In the first of a series of Third Sector special reports into voluntary sector partnerships, Indira Das-Gupta finds out that working with government hasn't been the best experience for many charities.
THIRD SECTOR SURVEY
The voluntary sector is locked into an unhappy relationship with the state, and often feels it is taken for granted, according to a new survey by Third Sector. But far from trying to extract itself, much of the sector is keen to get more deeply involved with government.
The survey, which was conducted for this magazine by voluntary sector researchers nfpSynergy, found that only 13 per cent of respondents feel like equal partners in their relationships with central government, while less than half feel that their overall experience of working with central government is positive. Local government didn't fare much better: just 24 per cent of respondents say they feel like an equal partner when it comes to local government partnerships.
Pam Knight, director of development and communications at the British Institute for Brain Injured Children, has struggled to persuade her local authority in Somerset that the charity provides an essential service.
"When we first applied for funding we were told there wasn't a need for our service, even though we were already working with 150 children in the local area," she says. "We seem to have trouble getting funding because we cross education, social services and health, so we don't fit into any of local government's boxes.
"But what we're offering is a joined-up service of the kind that the government has said it aspires to. Obviously, no charity would be here unless there was a gap that needed filling, and we're very good at making a little bit of money go a long way because we haven't got money to waste. But it's very hard to break through the bureaucracy of local government unless you're one of the bigger players."
The financial inequalities run deep. In total, 53 per cent of respondents say they are forced to subsidise their contracts with central government because the funding they receive doesn't cover the costs of running the service they've been contracted to provide. A further 67 per cent do the same with their partnerships with local government. What's more, almost a third claim to subsidise their partnerships by more than 20 per cent of the contract value, while more than half find that their contracts aren't long-term enough to be viable. These charities often feel they have little option but to run services on an impossibly tight budget.
Nicola Morgan, fundraiser at the Kids' Cookery School in Ealing, west London, says: "We felt we were being asked to achieve a lot with very little by the local council. Now we're being penalised for our success. Our funding is being cut on the grounds that we have sufficient money, even though we're operating at a deficit."
The Compact factor
The Compact was launched in 1999 to try to tackle these sorts of problems by improving relations between voluntary organisations and government.
In fact, if the respondents to our survey are to be believed, the Compact has so far spectacularly failed to have any lasting impact. Only 15 per cent of the 311 who took part agree that it has made a significant difference.
"The sentiment behind the Compact is great, but in practice it's irrelevant," says Bryan Dutton, director-general of Leonard Cheshire. "We do have a working relationship with the Government because of our size, but at a central level the Compact is all about philosophy rather than the day-to-day running of a service. The message and the resources don't always get transmitted down. I do have some sympathy with local government, but we have to stand up for ourselves and make them realise that we're equal partners."
And, despite the fact that many charities still struggle to recover their core costs and feel like the junior partner, 48 per cent of those questioned would like to increase the scale of their work with local and central government. Only 3 per cent feel they're too dependent on the state. This may be because charities distinguish between partnerships with government and service delivery contracts, and are keen to increase non-contractual partnership working.
But Clive Newton, development manager (social care) at Age Concern England, has a simpler explanation: "If a partnership or contract with government leads to more activity for the charity or enables them to reach more service users, they may well feel it's a price worth paying. These relationships can also lead to increased turnover in some cases."
The survey results support this suggestion: two thirds of respondents say their main reason for getting into relationships with government is to increase their income and the levels of service they're able to provide, while a third say they get into contracts because they can deliver services better than the state. However, 16 per cent say they enter government partnerships because it's the only way they can survive financially.
But it isn't all bad news. Nearly two thirds say they don't feel constrained when campaigning against government policy, despite receiving money from the state, and more than a third say the chance to change policy is one of the most important motivations for getting into government partnerships.
Despite their gripes, 73 per cent of respondents also feel their contracts or partnerships with government achieve their objectives. The NCVO's head of research, Karl Wilding, says this shows that unease about the Compact may be down to perceptions rather than reality. "The Compact is obviously working here. The problem is one of continuing negative perceptions brought about by some early failures," he says. "Just because voluntary and community organisations don't use the Compact on a day-to-day basis doesn't mean that it hasn't changed attitudes in government, which has paved the way for the success described in this research."
Joe Saxton, director of nfpSynergy, who conducted the survey, is unsurprised by the findings and believes it's unrealistic for charities even to aspire to having an equal relationship with government. "A lot of people talk the language of partnership, but it's not equal when one party controls the cash flow," he says. "There will always be strings of some kind attached.
They have to get their money from somewhere and it's not from government, it will be from fundraising, so they have to decide which is the best out of a bad choice.
"To a certain extent, maybe it's unrealistic for charities to expect to have an equal relationship with government when one holds all the power, but that doesn't mean they have to accept being taken advantage of. They need to learn how to negotiate effectively and if they're financially dependent on government, diversifying their income means they won't be so wary of rocking the boat."
But while it may be inadvisable for charities to be too accommodating, RNID chief executive John Low believes it's equally fruitless to be too confrontational. "The only way to deliver change is by working in partnership with other people, whether they be from another charity or in government," he says. "We're a campaigning charity, working to change the lives of the 9 million people who are deaf or hard of hearing. So many people go in whingeing and asking for the impossible. If I asked the government to provide digital hearing aids free of charge to everyone who needed them, it would cost £1bn, so the answer would be no. You have to go in with a solution, not present a problem and demand something is done about it. However, you do sometimes need to take a tougher approach and be prepared to risk losing a contract."
Jeremy Swain, chief executive of homeless charity Thames Reach Bondway, agrees that working with government is often the best way to achieve objectives: "We should accept that receiving government funding is essential in delivering high quality services and that no sector is as well placed as ours to deliver many of them. High-quality services can't and shouldn't be funded through tin-rattling at railway stations. If the Government wants the best, it can damned well pay for it - and in full."
One charity that has sent out a clear message that it's no longer prepared to subsidise statutory services is Leonard Cheshire. About five years ago, the charity was spending between £7m and £10m on propping up contracts with local government. In 2004, according to Dutton, it's breaking even overall, although there are still some local areas where this isn't the case.
"I can now put my hand on my heart and say all our income is being spent not on statutory services but new and exciting developments, which is what we're here for," he says. "However, there are still some pockets where attitudes are taking longer to change, and while we're breaking even now, that's not enough. There has to be a margin of error as things don't always turn out as planned."
Taking the hard line
While Leonard Cheshire may not have reached its final target yet, its success so far is undeniable. This has been achieved through a transparent costing and pricing system, coupled with a more hardline approach. Dutton explains: "If a local authority disputes our prices, then we basically ask them which services they don't want us to provide. We've had to be uncompromising and when that hasn't worked, we've had to cut services. We're prepared to go public in the areas where local government is continuing to set unrealistic budgets, but this would be the last card we would play."
While individual charities can take a tougher stance, charities need to work together to ensure they're not forced to subsidise services. "The sector needs to be bolder," says Low. "I don't want just contracts for public services; I only want RNID to provide a service if we can do it better than anyone else and in a cost-effective way. Then I can demand the same level of service from other providers. In the past, charities have provided services at under the true cost. RNID couldn't go from where it was to where it needs to be overnight, so we're gradually raising the cost of our services by a little each year."
Saxton agrees that charities need to toughen up: "Many charities don't even think there's anything wrong in subsidising services - they expect it. While some charities might claim that longer contracts are the solution, the irony is that you don't want to be tied into subsidising a contract for longer. Ideally you want a longer contract where core costs are recovered. Charities need to work together so they can ensure the bids they're putting in for government contracts are at least in the same ball park - nobody will benefit if the contracts are set too low. There's power in numbers."
- Third Sector's survey of voluntary sector partnerships with companies will be published on 9 March
WHAT THEY SAID ...
'It's still a master-servant relationship. Local government has still to take on the understanding of partnership and the Compact.'
Gordon Diffey, chief executive of Vista in Leicester
'Since funding was passed from central to local government, the partnership has deteriorated to being told what the need is and how it will be met.'
Linda Thomas, chief executive of homelessness charity Arch, north Staffordshire
'The time horizons are too short and the time taken to agree contracts is too long.'
Jonathan Slack, chief executive of the Association of Business Schools
'Civil servants seem reluctant to trust us to deliver in an area we know well and they don't use our expertise, which they pay for. The bureaucracy and returns required seem to go well beyond the level justified by public accountability.'
Helen Moss, director of the Greater Bristol Foundation
'I bet I won't be the only one to mention the Children's Fund.
They have really soured our feelings about working with central Government. They broke many of the fundamental precepts of the Compact and withdrew funding with only two weeks' formal notice, leading to the near-collapse of this organisation.'