Opinion: Contracts should include a strategy

Whatever the future of the Compact and how it should be implemented, there are some financial considerations that charities must bear in mind if they are engaged in public service delivery.

One danger is that we will reduce our relationships to a series of set-piece contracts about individual service delivery. There is still the potential to engage in constructive delivery models with the public sector, whether the underpinning financial and legal relationship is contractual, grant-funded or a joint venture.

For example, the RNID is engaged in a project in Falkirk, Scotland, where three local authorities, the local health board and a number of sensory disability charities are working together to provide a one-stop shop for the people they are providing services for.

Audiologists, ophthal-mologists and social and charity workers all share space in a 'sensory centre', where services are provided seamlessly to beneficiaries. The financial and legal arrangements for this project do not fit neatly into the 'grant' or 'contract' box, but what is important is providing an excellent service.

As finance professionals, we need to respond positively and encourage our service delivery staff to be entrepreneurial.

We all have horror stories of inequitable contract negotiations with statutory funders, sluggish payment terms and inability to negotiate fee levels. But the key is to enter into contracts with eyes wide open and negotiate robustly.

We need to understand the strategic drivers in the contract. The public sector partner wants to make sure public services are delivered and the charity is primarily concerned with its own wider strategy. It is dangerous to change a charity's activity just to 'follow the money' and it is imperative that, in delivering the service, we deliver strategy.

It is also essential that we know our cost base. We may not always be able to secure full cost recovery, nor cover the direct costs of certain activities delivered in partnership. But charities must be clear to what extent they are applying charitable money to certain areas of service delivery and that they are comfortable doing so.

Whatever the future of the Compact, delivering services in partnership is here to stay and it is important that finance professionals are geared up to support our charities effectively.

Paul Breckell is executive director of finance and corporate resources at RNID and chair of the Cipfa Charity Panel.

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