has negatively impacted on the funding environment for charities and community organisations that draw directly upon money from the state. The VCSE sector have been challenged to scale up and to ‘professionalise’ in order to be a provider within the health and care market place and many larger organisations are now delivering large scale service contracts for some of the most vulnerable people. However, we have created an environment whereby it is increasingly hard for smaller grass roots ‘place based’ and/or peer support groups’ to secure funding to provide that essential social value and asset based approach to preventing ill health and promoting wellbeing.
In order to grow the capacity of civil society and see reductions in the cost of state provision we need to invest in its infrastructure not withdraw support.
- What opportunities do charities have in the current environment?
The voluntary sector can help to transform public services – not just by delivering services but also by shaping service design, and supporting user and volunteer involvement in services
- Are there specific pressures affecting particular types of charity (for example, service delivery charities; charities reliant on fundraising income; charities with a rural focus; smaller or larger charities; or charities promoting a particular cause) that you can highlight?
VONNE is the regional infrastructure body for the NE and undertakes an annual survey of member organisations. There are 4,509 registered charities in the NE and at least the same again in informal small scale voluntary and community groups. The NE has a higher than average percentage of smaller charities and voluntary groups.
VONNE State of the Sector statistics – June 2016
Headline figures from VONNE’s survey into the state of the North East third sector, carried out in May and June 2016.
Headline figures
• 85% have experienced an increase in demand for their service (71% 2 years ago)
• 61% have increases the number of services provided (35% 2 years ago)
• 72% have had an increase in numbers of beneficiaries (42% 2 years ago)
• 43% only have reserves to last up to 3 months (41% 2 years ago)
• 46% have their grant income decrease but 44% have seen their earned income increase.
• A third of those who have experienced a reduction of income did not expect that loss.
Looking to the coming 12 months:
There continues to be a heavy reliance on public sector funds, with 76% of respondents sourcing some, or all, of their income from public sector grants. Public sector contracts provide 49% of the funding mix for groups.
Innovation
3. How do charities seek to innovate, particularly in the digital arena?
- What more could be done to promote innovation, and by whom?
- What barriers are there to being innovative?
Resources in terms of time and money to innovate are scarce particularly in the current climate of shrinking funding and increasing reliance on very prescriptive contracts as oppose to flexible grants and core funding is also very scarce and reducing from the public sector.
Governance and leadership
4. What skills are required to lead and manage a charity?
• Leadership & governance skills
• Developing partnerships and collaborations
• Demonstrating impact
• Business planning, financial acumen, strategy development
• Intelligence about new initiatives and best practice
• Intelligence about the policy & competitive environment
- How can these skills be gained?
- What support exists to develop these skills within the charitable sector?
Civil society support & infrastructure organisations can help charities and other civil society organisations to gain these skills but often lack the resources to deliver programmes locally. civil society support’ organisations including Traditional ‘infrastructure’ organisations, such as Councils for Voluntary Service, regional infrastructure bodies and national umbrella groups such as NCVO, NAVCA and Acevo and ‘Anchor’ organisations, which, beyond making substantial contributions to their communities and neighbourhoods, also nurture wider civil society networks by providing support to new and existing community groups within their locality (Thake 2009
Nationally organisations such as CASS and NCVO can provide training but often the training is London based which is prohibitive resource wise for organisations in the regions such as the NE.
.lack of resources for high-level training is an issue.
Cabinet office put resource into planning a Skills Exchange programme to promote skills sharing between business and charitable sector but then government resource was withdrawn and this has now become a voluntary skills ambassador programme with little teeth or resource to implement meaningfully. For more information on the ambassador role click here.
Nationally cabinet office have been working with the regions on Employer Supported Volunteering (ESV). In the North east we collaborated with Cabinet office and Universities of Hull & Sheffield to run a Workshop in Tyne and Wear. Here is the link to slides from the speakers and below is a summary of emerging findings.
A number of ‘gaps’ were identified as barriers to increasing ESV. For example a lack of access to businesses who could offer the right skills to the VCSE sector, as well as businesses not having the capacity to allow their staff to get more involved in their communities. Similarly, the workshops identified that organisations often found it difficult to articulate what support they would need from businesses; with a lack of common language being highlighted as a barrier for the two sectors engaging with each other.
The workshop highlighted that there is a need for a central way for VCSE organisations and businesses to establish effective links as well as more opportunities for cross sector networking and sharing best practice. Brokerage infrastructure was seen as a vital component to help establish long term relationships between the sectors. To support brokerage there is a need to articulate a stronger case as to why organisations would pay for brokerage as well as strategic involvement from funders. The Universities of Sheffield and Hull will be compiling the research from each workshop into a report that will be published later in the year.
Organisations such as Pilotlight support skills sharing between business and charitable sector nationally.
5. What role should trustees play in the performance and effectiveness of a charity?
- How can trustees be best equipped, enabled and supported to fulfil their responsibilities?
- What, if any, changes might this mean for current arrangements?
Good Governance guides produced by NCVO and Quality Good Governance Training delivering by organisations such as NCVO & CASS Business School should be mandatory for all trustees and available at no cost or reduced cost for smaller charities.
Charity Commission Guidance and Training is also available via their website and via Civil Society Support organisation’s but any training should be of recognised quality standard and resourced effectively and refresher training should also be mandatory.
Accountability
6. How can charities ensure that they are properly accountable to their beneficiaries, their donors, and the general public?
See above response to point 5
- What, if any, changes might this mean for current arrangements?
Strengthening of requirement for trustees to undertake specific training and for this to be properly resourced and available.
- How should charities assess their long term viability and/or sustainability?
Support for business planning and strategic planning is available via a range of organsiations but can be prohibitive in cost. Organsiations such as Big Society capital are providing access to support for investment readiness but with a focus on social investment which may not be appropriate for charities. See response to point 5 on skills above.
Resource management
7. What are the current challenges to financial sustainability, as well as efficient resource and risk management for the sector?
VONNE State of the Sector statistics – June 2016
Headline figures from VONNE’s survey into the state of the North East third sector, carried out in May and June 2016:
• 85% have experienced an increase in demand for their service
• 43% only have reserves to last up to 3 months
• 46% have their grant income decrease but 44% have seen their earned income increase.
• A third of those who have experienced a reduction of income did not expect that loss.
Looking to the coming 12 months:
There continues to be a heavy reliance on public sector funds, with 76% of respondents sourcing some, or all, of their income from public sector grants. Public sector contracts only provide 49% of the funding mix for groups
- How can these challenges be overcome?
Government should consider providing greater support to build the capacity of VCSE organisations to compete for and public sector contracts and develop other income generating sources and business models.
-- How can charities effectively deliver services and be assured that their work achieves successful outcomes?
Charities have largely been delivering services effectively for years and their person centred and holistic approach generally leads to an outcomes based approach. The problem is that it is often difficult to quantify and measure the impact and outcomes in a way that satisfies the commissioners particularly in the new public sector contracting environment. It takes additional resource and time to put in place effective evaluation measures to demonstrate outcomes and impact and outcome often take time to achieve which goes against the short term based contracting world. Greater support for charities in understanding and applying outcome based measures for their work and funding built into contracts to provide for the measurement of outcomes is essential. Having a centralised resource with an ‘approved’ set of outcomes based tools for measurement which commissioners and charities can draw on would be helpful as charities are often challenged with using a variety of different outcomes measures for different funders.
Outcomes measures are more difficult for organisations with a focus on infrastructure or on campaigning/lobbying and this needs to be recognised as they are not direct service delivery organisations working with individuals.
The Joint review of role of the VCSE sector in improving health, wellbeing and care outcomes & partnerships May 16. Department of Health, Public Health England, and NHS England
The report recommendations include:
• funding for voluntary organisations should be transparent, long term and have a greater emphasis on social value
• Local strategic plans should be based on thorough engagement with local communities and VCSE organisations
• statutory guidance for Commissioners in health and social care should be revised to emphasise the need for them to work with charities and social enterprises in order to meet duties under the Health and Social Care Acts.
- What are the benefits and challenges of funding for charities being derived from commercial contracts?
Since 2010, the nature of public service delivery has changed significantly, with a shift towards the use of competitive commissioning models in which all types of provider compete to deliver public services. There is compelling evidence to suggest that large organisations, including some large charities, are increasingly dominating the market for public service provision, to the detriment of small and medium-sized organisations.
The VCSE sector have been challenged to scale up and to ‘professionalise’ in order to be a provider and many larger organisations are now delivering large scale service contracts for some of the most vulnerable people. However, we have created an environment whereby it is increasingly hard for smaller grass roots ‘place based’ and/or peer support charities and groups’ to secure funding and to compete in a competitive tendering environment.
Traditional contract-based commissioning can work for some large-scale VCSE provision but these do not appear to be the best way to support community development or to build social action, and we need a more considered range of funding approaches to be used in every area. For instance, personal budgets and personal health budgets can allow individuals and small groups to take real responsibility for shaping their care, with consistently better outcomes for people with long term conditions and their family carers.
Neither ad hoc grant giving, nor contract-based procurement, appear to create a diverse, creative and sustainable VCSE sector. Genuine commissioning and market shaping represent progress. But the real goal must be to end the inside/ outside model where statutory bodies are ‘the system’ and VCSE organisations and the communities they represent remain ‘outside’, competing for scarce and fiercely guarded resources.
Social investment
8. What is the potential of social investment and social impact bonds?
Social investment has been recently seen as the magic solution to the decline in public sector funding for charities and social enterprise nationally. However, for a great number of local charities social investment is not something that will ever be appropriate as ultimately it is loan finance and particularly in the North East, charities are asset poor, do not have reasonable reserves and trustees are very wary of exploring loan finance.
The North East is the English region with the lowest number amount of registered
Charities (4,509) by number and by population and the region with the lowest number
Of organisations by income and assets (NCVO 2016) and our recent Surviving or Thriving survey 2016 identified that of over 100 respondents 43% of orgs only have reserves to last up to 3 months.
A social impact bond SIB is a financial mechanism in which investors pay for a set of interventions to improve a social outcome that is of social and/or financial interest to a commissioner. The added value to public sector commissioners is that it substantially de-risks innovation and the re-design of services with an explicit focus on social and financial outcomes that, in themselves provide a rigorous proof of concept. In the North East Newcastle Gateshead CCG has the first SIB in health in the UK, Ways to Wellness, which is delivering social prescribing at scale through 4 Voluntary sector main providers for up to 8,500 people with long term conditions in West Newcastle with the aim of improving quality of life and reducing demand for expensive hospital services.
This model was developed through the charitable sector collaborating with public sector stakeholders but required significant amounts of start-up funding via Big Lottery and Cabinet Office. This is a potential route to replacing public sector funding of public services and has enabled the scaling up of social prescribing interventions often previously delivered by charities and funded via piece meal grants on a small scale to being a part of the mainstream delivery of health & wellbeing services.
https://www.vonne.org.uk/resources/ways-wellness-social-impact-bond
https://www.vonne.org.uk/resources/social-investment-health-and-wellbeing
- What are barriers to fulfilling their potential?
However, for SIB’s to work there needs to be significant amount of development time, resource and expertise along with willingness on the part of public sector commissioners which is not always forthcoming. The recent launch of the Life Chances Fund by Cabinet Office and the Go To lab are a step in the right direction but the restrictive procurement rules and NHS Standard Contracts in addition to inflexible procurement teams at local level work against the development of SIB’s.
The role of the Government
9. What should the role of Government be with the sector?
- What should be the role of local Government?
- What should be the role of the Charity Commission?
- Have these relationships changed? If so, how?
There are concerns that government has been seeking to restrict charities’ right to initiate legal proceedings – over the past couple of years we have seen judicial review slowly but relentlessly curtailed by a number of changes.
.In recent previous revisions of Charity Commission Trustee guidance, the commission has tended to re-set the tone to a much more restrictive one, often strengthening the emphasis on the risks of trustees doing something and on their liabilities should they fail to meet their legal duties (see for example the updated CC3 guidance on the ‘Essential Trustee’).
These are at no point balanced out by the commission’s acknowledgement that legal proceedings can be a necessary step, and the only way in which trustees can act in the interests of their beneficiaries. Not to mention the use of judicial review as a vital way for individuals and groups to hold powerful public authorities to account for important decisions such as which public services they provide, how they provide them and who can access them – by organisations such as AGE UK, Justice, Child Poverty Action Group and many others.
- How should Government (national or local) focus its resource to deliver its civil society agenda?
The Coalition government prioritised diversity of scale in its general procurement agenda by introducing a goal for 25 per cent of central government spending to go to small and medium-sized enterprises by 2015. The government has announced that this target was met in 2014/15,4 and the 2015 Conservative party manifesto included a pledge to increase the percentage of spending going to small and medium-sized businesses to one-third. It is significant that the current government has made a commitment to work with smaller private companies to overcome the particular obstacles that they face, but not with charities. We recommend, therefore, that the government makes a similar pledge for small and medium-sized charities that may be offering greater social value through the goods and services they provide. Local authorities could also benefit from following the example set by central government, by setting their own targets for contracting with smaller organisations with charitable/social objectives
To improve their quality of life and reduce the ‘cost’ to the system of supporting the people who place most demand on the system we need to invest in communities and activities that support behavioural change, resilience, self-care and social inclusion and recognise there is a need to shift investment into building the local asset base to support this. This requires investment at scale in locally routed and user led civil society organisations in order to take an asset based approach to creating sustainable and cohesive communities. Combined Authorities should use greater devolved powers and resources to develop, at scale, locally integrated programmes to support people into employment that recognises the value of local VCSE organisations in delivering a person centred, holistic approach to supporting those furthest from the labour market towards employment. Resources should be ring fenced within a Regional ‘Asset Development’ Fund to protect our existing community asset bases and organizations and support their sustainability.
There is also an opportunity for the Combined Authorities to introduce a joint and consistent approach to social value within commissioning and procurement to ensure a level playing field for organisations with a social mission and to create more value from public spending.
Government at central and local level should consider the recommendations set out in Change for Good and subsequent work from the Independent Commission on the Future of Local Infrastructure and seek to target resources to protect local infrastructure support from the charitable sector. .
- What is the likely impact of greater local devolution on the charitable sector, or particular types of charity?
- What are the opportunities and challenges associated with local devolution?
Potential challenges for the sector:
The charity sector has a role to play within devolution as follows:
As service providers
As local partners
As lobbyers/campaigners
5 September 2016