Survey slams statutory funders

Government funders are getting worse at paying charities' full costs for contracted services, according to an Acevo survey.

Despite Chancellor Gordon Brown's 2002 pledge that all government departments would adopt the principle of 'full-cost recovery', the snapshot of 70 chief executives suggests few have taken any notice.

One-third of respondents said that adherence to full-cost recovery had got worse, with just 18 per cent saying it had improved.

Statutory funders have been given a deadline of April 2006 to implement the Treasury's commitment to full-cost recovery, but 49 per cent of the chief executives questioned criticised current practice. Only 3 per cent thought it was good.

Nearly half of the charities taking part in the survey were funded by local authorities; the rest were funded by government departments, quangos or primary care trusts.

The results also suggest that other problems have worsened. Some 42 per cent said that the bureaucracy associated with contracts had got worse, while 60 per cent said that their funders were bad at sharing risk.

The effect of poor funding practice was also highlighted by the survey.

Nearly one-third of charities said they had cancelled or closed down services as a result.

"This shows the scale of the challenge we face in securing funding reform," said Acevo's deputy chief executive, Gail Scott-Spicer. "We have shown that bad contracts waste public money, and mean worse services for our clients. Change has been a long time in coming."

But the results also indicate that the problem may not be solely the Government's fault. Despite their complaints, the respondents also noted that funders are more willing to negotiate over fees for services. Acevo believes that charities are not making a strong enough case for better funding.

A Home Office spokesman said that it had produced guidance on good practice, and was working closely with the sector and other departments to implement it.

- See Editorial, p22.

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