Compact in action: Full cost recovery

Third sector leaders express serious concerns about the Compact's ability to fulfil its remit.

"The Compact Commissioner has a hell of a job on his hands," said Dame Suzi Leather, chair of the Charity Commission, in a speech to the NCVO's annual conference last month.

Such a strong comment by so senior a figure in the voluntary sector would normally attract considerable attention. But because it was contained in a wide-ranging speech based on the results of a commission survey of 3,800 charities, it went largely unnoticed.

Instead, attention focused on the fact that only 12 per cent of charities were recovering the full cost of services provided on behalf of local authorities, and 26 per cent of service-delivering charities did not feel free to make decisions with no pressure from funders. The Compact, as is so often the case, missed out.

This is curious, because the Compact is, in theory, the perfect vehicle to tackle full cost recovery and threats to independence. As Leather pointed out, however, there is "massive discrepancy between the strong and positive aims of the Compact at a national level and the reality when translated at local level". Hence the "hell of a job" confronting Compact Commissioner John Stoker.

Many feel Stoker needs more power to force local authorities into taking the Compact seriously. But Ben Wittenberg, director of policy at the Directory of Social Change, thinks that could backfire. "The problem isn't that the Compact is wrong, or that the punishments for breaching it don't exist," he says. "It's that charities don't feel able to complain in the first place."

He describes as "fundamentally flawed" the idea that the Compact is a partnership, because there is an imbalance of power between local authorities and charities. "It is a financial relationship, so it's more of a client partnership," he says.

Public bodies need to develop a greater understanding of individual voluntary organisations rather than subscribe to a government-imposed, top-down view of such a diverse sector, he adds.

"Breaching the Compact could have the highest penalty imaginable, but the higher the penalty the greater the consequences for the tiny voluntary sector organisations as long as there is this imbalance," says Wittenberg.

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