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Joint Charity Commission/NCVO seminar exploring charities role in public service
delivery over the next 10 years – a note of the discussion
Introduction
The Coalition Government’s plans, and the Comprehensive Spending Review
announcement, envisage a greater role for the not-for-profit sector, including charities, in
the provision of public services over the next few years. These organizations are seen as
playing a vital role in designing and delivering good quality, cost-effective services to the
public, both on behalf of government and on their own account. Whilst there are
opportunities, these are being played out against a challenging economic environment.
On 17 November 2010, the Charity Commission and NCVO invited a small number of
public policy and charity experts (see annex) to discuss charities role in public service
delivery over the next 10 years within the above context.
The event was chaired by Professor Albert Weale (Chair of Politics, Public Policy and
International Relations, University College London).
The aim of the discussion was to:
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Explore whether there are, or should be, any legal boundaries to charities
participating in the provision of public services;
Discuss the role of charities compared with that of the state, and other providers
of public services;
Within this context stimulate thinking about the essence of what makes a charity
a charity; and
Consider any implications for public perception of charity.
The discussion took place on Chatham House rules i.e. comments are not attributed. The
Commission and NCVO are grateful to Sarah Clark and Nick Martin at UCL’s School of
Public Policy for producing the following independent note of the discussion.
The discussion
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’s work as regulator of charities
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1) The independence and integrity of charities
For some participants the broad shift from grant funding to contract funding, as charities
take on a greater role in public service delivery, raised questions about the on-going
independence of charities: the relation of the state to charities was described as different
in a ‘contract world’ where, arguably, national or local government commission charities
to do what the state wants them to do, than in a ‘grant world’ where the historically the
state gave charities money to do what charities want to do.
There is a clear legal obligation to take on public service functions only where they
coincide with the charity’s charitable purposes, thereby helping to preserve their
independence. This emphasis on independence is further reflected in the obligations
imposed on trustees to arrive at independent judgements. Nevertheless, a series of
tensions arise in this context, for example between:
i. organisational viability and organisational integrity
ii. the needs of beneficiaries and the needs of the organisation,
iii. independence and accountability, and
iv. charitable assets acting as a source of independence and of liability.
i) Tensions between organisational viability and organisational integrity
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 become an even more important part of such charities finances.
However, it is precisely in times of economic constraint 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. For others, the opening of new services for charities to contract for
will provide increased opportunities.
The priorities of commissioners can change over time. As well as having a financial
impact, changing priorities have the potential to affect the independence of charities’
‘mission’. If charities feel they have to adapt their priorities to fit those of commissioners
in order to increase their likelihood of winning contracts, this may create a tension with
the character or purpose of the charity, and needs of its beneficiaries.
ii)
The needs 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 always be the same
thing as doing what is right or best for beneficiaries. In seeking to secure contracts and in
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working ‘on commission’, charities can be aiming towards targets and outcomes not set
by the charities themselves, and need to consider whether this has any implications for
their continued focus on the needs of beneficiaries.
Some participants questioned whether the ability of charities to provide effective
advocacy and campaigning ‘voice’ on behalf of beneficiaries could be compromised on
some occasions by the need to maintain good relationships with national or local
government commissioners, particularly in cases where the policies of those agencies
carry explicit disadvantages to beneficiaries and where, in other circumstances, charities
might campaign against such policies. One participant described some charities in receipt
of statutory contract funding not wanting to ‘bite the hand that feeds them’.
The growing emphasis on localism, on transparency of decision-making and on engaging
citizens in designing service delivery is also relevant here: participants saw a role for
charities in empowering beneficiaries to get involved with and scrutinise local decision
making which may affect them. However, they also thought that some 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 awarding contracts for service delivery. Additionally,
concerns were expressed that charities themselves will come under greater scrutiny as a
consequence of their role in service delivery, although participants observed that this
scrutiny may not primarily be from their own users.
However, another perspective was that charities should focus on their key objective to
provide services. As one 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, another participant 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. 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. The
Compact, which respected the voluntary sector’s right to campaign or challenge
government, provided legitimacy for their advocacy ‘voice’ for their beneficiaries,
alongside their service delivery role.
ii) Tension between independence and accountability
As well as opportunities, public service delivery was seen as potentially bringing added
demands - and risks – for charities in terms of accountability, especially in the form of
targets. Such demands were seen as representative of the ‘contract culture’, where the
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logic of political accountability for public expenditure takes hold. However, problems of
accountability were perceived as cutting both ways: voluntary sector organisations were
not seen as being accountable in the same way as statutory service providers, and this can
create accountability ‘gaps’. Whilst accountability is no less necessary amongst
voluntary sector providers than amongst public and private sector ones, the form that
accountability was identified as a potential issue.
There is also a question of the risk imposed upon charities by the particular forms of
targets and payments typically employed in public service delivery. Notably, the system
of Payment by Results transfers risks 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 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 all charities 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.
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 although, some participants felt that, in some cases, such
charities also used the opportunity of providing public services to proselytise about their
own cause.
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. Participants recognised that there were a number of arguments
as to whether it was appropriate to extend FoI requirements, or whether charities
demonstrated their accountability in different ways.
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iii) Asset-holding
Asset holding was seen as one way of increasing charities’ financial independence as it
allowed charities more independence and flexibility. For example, one participant
pointed out that assets could be used as collateral, and that their infrastructure could
provide employment opportunities for beneficiaries – for example 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,
because of their physical condition, or be transferred along with obligations or conditions
on the receiving organisations. If assets are to be an instrument of independence,
participants thought that it was important that these are not tied up or their use restricted
in such a way that was not compatible with the charity’s aims or where it was not
possible to generate income 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: in such an instance, the charity was unable to utilise
the asset to any financial advantage, but was nonetheless obliged to maintain the field.
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: the
government’s themes underlying the Big Society and localism agendas emphasize decentralisation 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.
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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,
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 could open
up opportunities for the private sector, so 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 participant posed 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 also raised by participants about where the expertise of charities lay, and
whether, in the context of the expanded role many charities 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’ where they argued that other types of organisation may
perform such functions better than charities.
However, at the same time as charities have taken on roles which some may argue 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
developing new and innovative services to meet unmet needs, encouraging volunteering,
carrying out fundraising and campaigning.
Other participants felt that the distinctiveness of what charities offer might be undervalued if their main contribution to improving public services was 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 was quoted as 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
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more efficient from the perspective of the local authority, and more effective from the
perspective of the charity’s beneficiaries.
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
can make a considerable difference to the engagement of users and therefore to the
quality and effectiveness of service that can be provided. However, if a charity or
charities are perceived to provide substandard services, this could have a disproportionate
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.
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.
There is no conclusive evidence that the voluntary sector delivers better (or worse)
services than other sectors: one participant suggested, whatever the reason for contracting
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out public services to charities, the primary reason was probably not because they deliver
better services, and certainly not that they deliver better services across the board.
The point was made by another 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).
More generally, questions were raised in the seminar as to whether there is a ‘level
playing field’ in competition for contracts. There were also concerns that not all charities
had the skills to compete with commercial players in bidding for contracts or delivering
services. There was a concern that in some cases 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.
For charities to deliver a full range of high quality services, participants noted the need to
‘skill up’ more of the sector (across all incomes), to develop sound organisational
infrastructures and to employ appropriate staff at appropriate salaries – and participants
also observed that 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
Some participants questioned whether 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 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, without the right skills and awareness, 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
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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,
including charities. 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 centralism and localism - the
issue of evenness of service provision. Centralised planning and service delivery held out
the promise of relatively even provision, albeit that in reality there have always been
variations by area. Localism, on the other hand, seeks to be sensitive and responsive to
particular needs, rather than offering the appearance of 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, there was
some evidence to suggest that uniformity of provision and national standards had been
welcomed by patients as a replacement to the perceived ‘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,
practices of commissioning and procurement may vary from one area to another, such
that charities may be asked to provide services in one way in one area, but in a different
way in another. This may be appropriate in terms of meeting local need, but it depends
on the ability of commissioners to accurately identify that local need.
Secondly, there is some variance in the geographical distribution of charities: there is
evidence of north-south and urban-rural 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.
Further, regardless of geographical variation, 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
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population. In some cases they are designed to complement services provided by others,
but in other cases they may not meet the most pressing needs.
4. Implications for the Charity Commission’s work as regulator of charities
Questions arose around the definition of independence for charities. It was suggested that
the question of what independence means might be considered in the review of the
Charities Act in 2011, and that there might be scope for future legislation to set out more
clearly what it means.
More generally the changing role of charities in delivering public services raised
questions about to the extent to which traditional principles of charity continued apply,
and this could also be an area for the Review of the Act to consider.
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 change the nature of its role. For
example, might the Commission be required to take more complex and perhaps
controversial decisions about what is and isn’t a charity? With the transfer of assets as
part of the new models of public service delivery might this have implications for the
sector’s risk profile and for the Commission’s compliance work as well?
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.
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Annex
Attendees
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Professor Albert Weale, University College London (chair)
Zoe Briance, Centre for Social Justice
Olivia Butterworth, Third Sector Partnership Team, Dept of Health,
Hilary Cross, Director of External Affairs, Macmillan Cancer Support
Nicholas Deakin, Chair, Barings Foundation
Professor Bill Jordan, University of Plymouth
John Knight, Charity Commission board member
Cath Lee, Chief Executive, Small Charities Coalition
Ben Lucas, Director 2020 Public Services Trust
Andrew Purkis, Chair Action Aid UK
Andy Sawford, Chief Executive, Local Government Information Unit
Srabani Sen, chief executive, Contact a Family
James Sinclair Taylor, Russell Cooke Solicitors
Helen Sullivan, University of Birmingham
Sharon Witherspoon, Deputy Director, Nuffield Foundation
(Plus attendees from the Charity Commission, NCVO and University College, London)
Professor Albert Weale and Sarah Clark from University College London would like to
acknowledge support provided by the Economic and Social Research Council, under their
Professorial Fellowship grant (Grant Number RES-051-27-0264)'Social Contract,
Deliberative Democracy and Public Policy'.