Department of Health 'could move towards contracts'

The Department of Health has said its new main funding programme for charities could switch from providing only grants to a mixture of grants and contracts.

The Department of Health announced last week that it was replacing Section 64 grants for charities that deliver services on its behalf in favour of new funding arrangements (Third Sector Online, 17 July).

Under the new system, known as the Third Sector Investment Programme, £17.2m will be awarded to charities in three-year deals.

It will be divided between about 10 strategic partners – who will be paid to advise the DoH on the key issues for voluntary organisations in health and social care – and successful applicants to an innovation, excellence and service development fund.

The DoH has not set a limit on the number of charities it will fund or the amount it will award. "This will depend on the quality of applications received and the relevance and strategic fit," said a spokeswoman for the DoH.

She said awards would initially consist of grants, but added: "We will be developing further schemes in the future where contracts may be used, where appropriate and proportionate."

The fund was established after consultation with more than 700 charities. Kevin Curley, chief executive of umbrella body Navca, praised the level of engagement with the voluntary sector and the switch to more lightly prescribed funding guidelines.

But he is opposed to the introduction of contracts. "Grants allow for a mature relationship that will deliver for the department without the need to limit organisations to specific products or outcomes," he said.

He added that Navca would apply to become one of the DoH's strategic partners.

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