Rs15 Stand And Deliver
Stand and deliver
The future for charities providing public services
a2
The Charity Commission is the independent
regulator for charitable activity. This is
one of a series of reports that present our
case-working experience, supplemented
by additional research. Their purpose is
to help increase understanding of an issue.
They are part of our mission to help
charities maximise their impact, comply
with their legal obligations, encourage
innovation and enhance effectiveness.
This report presents the findings of
our survey of registered charities
concerning their participation in delivering
public services.
Table of Contents
Introduction
2
Key findings
3
1.
Detailed analysis of survey results
5
1.1
Number of charities delivering public services
5
1.2
Income from public service delivery
6
1.3
Types of services delivered
7
1.4
Operational area and public service delivery
8
1.5
Types of funding agreement
9
1.6
Full cost recovery
10
1.7
Number and duration of funding agreements
14
1.8
Impact on independence and governance
15
1.9
Future scope for charities to deliver public services
18
2.
Some policy implications
20
2.1
Charities’ independence, governance and mission
20
2.2
Funding and sustainability
20
2.3
Shape and nature of the sector
21
3.
Conclusions and recommendations
23
Annex 1 – Survey methodology and profile of participating charities
24
Annex 2 – Number of charities delivering public services, by income band
26
Annex 3 – ‘Other’ public services delivered by charities
27
Annex 4 – ‘Other’ types of funding arrangement
28
Annex 5 – Full cost recovery
29
Annex 6 – Full cost recovery by type of funding agreement
30
v1.1.1
Introduction
Now, more than ever, charities are being invited to
In total, over 3,800 charities completed the survey,
deliver public services. Today they face a range of
representing a broad cross section of the
choices, all of which have implications for future
Commission’s Register of charities by income and
service delivery.
operational area. This is the largest survey on this
subject to date.
During the summer of 2006 the Charity Commission
conducted a survey of all registered charities in order
We would like to thank the Directory of Social Change
to obtain some basic information about their
who carried out the survey on the Commission’s
involvement in public service delivery, its impact on
behalf.
their activities, funding and governance, and future
scope for their involvement in this kind of activity.
2
Key findings
Amongst respondents to the survey:
1. Over 60% of charities with an income above £500,000 currently deliver
public services.
2. Only 14% of charities that are not currently delivering public services are
actively considering doing so in the next year. The survey results also
indicate that there are barriers to entering the market for smaller and
locally based charities.
3. One third of charities that deliver public services obtain 80% or more of
their income from this source. This figure rises to almost 67% for charities
with an income above £10 million.
4. Almost one third of all public services delivered by charities are in the
fields of health and social care, but the survey also showed a great variety
of services provided.
5. The most common funding arrangement is a combination of grants,
contracts and service level agreements. 37% of charities delivering public
services are funded in this way.
6. Over two thirds of all funding agreements for public service delivery are for
one year only.
7. Of the charities responding to our survey:
•
Only 12% of charities delivering public services reported that they
obtain full cost recovery in all cases.
•
37% said they obtain full cost recovery in some or most cases.
•
43% indicated that they do not obtain full cost recovery for any of the
services they deliver.
3
8. Charities that deliver public services are significantly less likely to agree that:
•
their charitable activities are determined by their mission rather than by
funding opportunities;
•
they are free to make decisions without pressure to conform to the
wishes of funders;
•
their trustees are always involved in decisions about what activities or
projects to undertake.
9. Only 26% of charities that deliver public services agreed that they are free
to make decisions without pressure to conform to the wishes of funders.
Our findings raise important questions about charities’ future role and
engagement in delivering public services. They also raise issues for charities to
consider when thinking about their future direction, including their:
•
independence, governance and mission;
•
funding; and
•
sustainability.
At the same time as publishing this report, we are also publishing new
guidance Charities and Public Service Delivery: An introduction and overview
(CC37). This guidance applies to all charities either considering or already
engaging in public service delivery.
We will also be taking work forward with charities, umbrella and professional
bodies, and government departments. This work includes:
•
properly understanding the risks and rewards for charities, their
beneficiaries and the sector as a whole;
•
increasing understanding of charities’ legal duties in relation to public
service delivery; and
•
promoting and encouraging good practice amongst charities and funders in
funding of public service delivery.
4
1. Detailed analysis of survey results
1.1 Number of charities delivering public services
We asked charities whether they currently deliver
public services, is reflected in the graph below. It is
services to, or on behalf of, a public authority.
not a smooth curve; there is a steep increase in the
percentage of charities delivering public services
Whilst preliminary analysis of the results from the
between the £10,000 - £100,000 and £100,000 -
survey indicated that 30% of respondents to the
£250,000 brackets.
survey were delivering public services, further
analysis revealed that there were marked differences
If the responses are analysed by income band and
in the proportions of respondents reporting that they
the percentage of charities in each of these bands
delivered public services when the figures were
(see annex 1), the figures would suggest that
broken down by income band. For example, the
approximately 20% of all charities are delivering
results showed that only 8% of charities responding
public services. So whilst we are unable to directly
to the survey with incomes below £10,000 reported
infer the proportion of charities across the sector
that they delivered public services whilst a much
delivering public services from these survey findings
higher proportion, 62% of charities with incomes
alone it is possible, given the two approaches that
above £500,000, reported that they delivered
could be used, to suggest that the figure lies
public services. This relationship, ie charities within
between 20% and 30%.
the higher income bands were more likely to deliver
Percentage of charities by income band delivering public services
100
90
80
70
Deliver public
services
60
Do not deliver
public services
50
B
r
c
entage
e
P
40
A
30
20
10
0
Under
£10,000 -
£100,000 -
£250,000 -
£500,000 -
£1 million -
Over
£10,000
£100,000
£250,000
£500,000
£1 million
£10 million
£10 million
Income band
5
1.2 Income from public service delivery
We asked charities that deliver public services what
Conversely, almost a quarter (23%) of charities that
percentage of their income they obtain from
deliver public services obtain less than 20% of their
delivering these services.
funding in this way, suggesting a polarisation within
the sector between those charities that rely wholly or
Just over one third of charities (34%) that deliver
mainly on public service delivery for their funding
public services obtain 80% or more of their
and those that rely only partially on this source of
income from public service delivery, suggesting a
funding.
high level of reliance on this source of funding.
Proportion of annual income that comes from public service delivery
6%
34%
23%
Don’t know
0 - 19%
20 - 39%
40 - 59%
60 - 79%
80 - 100%
16%
11%
10%
This polarisation becomes more evident when
million delivering public services obtain 80% or
charities’ responses are broken down by income. The
more of their income that way. In contrast, 46% of
survey results show that larger charities are more
charities that deliver a public service with an annual
likely to obtain a greater percentage of their income
income below £10,000 obtain less than 20% of their
from public service delivery. Almost 67% of
income that way.
charities with an annual income above £10
6
Proportion of income that comes from public service delivery by income band
Under
£10,000 -
£100,000 -
£250,000 -
£500,000 -
£1 million -
Over
£10,000
£100,000
£250,000
£500,000
£1 million
£10 million
£10 million
%
%
%
%
%
%
%
Don’t know
11
8
6
2
3
7
5
0 - 19%
46
32
22
12
17
15
10
20 - 39%
8
15
19
20
13
18
10
40 - 59%
5
8
13
15
10
7
0
60 - 79%
5
7
11
15
16
15
10
80 - 100%
25
30
29
36
41
37
67
Total
100
100
100
100
100
100
100
The fact that larger charities are more likely to be
value. For example, the survey indicates that £140
dependent upon income from public service delivery
million of government funding currently goes to 14
is significant as these charities may be fewer in
charities that derive 80% or more of their income
number but actually have a collective high monetary
from public service delivery.
1.3 Types of services delivered
We asked charities that deliver public services what
The results also show that just under half (46%) of
kinds of services they deliver1. The results show that
charities delivering public services deliver services in
there are particular service areas in which the
more than one category. Interestingly it is the
numbers of charities delivering them are
charities with incomes between £10,000 and
comparatively high. For example, the pie chart shows
£100,000 that are most likely to deliver services in
that the provision of health and social care
more than one category. For example, the survey
services account for almost one-third (31%) of the
responses show charities that provide combined
total public services delivered by charities.
educational and advice services, housing and
environmental services and (as already indicated)
The second largest category of services delivered by
health and social care services. An example of such a
charities are those related to education2 (15%). This
charity might be a centre providing a “one-stop
is followed by children’s services (14%).
shop” for a particular beneficiary group or community.
These clusters of activity are significant as they raise
11% of respondents selected the category ‘other’
some important regulatory issues. For example,
under the types of services delivered. The most
charities delivering health and social services are
common responses in this category were transport,
likely to be regulated by bodies such as the
museums and heritage, counselling, and supporting
Commission for Social Care Inspection or the Health
the arts. Responses to the survey demonstrate the
Care Commission, raising the possibility of regulatory
diversity of public services delivered by charities
overlap.
(see Annex 3).
1 Charities could select more than one type of service eg a charity could deliver services in both the housing and environmental fields.
2 This includes both adult and children’s education.
7
Types of public services being delivered by charities
4%
5%
19%
7%
Environmental
Housing
Leisure
11%
Other
12%
Advice
Children’s services
Education
Health
13%
Social care
15%
14%
Base: number of services being delivered by charities taking part in the survey, 2637
1.4 Operational area and public service delivery
We asked all charities participating in the survey
based public service commissioners such as local
whether they operate within a local area such as a
authorities and primary care trusts. It is interesting to
county or city, across more than one county,
note that a higher proportion of charities operating at
nationally or internationally?
a regional level (across more than one county)
deliver public services than of those operating at a
75% of charities that delivered a public service did so
local level. This may be linked to economies of scale
on a local (eg within one county or city) or regional
and risk management (contracting with more than
basis (across more than one county). This highlights
one public authority) and may merit further
that the majority of charities delivering public
investigation.
services are likely to be contracting with locally
Does your charity currently deliver public services
Yes
No
Number
%
Number
%
Within a local area
779
30
1792
70
Across more than one county
205
45
254
55
Nationally or internationally
158
20
615
80
Total
1142
2661
In contrast 80% of charities working nationally or
involved in any form of public service delivery.
internationally responded that they were not
8
1.5 Types of funding agreement
We asked charities that deliver public services what
£10 million are more likely to be funded by contracts
forms of funding agreement they had in place for
(see table below).
public service delivery. Possible responses were
grants, contracts, service level agreements, a mixture
The most common funding arrangement for
(more than one) of these methods, or ‘other’.
charities delivering public services was a mixture
of grants, contracts and service level agreements
Analysis confirmed that there is a relationship
(37% of charities delivering public services said
between the types of funding agreement and the
they are funded in this way). In contrast, only 17%
size of charity, for example, charities with incomes
were funded solely by service level agreements, 15%
below £100,000 are more likely to be funded by
solely by grants and 15% solely by contracts.
grants whereas charities with an income over
Type of funding agreement
Don’t know
Grants
Contracts
*SLAs
A mixture
Other
Number %
Number %
Number
%
Number
%
Number %
Number
%
Under £10,000
9
9
22
22
6
6
7
7
13
13
43
43
£10,000 - £100,000
18
6
76
25
23
7
59
19
66
21
67
22
£100,000 - £250,000
3
1
25
10
34
14
56
23
101
41
26
11
£250,000 - £500,000
2
1
11
6
29
15
29
15
106
56
12
6
£500,000 - £1 million
0
0
17
9
43
23
27
15
90
49
7
4
£1 million - £10 million
1
1
15
1
21
22
11
12
43
46
3
3
Over £10 million
0
0
1
5
11
52
2
10
6
29
1
5
Total
33
3
167
15
167
15
191
17
425
37
159
14
*SLAs Service Level Agreements
43% of charities with an income of less than £10,000
expired’ (4); ‘verbal/written agreements/contracts
said they had some ‘other’ type of funding
with some organisations’).
arrangement. Further analysis suggests that many of
the responses in this category (for example, ‘spot
Over 90 charities answering ‘other’ to this question
purchasing’ (5); ‘one-off contracts’ (3)) are actually
(approximately 8% of charities delivering public
contracts or service level agreements, suggesting
services) obtain their funding from voluntary sources
confusion over the terminology of funding
(such as donations or fundraising) or through
agreements. Other responses suggest some very
payments from beneficiaries, but appear to receive
informal funding arrangements which may not
no statutory funding (see Annex 4). This highlights
represent good practice on the part of charities or
the difficulty of defining the boundaries between
funders (‘informal agreement’ (6); ‘contract has
public service delivery and charitable activity.
9
1.6 Full cost recovery
We asked charities that deliver public services
Of the charities responding to our survey:
whether the funding they obtain from their funding
agreements covers the full cost of the services they
•
Only 12% of charities delivering public services
deliver (including overhead or core costs) in all cases,
reported that they obtain full cost recovery in
most cases, some cases, or not at all.
all cases.
•
37% said they obtain full cost recovery in
some or most cases.
•
43% indicated that they do not obtain full cost
recovery for any of the services they deliver.
Does the funding cover all the costs?
50
45
40
35
30
r
c
entage
Don’t know
25
e
P
In all cases
20
In most cases
15
In some cases
No
10
5
0
Don’t know
In all cases
In most cases
In some cases
No
Responses
10
Whilst more small and medium sized charities (those
with an income between £100,000 and £1 million
with incomes below £250,000) said they do not
are least likely to achieve full cost recovery. It is
achieve full cost recovery for any of the services they
difficult to determine reasons for this from this
deliver, as the graph below shows, a mixture of the
survey alone but it does highlight an area for future
largest and smallest charities said they receive full
research.
cost recovery in all cases. This suggests that charities
G
Does the funding cover the full cost of services provided (by income band)?
F
60
E
50
Under £10,000
D
40
£10,000 -£100,000
£100,000 - £250,000
C
r
c
entage
£250,000 - £500,000
30
e
P
£500,000 - £1 million
B
£1 million - £10 million
20
Over £10 million
A
10
0
Don’t know
In all cases
In most cases
In some cases
No
Responses
11
The graph below illustrates further that smaller
always obtain full cost recovery and those that are
charities are more likely not to be achieving full cost
not obtaining full cost recovery at all is greatest in
recovery for any of the services they deliver, whilst a
charities with incomes between £100,000 and
greater proportion of medium sized charities
£250,000. This is followed by those in the £10,000-
responded that they obtain full cost recovery in some
£100,000 and those with incomes below £10,000.
or most cases. The gap between those charities that
E
Percentage funding costs covered by income band
D
60
C
50
Don’t know
B
40
In all cases
In most cases
A
r
c
entage
In some cases
30
e
P
No
20
10
0
Under
£10,000 -
£100,000 -
£250,000 -
£500,000 -
£1 million -
Over
£10,000
£100,000
£250,000
£500,000
£1 million
£10 million
£10 million
Income
12
The relationship between length of funding
that only achieve full cost recovery some of the time,
agreement and full cost recovery appears complex
and the high proportion of contracts lasting between
(see the graph below). Of significance is the high
one and two years that do not achieve full cost
proportion of contracts lasting more than three years
recovery.
D
Length of agreements held by charities achieving full cost recovery - shown by percentage
C
60
B
50
In all cases
A
40
In most cases
In some cases
r
c
entage
No
30
e
P
20
10
0
1 year of less
Up to 2 years
Up to 3 years
More than 3 years
Number of years
The results of this survey indicated no clear
funded in some other way and 9% of respondents
correlation between the type of funding agreement
who didn’t know what kind of funding agreement
(grant, contract, service level agreement or a mixture
they had. (See Annex 6)
of these funding types) and full cost recovery. 19% of
charities funded solely by contract(s) said they
7% of all respondents did not know whether they
obtained full cost recovery in all cases in comparison
were achieving full cost recovery. Charities in the
to 11% of charities funded solely by grants, 17% of
middle income brackets (£100,000 to £10 million)
charities funded solely by service level agreements,
seemed more likely to know whether or not they
7% of charities funded by a mixture or more than
achieve full cost recovery.3
one type of funding agreement, 11% of charities
3 These figures may, however, have been affected by the way in which the survey was conducted, as charities’ correspondents were
asked to complete the survey with information readily to hand.
13
1.7 Number and duration of funding agreements
We asked charities that deliver public services about
showed that this was because some charities have
the duration of their funding agreements. Charities
separate agreements for each individual beneficiary.
were asked to record the number of agreements
One respondent had 4,000 individual one year
they had that lasted under one year, up to two years,
contracts.
up to three years and more than three years.
Over two thirds of all funding agreements for
Whilst the majority of charities appear to have
public service delivery whether it be through
between one and five funding agreements, the
grants, contracts or service level agreements last
results showed that some charities had much higher
one year or less. Only 8% last up to 2 years, 11% up
numbers of agreements. Further investigation
to 3 years and 13% more than 3 years.
Duration of funding agreements
13%
11%
1 year or less
Up to 2 years
Up to 3 years
8%
More than 3 years
68%
14
1.8 Impact on independence and governance
Charities were asked whether they agreed or
C) Our charity trustees are always involved in
disagreed with the following three statements:
decisions about what activities or projects the
charity will undertake.
A) Our charitable activities are determined by our
mission rather than by funding opportunities.
The table below shows the total of all responses:
B) Our charity is free to make decisions without
pressure to conform to the wishes of funders.
Our charitable activities are
Our charity is free to make
Our charity trustees are
determined by our mission
decisions without pressure to
always involved in decisions
rather than by funding
conform to the wishes of
about what activities or
opportunities
funders
projects the charity will
undertake
Number
%
Number
%
Number
%
Don’t know
79
2
91
2
42
1
Agree
2336
61
1833
48
3051
80
Mostly agree
1095
29
1197
31
576
15
Mostly disagree
146
4
330
9
82
2
Disagree
147
4
352
9
52
1
Total
3803
100
3803
100
3803
100
15
There are significant differences between responses
proportions of charities that agreed with each of the
from charities that deliver public services and those
three statements.
that do not. The graph below illustrates the
Percentage of respondents that agree with statements A - C
100
90
80
70
Delivers public
services %
60
Does not deliver
public services %
50
B
r
c
entage
e
P
40
A
30
20
10
0
Agreement with statement A
Agreement with statement B
Agreement with statement C
Our charitable activities are
Our charity is free to make
Our charity trustees are always
determined by our mission
decisions without pressure to
involved in decisions about what
rather than by funding
conform to the wishes of funders
activities or projects the charity
opportunities
will undertake
16
Charities that do not deliver public services are
deliver a public service agreed that they are free
more likely to agree with all three statements
to make decisions without pressure to conform to
than charities that are delivering a public service.
the wishes of funders.
This suggests that charities delivering a public service
are more likely to be affected by ‘mission drift’ or
Analysis of the respondents that agreed or mostly
pressure from funders and less likely to involve
agreed with all three statements appears more
trustees in decisions about what activities or projects
reassuring in terms of charity independence and
the charity will undertake.
governance (see graph below). However, the results
still showed that a smaller proportion of charities
These results suggest that there may be some cause
delivering public services felt free to make decisions
for concern regarding the impact of public service
without pressure to conform to the wishes of funders
delivery upon the independence and governance of
than those charities that were not delivering a public
charities. For example, only 26% of charities that
service.
Percentage that ‘Agreed’ or ‘Mostly Agreed’ with all three statements
100
90
80
70
Delivers public
services %
60
Does not deliver
public services %
50
B
r
c
entage
e
P
40
A
30
20
10
0
Agreement with statement A
Agreement with statement B
Agreement with statement C
Our charitable activities are
Our charity is free to make
Our charity trustees are always
determined by our mission
decisions without pressure to
involved in decisions about what
rather than by funding
conform to the wishes of funders
activities or projects the charity
opportunities
will undertake
17
1.9 Future scope for charities to deliver public services
We asked those charities that do not currently deliver
they did not know. A relatively high proportion (64%)
public services whether they would consider doing so
said they would not consider doing so within the
in the next twelve months.
next twelve months.
14% of those charities said they would consider
The graph below shows the breakdown of responses
doing so within the next twelve months. 21% said
by income band.
Capacity and willingness to take on public service delivery
1200
1000
D
800
C
f
charities
600
B
Number o
A
400
200
0
Under
£10,000 -
£100,000 -
£250,000 -
£500,000 -
£1 million -
Over
£10,000
£100,000
£250,000
£500,000
£1 million
£10 million
£10 million
Income band
Do not deliver public services
Would consider delivering public services in the next 12 months
Would not consider doing so in the next 12 months
Do not know if they would consider it
18
Income band
Under
£10,000 -
£100,000 -
£250,000 -
£500,000 -
£1 million -
Over
£10,000
£100,000
£250,000
£500,000
£1 million
£10 million
£10 million
Do not deliver
public services
1088
1000
230
158
118
56
11
Would consider
delivering public
services in the
next 12 months
78
149
69
49
21
9
7
Would not consider
doing so in the
next 12 months
775
653
114
64
66
29
3
Do not know if
they would
consider it
235
198
47
45
31
18
1
The largest number of charities that said they would
£100,000. Over half of the charities that said they
consider taking up public service delivery in the next
would consider taking up public service delivery in
twelve months were in the income band £10,000 to
the next year have an income below £100,000.
19
2. Some policy implications
The survey findings have a number of policy implications. Some of these are for charities,
some are for the Charity Commission, as their regulator, and others are for public authorities
and commissioners of services to consider.
2.1 Charities’ independence, governance and mission
The survey’s findings indicate that public service
that the trustees were prevented from acting
delivery is having an impact upon the independence
solely in the charity’s interests; or
and governance of charities. It would be of concern
•
insufficient involvement by a charity’s trustees in
to the Commission if these findings translated into:
decisions about what activities the charity should
undertake, by making these decisions themselves,
•
a charity carrying out activities or services outside
or by setting clear parameters for delegation and
its objects or powers in order to gain funding;
reporting of such decisions.
•
a public authority exercising control over a
charity’s decision-making processes in such a way
2.2 Funding and sustainability
The results of this survey do not shed any light on
Appropriate duration is a key element of sustainable
the view expressed by many charities that grant
funding, so the short-term nature of the majority of
funding is being progressively replaced by contracts
current funding agreements (as highlighted by the
(although the survey results do indicate that smaller
survey results) is a potential concern. However, 13%
charities are more likely to be funded by grants and
of charities already have a funding agreement that is
larger charities by contracts, which might affect
longer than three years, which suggests that there is
charities’ perception of changes to funding).
already some good practice which can be developed
and promoted.
However, the responses do suggest a lack of clarity,
between funders and funded, concerning the
Charities entering into multiple individual funding
terminology used to describe a range of funding
agreements also feature in the survey’s results. This
agreements, such as grants, contracts and service
raises issues about the time and resources needed to
level agreements.
manage these agreements. Conversely, some
charities have commented that they find such an
Some funding organisations are moving away from
arrangement gives them greater flexibility in
using the terms ‘grants’ and ‘contracts’ in favour of a
negotiating and pricing agreements around individual
description of what the funding organisation intends
beneficiaries’ requirements, enabling them to best
to achieve: obtaining (or purchasing) a service, or
meet complex or multiple needs.
supporting charitable activity. Greater clarity here can
only be a good thing. Different funding arrangements
Despite government support for the principle of full
place different legal obligations on the use of
cost recovery, the survey results show that there is a
charitable assets and, because of this, charities, and
long way to go before delivery of public services by
their funders, need to be clear about the terms on
charities is fully funded. This raises important issues
which funding is provided, and any conditions
for charity regulation: how are charities funding
attached.
20
deficits on services, how does this affect their wider
question. What might be the impact of these funding
charitable objectives and what impact is it having on
issues upon public perception of charity over time?
their longer term sustainability? Are charities
subsidising public services on the basis of decisions
Unless sustainability issues are properly addressed,
informed by beneficiaries’ interests? Or are they
the level of reliance on public service delivery as a
doing so accidentally, or because of a lack of
source of income, particularly amongst larger
negotiating power? It also raises a much wider
charities, could become a matter of concern.
2.3 Shape and nature of the sector
The survey highlights, for the first time, the
service provision, and that responsibility is clearly set
predominance of regionally based charities in
out in funding agreements and communicated to
delivering public services. The causes of this are not
service users as well as the wider public.
clearly identifiable from this survey but they may be
a result of several factors, including current
It is significant that 8% of charities that said they
procurement practices, and the success of the
deliver public services receive no statutory funding
regional model for larger charities.
for them. The figure may reflect differences of opinion
between charities and public bodies over what
This regional model may be replicated by other
constitutes a public service. If, however, it reflects a
charities that seek to enter this market, and may
reliance on charities and the wider voluntary sector
have implications for their constitutional structures. It
to provide services that the state needs but cannot
could also herald the development of greater
afford, that could have a knock-on effect on the
collaboration between smaller, locally-based
public’s perception of and trust in charities.
charities, to form regional consortia.
NCVO highlights that 38% of the sector’s income
The survey results indicate that charities with higher
comes from statutory sources, but only 2% of
incomes are more likely to deliver public services.
government expenditure on public service delivery is
Many sector observers suggest that smaller charities
paid to the charitable sector. NCVO point out that
want to engage more in public service delivery, but
doubling government spending on the delivery of
face barriers such as lack of capacity or competition
public services by charities and the voluntary sector
from larger charities.
would have a major impact on the sector’s
character5. More generally such a shift could affect
Health and social care are currently the biggest areas
how the role of charities is perceived by the public.
of public service delivery by charities. The
Previous research6 has shown that public perception
government has indicated that it would like to see a
of the role of charity is narrower than the role that
wider range and more services delivered by charities
charities fulfil in practice. An increasing shift towards
and other voluntary organisations. A number of
public service delivery will make public education a
government departments are taking this policy
more challenging task.
forward, initially in a select number of areas,
including, for example, work by the National
The results of the survey raise more questions about
Offenders Management Service, the Department for
charities’ future capacity for, and the sustainability of,
Work and Pensions, the Department for Education
public service delivery. It suggests that larger,
and Skills and the Department of Health4. Depending
regionally-based charities predominate in public
on funding streams this policy could dramatically
service delivery. This may be a result of market
change the shape of charitable activity in these and
pressures or barriers to funding opportunities, rather
other areas. The users of these services will, in
than choice on the part of charities. Whatever the
future, be clients of charities, rather than of statutory
cause, there may be a risk of creating a restricted
bodies, which will bring more complex issues of
market where only those charities above a certain
accountability. It is critical that charities and local
size and capacity can successfully compete for future
authorities are clear about who is accountable for the
delivery of public services.
4 Partnership in Public Services: an action plan for third sector involvement; Cabinet Office, 2006.
5 Ann Blackmore, Head of Policy, NCVO, speaking at Westminster Briefing “Transforming Public Services Through Better User Engagement:
Making the Most of Voluntary Sector Partnerships” (December 2006).
6 Opinion Leader Research for the Charity Commission: Report of findings of a survey of public trust and confidence in charities (2005).
21
The overall picture that emerges presents a key issue
•
The survey results also indicate that medium-
in relation to future public service delivery by
sized charities (particularly those with incomes of
charities:
£10,000 - £250,000) are struggling the most to
obtain sustainable funding.
•
Roughly two thirds of the sector is made up of
very small charities (with an income of £10,000
The government has made numerous commitments
or less) that are not heavily engaged in public
to increase the capacity of the sector to deliver public
service delivery and, because of their size, seem
services, to open up the market so that a wider
unlikely to have significant capacity to take on
range of organisations can participate, and to make
substantial public service agreements.
sustainable funding the norm. From the findings
above, the achievement of government’s targets to
•
The largest charities are already significantly
increase the level of charities’ participation in public
engaged in public service delivery. Over 60% of
service delivery will depend heavily on the successful
charities with an income above £500,000
implementation of these commitments.
currently deliver public services. It is unclear how
many more charities in this income band will
want to take on public service delivery.
22
3. Conclusions and recommendations
A significant number of charities are already involved
•
charities are aware of their legal duties and how
in public service delivery. If an increasing number are
these impact upon delivery of public services;
likely to turn to public service delivery as a means of
•
good practice in funding of public service delivery
carrying out their mission, it is essential that the
is promoted and encouraged amongst charities
following issues of concern, often discussed by the
and funders;
sector and government, but further evidenced by this
survey, are addressed:
•
areas of regulatory overlap are minimised.
•
Charities’ focus on delivering their mission and
Scope for further analysis and research
the risk of mission drift.
There are numerous avenues for further analysis and
•
The implications of under-funding and short-term
research arising from the results of this survey, for
funding for charities’ sustainability.
example:
•
The threat that funders’ influence or control over
decision making can pose for charities’
•
Why charities in different income bands may be
independence.
more or less successful at obtaining full cost
recovery.
•
The divergence between smaller and larger
charities, and between those charities that deliver
•
Differences between charities that operate locally,
public services and those that do not.
regionally and nationally in relation to public
service delivery.
There is clearly a need for increased support to
•
Whether differences in levels of uptake of public
locally-based, lower-income charities that want to
service delivery reflect choices made by charities
get involved in delivering public services but which
or barriers to entering the market.
currently lack the capacity to do so. There is
government recognition that there is also a need to
•
Whether different types of funding agreement do
build the capacity of parts of the public sector to
in fact have an impact on full cost recovery.
work in true partnership with charities and the wider
•
Differences in funding between different public
third sector. The government may also wish to
services.
consider what can be done to ensure that smaller
and more local organisations have access to
•
Longer-term trends in funding.
appropriate capacity building opportunities. Potential
•
Longer-term trends in public services delivered by
barriers created by current frameworks for
charities.
commissioning services, procurement and
contracting, funding and monitoring need to be fully
The Commission will consider what opportunities it
investigated, understood and addressed.
may have to conduct such research itself, or do so in
partnership with other bodies.
Finally, it must be reiterated that it is not for the
Commission either to encourage or to deter charities
The Commission is aware of other initiatives that may
undertaking or considering public service delivery.
have a role in examining some of these issues, such
But, the Commission will continue to work with
as the State of the Sector Panel, sponsored by the
charities, with other government departments and
Office of the Third Sector, and forthcoming research
with regulators to ensure that:
by the Audit Commission. We hope that this survey
will help to inform the work of charitable sector
•
the potential risks and opportunities to charities
umbrella bodies and other government departments
and the sector are highlighted and understood;
that are considering these issues.
23
Annex 1
Survey methodology and profile of participating charities
All registered charities were invited to take part in
legal duty. We suggested eight main categories as
the survey, which was advertised in the summer
examples (as indicated in the survey results).
2006 edition of Charity Commission News and also
by email to registered charities’ correspondents. The
By ‘public authorities’ we mean any organisation that
survey was conducted by Directory of Social Change,
is part of government (including the Welsh
who carried out an initial analysis of the results. In
Assembly), including government departments,
total, 3803 charities took part.
county and district councils, NHS bodies and Local
Education Authorities. Such organisations are often
The survey comprised ten questions about charities’
referred to as ‘commissioners’, ie bodies that
participation (or not) in delivery of public services,
commission services. The definition of ‘public
areas of service delivered, its impact on funding and
authorities’ is not always clear cut, for example some
governance, and future plans for public service
non-departmental public bodies, operating at arms-
delivery. It was decided on grounds of cost that the
length from government, also have charitable status
survey would be conducted online only, and
because they are established for exclusively
comprised mainly of closed questions.
charitable purposes.
“Public services” are difficult to define exactly, and
The charities that took part in the survey represent a
respondents had to judge for themselves whether
broad cross section of the register by income and
any of their activities fall within the suggested
operational area. A greater proportion of medium-sized
definition: those services that public authorities
and larger charities completed the survey. This might be
normally provide, often (but not always) under a
expected as the survey had to be completed online.
Comparison of charities participating in the survey with all registered main charities, by income
All registered
Percentage of
Survey
Percentage of
Total annual income
main charities7
registered main
respondents
survey respondents
charities
Under £10,000
95,243
56.78%
1,188
31.24%
£10,001 - £100,000
48,859
29.13%
1,309
34.42%
£100,001 - £250,000
10,220
6.09%
475
12.49%
£250,001 - £1 million
8,366
4.99%
649
17.07%
£1 million - £10 million
4,462
2.66%
150
3.94%
£10 million and over
602
0.36%
32
0.84%
Total
167,752
100.00%
3,803
100.00%
7 There are over 190,000 charities on the register (the exact figure is, of course, constantly changing). Some of these charities are
administered and accounted for as part of a group or “main charity”. The Commission’s published figures for the number of charities in
each income band as at 30 June 2006 is based on accounts for main charities.
24
68% of charities that completed the survey operate
within a local area. The majority of charities with an
within a local area (eg a single county or city), 12%
income over £10 million operate nationally or
across more than one county and 20% nationally or
internationally. Charities operating across more than
internationally.
one county formed the smallest proportion of
charities in all income bands except over £10 million.
Over half of the charities completing the survey
within each income band up to £1 million operate
Charities responding to the survey, by income band and operational area
Charities operating
Charities operating
Charities operating
within a local area (eg
across more than one
nationally or
Grand
one county or city)
county
internationally
total
Number
%
Number
%
Number
%
Under £10,000
939
79.04%
93
7.83%
156
13.13%
1188
£10,000 - £100,000
917
70.05%
127
9.70%
265
20.24%
1309
£100,000 - £250,000
292
61.47%
68
14.32%
115
24.21%
475
£250,000 - £500,000
200
57.64%
59
17.00%
88
25.36%
347
£500,000 - £1 million
156
51.66%
62
20.53%
84
27.81%
302
£1 million - £10 million
60
40.00%
43
28.67%
47
31.33%
150
Over £10 million
7
21.88%
7
21.88%
18
56.25%
32
Grand total
2571
67.60%
459
12.07%
773
20.33%
3803
We would like to thank all charities that took part in the survey for their contribution to this research.
25
Annex 2
Number of charities delivering public services, by income band
Does your charity currently deliver public services?
Yes
No
Number
%
Number
%
Under £10,000
100
8
1088
92
£10,000 - £100,000
309
24
1000
76
£100,000 - £250,000
245
52
230
48
£250,000 - £500,000
189
54
158
46
£500,000 - £1 million
184
61
118
39
£1 million - £10 million
94
63
56
37
Over £10 million
21
66
11
34
Total
1142
2661
26
Annex 3
‘Other’ public services delivered by charities
1: Responses that could be reclassified within ‘main’ categories
Type of service
Number of respondents
Leisure
20
Social care
34
Health
36
Environmental
1
Housing
10
Education
20
Children’s services
29
Advice
19
Total
169
2. Other responses
Type of service
Number of respondents
Transport
16
Museums/library/heritage
14
Counselling
13
Supporting the Arts
12
Employment services
9
Volunteering/Millennium volunteers
7
Community development
6
Support for victims and witnesses of crime
5
Support for victims of domestic violence
4
Grant making
4
Crime prevention
3
To represent the VCS locally
3
IT support
3
Wildlife consultancy/animal rescue
3
Administration
2
Lifeboat
2
Prisoners’ welfare
2
Anti-poverty projects
1
Applied science of freshwater
1
Assistance during a major emergency
1
Burial ground
1
Employer’s organisation
1
Fire safety, first aid, fire fighting
1
Interfaith
1
Polling station
1
Total
116
27
Annex 4
‘Other’ types of funding arrangement
Answer
Number of respondents
None
46
Donations from members/public
13
Fees
9
Free service
9
Fundraising
8
Charity managed by council
6
Invoice
6
Informal agreement
6
Spot purchasing
5
Membership/personal subscriptions
4
Founder funding it herself/self-funded
4
Contract has expired
4
As and when required
4
Contracts and service level agreements
4
Payments from pupils/students
4
Hall lettings fees/room rental
3
One-off contracts
3
Early years funding
2
Government
2
Individual placement agreements
2
Vouchers/county funding
2
Weekly maintenance contribution
2
Allocation
1
Client contribution
1
Maintenance contribution
1
Match funding and management of budgets
1
Personal banker’s orders
1
Provision of facilities
1
Revenue and grants
1
Small annual budget
1
Sponsorship
1
Strategy and action plan
1
Verbal/written agreements/contract with some organisations
1
28
Annex 5
Full cost recovery
Does funding cover the full cost of services provided?
Don’t know
In all cases
In most cases
In some cases
No
Number %
Number %
Number %
Number %
Number %
Under £10,000
19
19
16
16
9
9
9
9
47
47
£10,000 - £100,000
37
11.97
44
14.24
43
13.92
44
14.24
141
45.63
£100,000 - £250,000
14
5.71
19
7.76
43
17.55
34
13.88
135
55.1
£250,000 - £500,000
7
3.7
17
8.99
44
23.28
48
25.4
73
38.62
£500,000 - £1 million
4
2.17
22
11.96
52
28.26
43
23.37
63
34.24
£1 million - £10 million 4
4.26
14
14.89
24
25.53
21
22.34
31
32.98
Over £10 million
2
9.52
1
4.76
6
28.57
8
38.1
4
19.05
Total
87
8
133
12
221
19
207
18
494
43
29
Annex 6
Full cost recovery by type of funding agreement
Type of funding agreement
Don’t know
Grant(s)
Contract(s)
Service level
A mixture/
Other
agreement(s)
more than one
No
%
No
%
No
%
No
%
No
%
No
%
Don’t know
17
51.52
13
7.78
5
2.99
10
5.24
12
2.82
30
18.87
In all cases
3
9.09
19
11.38
32
19.16
33
17.28
28
6.59
18
11.32
ery?
v
c
o
In most cases
3
9.09
23
13.77
37
22.16
37
19.37
110
25.88
11
6.92
e
st r
In some cases
2
6.06
21
12.57
28
16.77
23
12.04
114
26.82
19
11.95
o
ll c
No
8
24.24
91
54.49
65
38.92
88
46.07
161
37.88
81
50.94
F
u
Total
33
100
167
100
167
100
191
100
425
100
159
100
30
Notes
31
32
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