Opinion: Charities must turn away from bad contracts

A number of recent articles and conferences have highlighted a worrying trend of councils reducing funding for services run by local voluntary organisations - Leicester being the most high-profile example to date.

As they struggle to balance their budgets in the light of capped council tax rises, councils face tough choices. Voluntary sector organisations that undertake contracting but may not have pursued robust contract negotiations are particularly vulnerable. Rumours abound of frighteningly short notice being given before funds are stopped, and of providers being kept in the dark over future plans.

A recent Third Sector analysis (25 February) raised questions about whether this will play out at national level, too. However, there are some key mitigating factors that we should consider.

To begin with, we are at the start of an unprecedented set of innovative joint voluntary sector/government collaborations to build the sector's capacity to deliver public services. Secondly, there are a growing number of robust partnerships that are working well between local authorities and the sector. A problem shared can be a problem halved, and there is a real opportunity to use these partnerships to broker some effective solutions.

All too often, money can blind organisations from thinking creatively.

Often, too, the voluntary sector does not have the confidence to realise that it can broker a lateral way forward.

Any voluntary organisation running a service on behalf of a local authority, or similar body, owes it to itself and its clients to make sure that contracts are effective. Developing good business practices across the voluntary and public sectors should go a long way towards ensuring that, regardless of funding fluctuations, initial contract negotiations are robust and clauses about notice periods are realistic. It is crucial to learn from mistakes, particularly around costing (rather than pricing) service.

Voluntary organisations must also be prepared to walk away, rather than sign up to contracts which jeopardise their long-term funding security.

The power of partnership, positive thinking, robust negotiating skills and a win/win attitude will deliver far more than acrimony and discord. Geraldine Peacock is a charity commissioner and a civil service commissioner, but writes in a personal capacity

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