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© 2011
Charities and Public Service Delivery
Albert Weale, Sarah Clark and Nick Martin
Record of proceedings at a Charity Commission/NCVO Seminar, chaired by Albert
Weale, held at NCVO on 17 November 2010
Address for correspondence:
Department of Political Science
School of Public Policy
University College London
29/30 Tavistock Square
London
WC1H 9QU
Tel: 020 7679 4993
Email:
a.weale@ucl.ac.uk
s.l.clark@ucl.ac.uk
This paper forms part of the research programme under the ESRC Professorial
Fellowship 'Social Contract, Deliberative Democracy and Public Policy' funded by the
UK Economic and Social Research Council (RES-051-27-0264) to whom grateful
acknowledgement is made.
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Charities and Public Service Delivery: Charity Commission/NCVO Seminar
On 17 November 2010, the Charity Commission and NCVO invited a number of public
policy experts to discuss the expanded role that charities have taken over recent years in
delivering public services, and which role may expand yet further in the context of the
Government’s ‘Big Society’ agenda.
This note is a record of the key points of the discussion that took place. These fall under
four broad headings, as follows:
1) The independence and integrity of charities
2) How much does the ‘form’ of provider matter in public service delivery?
3) Tensions between scale and localism, and centralism and localism
4) Implications for the Charity Commission and NCVO
1) The independence and integrity of charities
The broad shift from grant funding to contract funding, as charities take on a greater role
in public service delivery, raises the question of the independence of voluntary sector
organisations (VSOs): the relation of the state to charities is different in a ‘contract
world’ where national or local government commissions charities to do what the state
wants them to do, than in a ‘grant world’ where the state gives charities money to do
what charities want to do.
There is a clear legal obligation upon charities to preserve their independence and to take
on public service functions only where they coincide with the charity’s charitable
purposes. This legal emphasis on independence is further reflected in the obligations
imposed on trustees to preserve their independent judgement. Nevertheless, a series of
tensions arise in this context, between organisational viability and organisational integrity
and between the needs of beneficiaries and the needs of the organisation, between
independence and accountability, and around the issue of charities holding assets which
can be both a source of independence and of liability.
i) Tensions between organisational viability and organisational integrity
Viability, vulnerability and dependence
Public service delivery contracts provide funding to charities which can help to ensure
their ongoing financial and organisational sustainability. In times of economic hardship,
such funding can be vital to keeping VSOs afloat. However, it is precisely in times of
economic hardship that those who commission charities to provide services are also
looking to cut expenditure. So, charities that receive a significant proportion of their
income via commissioning from national or local government can find themselves in a
position of vulnerability when this major source of income is threatened.
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VSOs are also vulnerable when they are commissioned to deliver services, as a result of
the fact that the priorities of commissioners change over time. However, this has an
impact not only on financial stability for organisations, but also potentially on the
independence of their ‘mission’: charities may feel they have to adapt their priorities to fit
those of commissioners in order to increase their likelihood of winning contracts, but this
may result in a change of focus which threatens to alter the character or purpose of the
charity, and which takes it away from the needs of its beneficiaries.
The importance of beneficiaries
If charities do take on a greater role in public service delivery, what does that mean for
the beneficiaries of those charities?
The central concern here is that charities may do what seems to be right in terms of an
organisation and its continued existence and growth, but that may not be the same thing
as doing what is right or best for beneficiaries. It is worth recalling the point that charities
are only permitted in law to take on public service functions if those functions are in
accordance with their purposes – purposes, which are of course aimed at the needs and
interests of beneficiaries. However, in seeking to secure contracts and in working ‘on
commission’, charities can be aiming towards targets and outcomes not set by the
charities themselves, and problems can arise around loss of focus on the needs of
beneficiaries.
Importantly, the ability of charities to provide effective advocacy and campaigning
‘voice’ on behalf of beneficiaries can be compromised by the need to maintain good
relationships with national or local government commissioners, even in cases where the
policies of those agencies carry explicit disadvantages to beneficiaries and where, in
other circumstances, charities might campaign against such policies. This is the sense that
charities in receipt of statutory contract funding do not want to ‘bite the hand that feeds
them’.
One participant offered an example of what he termed the ‘bash for cash’ competition of
disability charities to secure contracts for delivering services to disabled people: these
charities had to accept aspects of policy such as the conditionality of benefits which may
have been to the disadvantage of many of their beneficiaries in order to win contracts. So
at the same time as these charities were lobbying against the conditionality of benefits to
disabled people, they were taking contracts to deliver services of which that policy was
an integral part. This raises the question of whether charities should reject contracts if
their outcomes compromise the position of the charity vis a vis its beneficiaries.
The growing emphasis on localism, on transparency of decision-making and on engaging
citizens in designing service delivery is also relevant here: charities should have a role in
empowering beneficiaries to get involved with and scrutinise local decision making
which may affect them. However, charities may be reluctant to encourage beneficiaries
to be critical of proposals for services because the same local government officials who
put forward those proposals will likely also be those who also hold the purse strings for
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awarding contracts for service delivery, and charities will not want to disadvantage
themselves in the competition for those contracts.
However, as another participant put it, if the objective of charities is simply to deliver
services, much as Tesco delivers services, then why would charities be any more
concerned about campaigning than Tesco? On this point, it was commented that there
are some charities that deliver public services to highly disadvantaged populations, but
who are rarely heard campaigning on behalf of those populations.
So, there may be a trade-off between the viability of the organisation on the one hand,
and its integrity on the other, in so far as that integrity is substantially about doing what is
in the interests of beneficiaries – a point backed up by charity law. The broader question
then arises of whose outcomes charities are there to deliver: their own, their beneficiaries’
or those of commissioners?
It was commented however, that in some areas the Local Compact arrangements had
forged partnerships between public, private and voluntary sector organisations wherein it
has been possible for the latter to be involved in service delivery but without losing an
advocacy ‘voice’ for their beneficiaries.
ii) Tension between independence and accountability
Public service delivery brings added demands - and risks – for charities in terms of
accountability, especially in the form of targets. Such demands are representative of the
‘contract culture’, where the logic of political accountability for public expenditure takes
hold. However, problems of accountability can cut both ways: voluntary sector
organisations are not accountable in the same way as statutory service providers, and this
can leave accountability ‘gaps’.
A number of participants commented that there are problems around measuring the
outcomes delivered by charities: often outcomes are intangible and, furthermore, the
‘added value’ that charities offer in terms of the quality of interactions with beneficiaries,
is hard to capture in any measurable way. However, where public money is being given
to charities to deliver public services, accountability will be required from commissioners
for the outcomes achieved. Whilst qualitative measures are available, participants raised
questions as to whether these would be adequate when it came to accounting for
outcomes in public service delivery.
There is also a question of the risk imposed upon charities by particular forms of targets
typically employed in public service delivery. Notably, the system of Payment by
Results transfers risks to VSOs in so far as payment is not made to providers until the
required outcomes are achieved. Firstly, this means that payment is retrospective: this in
itself can present financial challenges for charities. Secondly, payment for provision of
services is not guaranteed: this is particularly difficult given that it can be hard to
adequately measure whether and how well outcomes have been achieved in some of the
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areas of service delivery in which charities are engaged, and simply because outcomes
may not be achieved, but the organisations in question will still have expended resources
in the process. Whilst private sector organisations may be able to absorb such costs, it is
unlikely that VSOs will be able to do so.
Whilst independence might be challenged in various ways by the demands of
accountability for public service delivery, that fact of independence also presents a cause
for concern amongst some. For example, whilst independence is a virtue in terms of
working with some groups who are reluctant to engage in statutory services, the reasons
why they are reluctant to do so may point precisely to the reasons why statutory services
should be involved. One participant highlighted the work that some charities do with
families in disadvantaged areas, and noted that one of the reasons why they were more
successful than the local authority in ‘reaching’ those groups was because families were
often suspicious of Social Services. It is possible, however, that there may be grounds
upon which Social Services would be required to take actions – and to take legal
responsibility for actions – and where they would be held to account if they did not so
act. However, charities do not work under the same burdens of accountability or
responsibility. They may enjoy an independence and an access to ‘hard to reach’ groups
that statutory services do not, but they also lack the structures of accountability which
characterise those statutory services.
A similar issue was raised in relation to the role of faith groups: these groups can be
particularly effective at reaching disenfranchised communities for whom local authorities
struggle to provide effectively. However, the nature of faith groups’ interaction with
those populations is not subject to the constraints of neutrality that would apply to
outreach work carried out by statutory providers, yet there is no way to remove the
possibility that faith groups use the opportunity of providing public services to proselytise
about their own cause. As such, it may be difficult to guarantee that the non-negotiable
agendas of faith groups do not compromise the integrity of the public services in
question.
One additional point on the issue of accountability is that charities are not subject to the
Freedom of Information Act, and thus not accountable in the same way as local
authorities in this regard.
iii) Asset-holding
Asset holding can be one way of increasing financial independence for charities. Holding
assets allows charities more independence and flexibility: one participant pointed out that
money can be borrowed against the value of assets or they can be used to the advantage
of beneficiaries by means of employment opportunities – for example, employing
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beneficiaries to work on maintaining land or properties – or simply by virtue of charities
having full flexibility over use of buildings or facilities.
However, whilst assets can facilitate independence, they can also create liabilities or be
transferred in ways that impose conditions on organisations. One participant cited the
transfer of housing stock from local authorities to housing associations, noting that whilst
they technically owned the properties, they were not allowed to determine allocation of
houses to tenants, and were bound by a changing regulatory and policy framework over
which they had no control. The transfer of assets in this instance came at a heavy price in
terms of independence.
If assets are to be an instrument of independence, it is also important that they are not tied
up or their use restricted in such a way that income cannot be generated from them. One
participant gave an example of a playing field owned by a charity, but whose use was
restricted and which was in a location where it could not be effectively accessed. This
kind of asset represents a simple cost to the charity – in terms of maintenance and so on –
instead of offering a means of generating income.
2. How much does the ‘form’ of organisation matter in public service delivery?
i) Distinctiveness
The central and very broad question here ‘what does it mean to be a charity?’. Charities
are but one part of the voluntary sector ‘universe’ - amongst mutuals, co-operatives,
social enterprises and so on - and of the wider public service delivery picture: Big Society
rhetoric has emphasized de-centralisation and diversity of public service delivery,
including public, private and voluntary sector provision. A central issue in this context is
what is distinctive about charities and about the services and value they offer, in the midst
of other types of providers from the voluntary sector and beyond, and the question of how
that distinctiveness might be preserved against threats from various sources.
Seeking clarity on the distinctiveness of charities is important in so far as there are
questions about the relationship between the citizen and the state and about charities’
place in that relationship; about what ‘public services’ are; and about the social value and
‘social productivity’ that can be created in the relationship between the citizen and public
services. Partly as a consequence of this, it was suggested that the place of charities in
society is now less clear: no longer do they sit in the ‘clear middle ground’ between state
and citizen, but separate from each. Rather, they can facilitate the growth of ‘social
citizenship’ and ‘social productivity’ in the contact they have with beneficiaries, but at
the same time closer relationships with the state have developed out of their role in public
service delivery.
Whilst charities are bordered by other voluntary sector organisations, they are also
subject to, as one participant put it, the ‘pull and push’ of both the state and the market.
Often charities step into the breach left by the failure of either of those forces. However,
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whilst an increased role in public service delivery brings charities closer to the state, the
attraction of charitable status and the diversification of public service delivery that opens
up opportunities for the private sector, means that it - along with other non-charity
entities in the voluntary sector - may move closer to charities. There are not only tax
advantages in charitable status which may appeal to the private sector as well as to, for
example, social enterprises, but also considerable reputational benefits too. Concern was
expressed by participants about any potential loosening of the charity ‘brand’ which may
affect public perceptions of what it means to be a charity, and the practical impact that
might have on charitable giving.
Such changes in public perception may also arise, however, out of the perception of
charities being public service providers, working under contracts set by national or local
commissioners. This speaks in part to concerns about independence, but also to the
distinctiveness of charities in the public’s view, and particularly to what that might mean
in terms of charitable giving: one might ask the question that if all sorts of organisations
provide public services, of which charities are just one, what marks them out to be
distinctive as the kind of organisation to which I should give my money as opposed to
any other?
Questions were raised by participants about where the expertise of charities lay, and
whether, in the context of the expanded role many VSOs have taken on as part of their
public service delivery, they may be performing functions which, firstly, do not utilise
their expertise appropriately, and secondly, are functions which other sectors may
perform better. One participant offered the example of charities managing property
maintenance contracts and tenancy agreements, or including within their work
‘improving customer focus’. Such work is typical of the private sector, and it may
perform such functions better than charities.
However, at the same time as charities have taken on roles which may be more
appropriately filled by organisations in other sectors, questions were raised as to whether
that has resulted in charities doing less of what makes them distinctive, such as
encouraging volunteering, carrying out fundraising and, especially, campaigning.
The distinctiveness of what charities offer may also be under-valued if their main
contribution to improving public services is seen to be just delivering those services. The
sector may be able to contribute to the improvement of public services without taking on
responsibility for delivering them, and they may be able to do so in ways which may be
more in keeping with the distinctiveness of the sector. Working in partnership with local
authorities and other organisations is one way in which this happens best. One
participant offered the example of where a charity had worked with the local authority to
involve beneficiaries in the design and planning of services, with the result that the
changes made to the relevant provision made it both more efficient from the perspective
of the local authority, and more effective from the perspective of the charity’s
beneficiaries. The example demonstrates that charities do not have to provide an end
product to have a formative input into improving services for their beneficiaries.
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The possibilities for such partnership working are numerous: one could imagine, for
example in public health, local authorities, charities, self-help organisations and the
private sector working together, with each carrying out the activities that it does best. In
this way, the interests of beneficiaries are well-served and, at the same time, the
distinctive abilities of charities and other VSOs are put to best effect, instead of being
stretched to activities which may be more comfortably carried out by private or public
sector agencies.
ii) Public attitudes
One central question raised with regard to public attitudes was whether the public cares
who delivers public services. There is mixed evidence on the question: some surveys
report that the public does have different attitudes towards different service providers,
indicating that the public may indeed care who provides services and not just about what
they get out of those services. However, it was also noted that evidence base for public
attitudes can be highly variable in so far as it is contingent on changing attitudes – which
are in turn contingent on changing personal experience - and, in any case, attitudes do not
always translate into behaviour.
However, the extent to which people appear to care about who provides services varies
from sector to sector. One participant pointed to evidence which suggests that people do
not mind who provides ‘public space’ services such as parks and leisure centres, but that
they do mind who provides ‘private space’ services such as personal and social care,
childcare and family services. Questions were raised as to whether this division between
services where people care or do not care about providers correlated with the areas where
charities may be able to provide more distinctive services. It was suggested that if there
is an area where what charities offer is distinctive – although existing evidence on user
experiences on that is mixed – it may be in the area of ‘private space’ services where the
quality of personal interactions may matter more, and where a public sector ‘ethos’ is
expected or desired.
Attitudes towards charities as well as the distinctiveness of what they offer may also be
important where there are particularly negative perceptions about statutory services, such
as amongst some ‘hard to reach’ populations, and where it may, as a result, be difficult
for statutory services to work with those groups. That a charity is providing the services
makes a considerable difference to the engagement of users and therefore to the quality
and effectiveness of service that can be provided.
iii) Quality of provision
There are also questions around the quality of provision that charities can provide, and
their capacity to compete with other, notably private sector providers, given
organisational infrastructures and the skills of staff and volunteers.
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There is no conclusive evidence that the voluntary sector delivers better services than
other sectors: as one participant pointed out, whatever the reason for contracting out
public services to charities, it is not because VSOs deliver better services, and certainly
not that they deliver better services across the board.
The point was made by one participant that sometimes services provided by unskilled but
willing volunteers may simply be inferior to those which could be provided by paid,
skilled professionals. This issue is connected not only with that highlighted above about
the responsibilities and accountabilities of statutory providers, but also, to some degree,
with issues around localism and the variability of provision which could result from
charities providing services (see next section).
If charities do not deliver better services, then the question arises as to why they continue
to win contracts. Questions were raised in the seminar as to whether there is a ‘level
playing field’ in competition for contracts, and there are concerns that charities do not
have the skills to compete with commercial players in bidding for contracts or delivering
services. It is possible, then, that charities win contracts not because the services they
offer are better or because the bids they put forward are more comprehensive but rather
because their services come at a cheaper price than those offered by the private sector.
The issue of a ‘level playing field’ is further complicated in situations where the state
stands behind, or financially props up, VSOs that provide services. One participant noted
that this had happened in the case of housing associations, where the financial liability
and the risk to services associated with the failure of a provider was too great for the
Government to ignore.
In terms of quality, however, the cheapest option may not provide the best service either
for the public or for the beneficiaries of the relevant charities. There may also be links to
be made here between the services charities provide – perhaps not so effectively – and
issues of reputation: if charities are seen to be providing sub-standard services, might this
have an effect on the charity ‘brand’? Whilst income from contracts may increase, it is
possible that the overall quantum may decrease if charitable giving falls as a result of
public disillusionment.
If charities are to deliver high quality services, participants noted the need to ‘skill up’ the
sector for public service delivery, to develop sound organisational infrastructures and to
employ appropriate staff at appropriate salaries – and none of these are easy to do with
limited funds. Questions also arose around whether the demands of public service
delivery might require different governance structures, or paid trustees with different skill
sets.
3. Localism
i) Tensions between scale and localism
The Big Society emphasis on localism may be in tension with practicalities on the ground
where efficiency may demand that smaller charity providers of services link up to
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achieve economies of scale. There are also questions here about the place of charities
within larger consortia of organisations and the risks they may be left carrying:
participants suggested that when charities are involved in consortia there is a danger that
they end up with the riskiest parts of the contract which private sector organisations are
reluctant to accept.
ii) Tensions between centralism and localism
There has been over recent years - and there will continue to be in coming times if the
Big Society agenda takes off - a move from centralised to localised decision making and
service provision. Clearly charities have played an important part in this shift, given the
benefit they often have of connections with local communities and an ability to be a
conduit between those communities and decision makers, as well as to provide services
themselves. Further, the ideas and values around civic engagement, which seem to be
central to the concept of the Big Society as well as to earlier moves towards social
citizenship, are very much in line with the ideas and values of the voluntary sector. As
many participants pointed out in various ways, however, the trick is in how to foster,
manage and marshal the forces of civic engagement to best effect, as well as to recognise
limits where they exist.
Those limits play into one of the central tensions between between centralism and
localism - the issue of evenness of service provision. Centralised planning and service
delivery at least hold the promise of relatively even provision. Localism, on the other
hand, seeks to be sensitive and responsive to particular needs, rather than offering
uniformity of services. There is doubtless much value in sensitivity to particularity but,
as one participant put it “one man’s localism is another’s postcode lottery”. Whether
localism is appropriate and whether it adequately meets needs may be a sector specific
issue: so, for example, in housing localism may be the appropriate approach, but for
example in health, uniformity of provision and national standards have been welcomed
by patients as a replacement to the ‘postcode lottery’ of the 1980s and 1990s.
There are a number of possible reasons why this unevenness in service provision may
arise in particular relation to the issue of charities providing public services. Firstly, the
independence and varying activities of charities will almost necessarily mean that
provision will vary from area to area, if it is provided by different organisations.
Secondly, not only is there much variance in the activities of charities, but also much
variance in their geographical distribution: there is evidence of north-south and urbanrural splits, and some evidence of a negative relationship with deprivation – that is, there
are fewer charities in poorer areas. A related factor here may be the uneven distribution
of the capacity for civic engagement: this is known to be lower in areas of economic
disadvantage, so charities that rely on the involvement of volunteers, or which are
predominantly run by volunteers, may struggle in deprived areas. This gives rise to
concerns that charities may face particular challenges in providing services in precisely
those areas where need may be greatest.
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Further, regardless of geographical there is in any case an ‘involvement gap’ where
people say they want to be more involved in their local communities, but which intention
rarely translates into action on the ground. One participant noted that community action
does not ‘just happen’ but rather needs to be generated – and skills are needed by those
who do that – and that work needs to be done to ensure that those who do get involved
can see evidence of the difference they are making.
Thirdly, whilst charities can often be innovative and original in their thinking, this can
mean that the services they choose to provide, given their ‘independence’, may indeed be
innovative and original, but may not necessarily meet the basic needs of the local
population. One participant gave the example of holistic therapies being offered for
babies in an area, but only being taken up by middle class parents: perhaps more
conventional services were needed by less advantaged communities but, whatever the
reason, what was on offer did not reach all of the relevant beneficiaries.
Given the potential for unevenness in provision, there is a need for some top-down
organisation to ensure that innovative and effective services are replicated in other areas.
Yet, the rhetoric of the Big Society emphasizes bottom-up, grass roots action and has not
yet acknowledged the need for some top-down co-ordination.
4. Implications for the Charity Commission and NCVO
A series of questions arose for the Charity Commission and NCVO.
One broad question was how the Charity Commission and NCVO are going to respond to
the Big Society agenda. It was suggested that this agenda is something of a moving feast
and that hasty reactions to what may be temporary phenomena should be resisted: the
organisations have acted in a measured and reasonable manner before, and should
continue to do so.
Questions arose around the definition of independence for charities. It was suggested that
the question of what independence means may be considered in the review of the
Charities Act which is currently underway, and that future legislation may be able to set
out more clearly what it means.
With more boundary issues arising as the voluntary sector expands, diversifies and takes
a bigger role in public service delivery and in society more generally, the question arose
as to whether the Charity Commission would need to expand or change the nature of its
role: would the Commission take a more substantive and perhaps controversial and high
profile role in considering questions of what is and isn’t a charity? This in turn raises
questions as to how accountable the Charity Commission itself is.
One participant suggested that there may be grounds both for a broad and inclusive view
of charity or, conversely, for establishing more separation and clearer boundaries
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between what a charity is and how it is distinct from a co-operative, or a mutual or a
social enterprise. At present, legislative tools such as the public benefit test, are deficient
at making the distinction between charitable organisations and non-charitable
organisations that push for charitable status.
There was a suggestion that, in the changing environment of the sector, there might be a
public demand for the Charity Commission to facilitate consensus on the issues. The
role for the Charity Commission has hitherto been to protect what is charitable in law, but
it was suggested that the test in times to come may be how they continue to do that, but in
a more complex environment, and how they continue to protect the distinctiveness of
charities. In a changing and challenging environment for charities, the role of the Charity
Commission in protecting the identity of charities will be important in ensuring public
trust in the sector as a whole.