Charities 'using other income' to subsidise public service contracts

A report from New Philanthropy Capital finds that many charities won't bid for contracts because the operational risks are too high

Public service provision
Public service provision

Sixty-four per cent of charities that deliver public services are using other sources of income to subsidise the contracts, according to a report published today by the think tank New Philanthropy Capital.

Charities Taking Charge: Transforming to Face a Changing World reveals that 57 per cent of voluntary organisations that provide public services have chosen not to bid for some contracts because the operational risks are too high.

The report says the figures highlight the growing strain between the voluntary and public sectors, with contracted charities increasingly in danger of mission drift and being unable to speak out through fear of losing funding.

NPC commissioned the report, which is based on the views of 300 senior charity staff, to see how the sector is responding to the harsh funding climate and to identify ways in which they can improve.

Co-author Patrick Murray, head of policy and external affairs at NPC, said one of the most striking aspects of the research was that many charities were in danger of losing focus by trying to meet the extra demand for services while receiving less funding.

Murray said it was natural for charities to attempt to do more for less, but urged them to ensure they had a clear mission and priorities, then seek a more networked approach that enabled them to work with others to achieve greater impact. "Charities are tripping over themselves as they try to run harder," he said.

He said he was also struck by how many charities said they unconcerned about Brexit. The report says: "We found that many organisations think Brexit will have ‘no effect’ or a ‘neutral’ impact on their organisation across a range of prompted options."

The research also reveals low levels of concern about the impact of declining public trust in the voluntary sector. Offered a choice of responses on the subject, 31 per cent replied "there will be no effects". This was the most popular response.

"Many feel that the public need to better understand charities, rather than charities need to change their ways," the report says.

Murray said the report, published as part of NPC's State of the Sector programme, would inform its future research.

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