The government will create a central register of the voluntary sector organisations it funds and monitor their performance more closely in the wake of the collapse of the children’s charity Kids Company last year, the Treasury has confirmed.
In its response to the Public Accounts Committee’s report on the government’s funding of the children’s charity, the Treasury says the government accepts the committee’s recommendation to develop a cross-departmental register of grants to the voluntary sector that would enable it easily to identify charities that receive large amounts of government funding from single or multiple sources, and to share intelligence on the past performance of charities.
Kids Company closed abruptly last summer, having received more than £42m of central government funds since 2002.
The PAC report on government funding of the charity, published in November, recommended that the government review its non-competitive grant-making processes and create a central register of government grants to charities.
The Treasury’s response to the report says the government has already started a review of its grant practices through its Grants Efficiency Programme and has begun developing the Government Grants Information System, which will help departments make more informed decisions about grant funding.
The response says: "The GGIS will enable the recording and reporting of grant information across government in a simple, standardised and scalable way. It will improve transparency and provide insight into government spend. It will enable departments to manage grants efficiently and effectively while providing data to help to reduce the risk of fraud by opening up government’s ability to see the whole picture, and ensure we only pay once for each outcome."
It says the government also accepts the committee’s recommendation that the government should improve the way it monitors and evaluates the performance of grant-funded organisations. This includes making use of external evaluations, in addition to reports produced by charities themselves.
"The Grants Efficiency Programme is already delivering a programme of work to improve grant making across government, including scrutiny of spend," the response says. "Alongside establishing initiatives such as the GGIS, it is strengthening guidance, training and best practice in relation to the critical decision to use a grant; and improving monitoring and evaluation of grant awards."
The committee’s three other recommendations have also been accepted. These recommendations were that the government carry out a fundamental review of how it makes direct and non-competitive grants to the voluntary sector; that it undertakes not to provide funding commitments without referring the funding request to the appropriate funding department; and that the government be transparent in cases where it uses its special powers to award grant funding.
Rob Wilson, the Minister for Civil Society, said earlier this month that, in the wake of the Kids Company case, the Cabinet Office was carrying out a "detailed review" of how it makes non-competitive grants to charities.
Andrew O’Brien, head of policy and public affairs at the Charity Finance Group, said in a statement: "A register of grants to charities must not become a tool for ‘capping’ the amount of funding that they can receive from government sources.
"Grants are an effective tool for funding the work of the charities, and decisions should be made on a case-by-case basis."
O'Brien said that good monitoring and evaluation of grants was important, but it must be proportionate and tailored to each grant, rather than a generic approache that creates additional burdens without generating effective information.
Nick Davies, public services manager at the National Council for Voluntary Organisations, told Third Sector. "We are supportive of the introduction of the GGIS, but we wonder if it is going to apply to all government grants – charities make up only about 5 per cent of all grants. We also wonder whether the register is going to be made public. We believe it should be made open for transparency reasons."