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Spending cuts will reshape relations with beneficiaries and private donors
By Cathy Pharoah, Third Sector, 6 July 2010
Cathy Pharoah
Volunteering, self-help and mutualism will once again come to the fore, says Cathy Pharoah
In an emergency, airline safety procedures say that passengers should fit their own oxygen masks before helping others. This is the dilemma facing the charity sector since savage welfare cuts were announced in the Budget. Is the first priority to deal with the inevitable impact on the sector's own finances and jobs, or the mounting needs of the many beneficiary groups that will be affected?
The big society has big implications for the sector. In a future when there will be less dependence on the state - currently the sector's single largest shareholder - charities will need to re-evaluate their relationships with beneficiaries and private donors. Public spending cuts will inevitably affect the sector's funding directly and indirectly. At both central and local levels, we are likely to see reductions to grant funding as government departments seek savings, and the trimming of funds for more costly specialist services, such as particular educational or social needs or disabilities.
Service contracts are likely to demand higher productivity at the same cost or less, and organisations will have to compete even harder on price to win them. Charity Market Monitor 2010 shows that statutory income to the major service-providing charities barely beat inflation in 2008/09, so there was little fattening up for the lean years ahead.
But government savings are more than an economic inevitability to be coped with until better times arrive: the reduction in government dependence is intended to prompt different thinking about beneficiary relationships. The big society emphasises what, for example, a member of my local choir (a charity with healthy reserves) calls "the old way of doing things" - charities as member organisations, drawing on volunteering, self-help and mutualism.
There may be little choice here, but there is also reason for optimism. Much sector support is in the form of memberships and subscriptions, where donors are also beneficiaries. People will continue to fund the local facilities, culture and environment organisations that are a part of their lifestyles, along with the health research and care causes that are close to their experience and values.
The results of CMM show that giving did not collapse in the downturn, although people had less to donate. Some might be willing to give more if they see a need, or to participate more, as the success of events fundraising shows. We are not in a plane crash or reaching for the oxygen masks, but that doesn't mean it will be easy to achieve equal protection from the budget cuts.
- Cathy Pharoah is professor of charity funding at Cass Business School
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