nEW pHILANTHROPY CAPITAL (npc) – WRITTEN EVIDENCE (PSR0068)

This submission to the House of Lord’s Public Services Committee inquiry into the ‘Public services: lessons from coronavirus’ covers the role charities have played and the challenges they have faced delivering public services during the crisis.

It comes from charity thinktank NPC (https://www.thinknpc.org/) and draws on research, of which a summary has been published (see here https://www.thinknpc.org/blog/behind-the-figures-what-has-been-the-impact-of-the-coronavirus-crisis-on-larger-charities/), where we interviewed 27 large (over £1m income) charities many of whom have been delivering services for the most vulnerable people in the country during the crisis. These charities have asked to remain anonymous. In some cases they are directly contracted by government, in others the cost of supporting the people they work with would fall back on the exchequer were they not.

It is also informed by our charity research more widely, and a meeting we convened with our ‘Pledge on Place’ group of charities operating locally around the country.

Resource, efficiency and workforce

Did resource problems or capacity issues limit the ability of public services to respond to the crisis? Are there lessons to be learnt from the pandemic on how resources can be better allocated and public service resilience improved?

Subsidy

Of the different models of charities, we spoke to, those who delivered statutory services were generally the best off, from a resources point of view, during the crisis. This is because their contracts with government have provided a steady income stream, while those who rely on charity shops and fundraising from the public have been hit by the lockdown.

However, it is important to understand that very few of the charities we spoke to were exclusively funded by government contracts. Most run a model which includes some contracts and some fundraising from the public. In fact, in normal times – our State of the Sector research shows that 59% of charities with a public sector contract say they are cross subsiding that contract with money from other sources such as public fundraising [1].

This cross subsidy potentially creates a weakness, as with fundraised income drying up, charities may find they cannot afford to deliver their contracts. Happily none of the large charities we spoke to were close to this point at the time of interview (though they still had shortfalls in the millions of pounds).

But worryingly our State of the Sector survey and research carried out just pre crisis found a large increase in the number of smaller charities both delivering and cross subsidising government contracts. These charities are likely to be less resilient, less able to draw on reserves, and less able to continue subsidising contracts as fundraised income dries up.

Essential services, voluntary income

Many of the charities we spoke to for our large charity research were delivering services which were not commissioned by government (at any level) but were they no longer able to provide these services, the costs would fall back onto the public purse. And, it should be noted that for various reasons charities are often more cost effective in delivering these services than the public sector.

Charities spoke to us on the condition of anonymity but described situations where, were they to withdraw services, information or advice it would result in increased costs for local child and youth mental health services, increased pressure on GPs and reduced access to mental health services.

We are concerned that this represents a silent weakness of the current funding model for public services, simply because many of these essential public services are outside of the sight of government. We do not know what the total costs to the exchequer would be, should charities be unable to continue delivering services, or which sectors would be most affected – but this should be understood, especially in areas such as health and elderly care which are critical to getting through the current phase of the pandemic.

Conversely, this there are opportunities to strengthen this model, through the encouragement of non-governmental funding charities delivering public services receive. Philanthropy could potentially play a major role here, even in difficult areas such as criminal justice, mental health, and financial security. We have set out how in our guide to the crisis for philanthropists here (https://www.thinknpc.org/resource-hub/coronavirus-guide/).

In future more dialogue between charities, philanthropists and government about how they can work together to strengthen public services could be fruitful.

Technology, data and innovation

Has the delivery of public services changed as a result of coronavirus? For example, have any services adopted new methods of meeting people’s needs in response to the outbreak? What lessons can be learnt from innovation during coronavirus?

Despite our State of the Sector research finding shrinking digital confidence among charities earlier this year (charities’ confidence they are ‘making the best use of digital technology’ declined by 11 percentage points to 59% from 70% in 2017) most of the bigger charities we interviewed about the crisis had adapted their services where possible, make better using of digital communications technology and respect social distancing.

While this is an important achievement, and one that has likely benefited many individuals with a continuity of some sort of service, it is important to note that the charities we spoke to did not view a shift to digital delivery of services as an unqualified good.

Charities are often on very human, very difficult issues. One we spoke to was concerned that that there is was much a hidden need, with acute cases will have been unreported. In that case demand for services is expected to jump significantly in the medium term when these currently latent issues such as abuse and mental health problems, come to the surface.

Another was concerned that the current situation may influence commissioners in the wrong way; they may insist on a lighter touch, more cost-effective model in future, as the organisation is on the surface adapting well. However, the charity is aware that the full effects of shifting delivery may not be seen until much further down the line, and the effectiveness of the services are unlikely to be the same as when delivered face to face.

This implies a need for charities and commissioners to think very hard about what interventions really do work online, for what groups of individuals, and which do not. Proper evidence and evaluation can play a key role here.

Inequalities

Have public services been effective in identifying and meeting the needs of vulnerable groups during the Covid-19 outbreak? For example, were services able to identify vulnerable children during lockdown to ensure that they were attending school or receiving support from statutory services? How have adults with complex needs been supported?

Some charities have extensive data on the needs of vulnerable groups, and each uses it to deliver services and advocate for the group they are concerned with. What has not existed up till this point, is a way of cross referencing this data and coming to an evidence-based view of where the need is most significant.

We are aware that as part of the response to the crisis, government has set up a group to explore the possibility of developing such a resource. If it could be developed it would be incredibly valuable but there are many practical and institutional barriers to doing so.

And we are also aware that some charities do not have the kind, or amount of data you would expect about their services users. We advocate for wider adoption of measurement and acquisition of data skills within the sector, but progress can be slow. These skills are in high demand and charities, especially smaller ones, often cannot offer competitive salaries.

Where specific vulnerable groups have been targeted for funding by government (such as in its £750m of funding for charities [2]) it is not clear how these groups were chosen so it is hard to understand how well the government understanding need [3].

Were groups with protected characteristics (for example BAME groups and the Gypsy, Roma and Traveller community), or people living in areas of deprivation, less able to access the services that they needed during lockdown? Have inequalities worsened as a result of the lockdown? If so, what new pressures will this place on public services?

We know very little about whether groups with protected characteristics were able to access charity services during the lockdown, and this is due to a lack of data on the subject being published. We are concerned that this lack of publication is due to a lack of primary data collection (i.e., attempts to understand the race, gender etc of services users) and have anecdotally heard this is the case with many charities, especially smaller ones.

This is an issue the sector must urgently address but is particularly important where the government is spending money with charities, either through commissioning or as part of its ‘bailout’ of the sector. Transparency about who

Role of the private sector, charities, volunteers and community groups

What lessons might be learnt about the role of charities, volunteers and the community sector from the crisis? Can you provide examples of public services collaborating in new ways with the voluntary sector during lockdown? How could the sectors be better integrated into local systems going forward?

The role of charities?

The framing of this question implies that public services collaborate with charities each as two distinct entities. In reality the picture is much more complex, with charities valuing their independence but, in many cases, delivering vital statutory services, via commissioning.

More than half of the charities we surveyed earlier this year have at least one government contract and our recent interviews illustrate that they are in fields as vital as justice, health, housing and vulnerable children. According to the NCVO almanac (which covers various aspects of the financials of the charity sector) charities who provide ‘social services’ receive more income from government than they do from the public [4].

Even when there is no commissioned relationship, they are delivering services which would otherwise fall back onto the state. It is important that the charity sector collaborates more and better with both local and national government, but it is equally important that it is seen and understood to be the delivery partner that it actually is.

Some places getting it right

We have heard from members of our Pledge on Place group (https://www.thinknpc.org/blog/place-and-the-future-of-the-social-sector/), which includes charities from around the country, that where there was collaboration between the social sector and local government in a place, the crisis has deepened it.

But we have also heard that where there was not collaboration, it has been difficult if not impossible to for it to get started. Factors causing this included the difficulty of establishing relationships due to social distancing and confusion over roles due to furloughing. It was impressed on us by members that these partnerships take time and resources to develop – assets in short supply in most charities and local authorities at the moment.