Cathy Pharoah: To bring sustainability, we must seek a longer-term role in service provision

Charities are seen by the government as a key part of welfare provision, but short-term policy and funding arrangements place a cost on the sector that it struggles to afford, writes our columnist

Cathy Pharoah says the government must consider the charity sector's long-term viability
Cathy Pharoah says the government must consider the charity sector's long-term viability

Anxieties about sector sustainability in the current climate have tended to focus on its funding and the impact of spending cuts on sector income levels. However, the government's recent changes of policy on tackling re-offending and rehabilitation, and their effect on reducing the significance of the flagship - but still fledgling - social impact bond at HM Prison Peterborough, are a reminder that sector sustainability is linked not only to government spending, but also to policy-making. With the general election less than a year away, one issue on our political shopping list should be a strategy to sustain the sector's place in service provision.

This means thinking not only about immediate opportunities for new contracts, but also about the sector's longer-term viability. The sector has come under enormous pressure, for example, to evolve more sustainable and entrepreneurial approaches to income generation. Social finance has been at the heart of this, with service-providing organisations trying to attract investments in which the return depends on savings made to the public purse by those organisations developing better solutions and more cost-effective outcomes. But Peterborough's message is that if the case for more effective approaches is made, public policy might quickly overtake the sector's role. The message to investors is that SIBs might be a short-term product, and this will be a disincentive. Under the rehabilitation reforms, due early next year, private contractors will run rehabilitation services in 21 areas in the UK, including Peterborough.

Another example where public policy change has outstripped the sector's role in leading better service provision is early intervention children's services. The introduction of the Early Intervention Grant removed the ring-fencing around Sure Start, destabilising much existing provision and leaving organisations to reconfigure their services. Long-term decision-making in early intervention is one of the aims of the recent manifesto from the National Council for Voluntary Organisations. The case for this is not only that the results of early intervention can only be seen in the long term, but also that it enables sustainable, continuous and effective modes of service delivery.

The sector is seen by government as a key part of long-term change in welfare provision in the UK, but sector services in many areas are heavily dependent on National Lottery funding, which fluctuates.

Experiment, innovation and responsiveness to change are seen as crucial to improve social welfare. But short-term policy places a cost on the sector, which it struggles to afford. The argument is not about transitional provision for the impact of new policy on voluntary organisations, but about positive policy-making to maintain the sector and its services on a sustainable footing, embedding its place in future service provision.

Cathy Pharoah is professor of charity funding at Cass Business School

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