Charities need to be innovative to beat tough times
PUBLIC services are being opened up to a variety of providers. If you go swimming, social enterprise Greenwich Leisure Limited, not the council, may well be running the pool. Your rubbish is more likely to be collected by a private company. And if you have a relative in need of social care, then it’s likely you will be dealing with a charity or for-profit provider, not an arm of the state.
The aim of all this is to deliver better services, more efficiently and create a less top-down public sector. The coalition is encouraging more of this, given the combination of major financial obstacles and an agenda of reducing the size of the state, so we are entering a period of radical change.
At the same time we are seeing two other things. The terms of contracts are getting tighter as money is cut from the budgets of local councils, health and other commissioners. There is also a shift away from contracts that guarantee funding, towards ones that give rewards based on the outcomes achieved – payment by results.
A new landscape is emerging. Lots of the work in this new world is going to private outsourcing companies – like Serco and Capita – who are doing pretty well, despite overall cuts in public spending.
But what about the not-for-profit sector? Government rhetoric about the Big Society suggests charities should pick up lots more work as the state pulls back. But is that really happening?
A new report and survey by New Philanthropy Capital (NPC), in partnership with Zurich, offers us a real insight into what is going on. Charities told us they are finding the going tough. Two-thirds are cutting front-line services, three-quarters are making redundancies and perhaps most worryingly, over 60 per cent are using reserves to help them get by – clearly an unsustainable approach for many charities.
This new landscape is leading to many charities becoming sub-contractors to big prime providers, for instance in the government’s flagship scheme for helping the unemployed, the Work Programme. However, the research suggests that many charities find sub-contracting to private organisations unsatisfactory and many would prefer to be dealing directly with commissioners, or at least sub-contracting to another charity. To deliver services through subcontracting it is important charities carefully assess tenders before bidding and ensure contracts work for both parties.
But in the face of adversity the best charities are responding with innovation. Three quarters of charities are drafting in more volunteers, nearly half are collaborating more with other charities, and most charities, 70 per cent, are confident in their skills and capacity to bid for public service contracts.
Charities shouldn’t be fearful. Those embracing opportunities, with a long-term view of risk management, will prove the most resilient in the face of adversity.
Dan Corry is chief executive of NPC and Paul Emery is head of community and social organisations at Zurich.