Charities face a crisis as grants are delayed

A number of charities have been plunged into financial crisis because the Department of Health is several months late in deciding the fate of their Section 64 grant applications.

The department has admitted breaching the Compact in its treatment of voluntary organisations that have applied for grants from the £17.85m funding stream for organisations supporting the Government's health and social care goals. It admitted in an email to the organisations that it would not be letting them know the results of their applications for 2006/07 within the three months required under the Compact agreement.

Organisations that submitted applications in May last year were told they could expect an outcome by early January this year. Two emails from the Voluntary & Community Sector Partnership Team at the Department of Health on 3 January and 31 January signalled that there would be delays in the final decision and the deadline would be extended to March. On 1 March, applicants were informed this would not be met either.

"As you are aware, it was our intention this year to let you know the results within the Compact guideline of three months' notice," applicants were told. "Unfortunately, the Department of Health's spending review for 2006/07 is not yet finalised."

According to Sultana Begum, Compact advocacy officer at the NCVO, the breach has plunged many voluntary organisations into crisis. "It has resulted in serious financial difficulties and insecurities, and organisations have had to stall or discontinue some of their services to really vulnerable groups," she said. "They're not able to fill key posts or take on additional staff. Some organisations aren't able to access other funding streams because they require match funding."

The Compact Advocacy Advisory Group, which has launched a Section 64 campaign, says smaller organisations have been hit particularly hard and some are even facing closure.

"It means we haven't got any planning for sustainable funding," said Jonathan Lake, director of the Cancer Counselling Trust, one of the organisations that has been affected. "We've had to warn staff that we are potentially making cuts, and we've also stopped any recruitment."

But organisations applying for new grants are not the only ones affected.

Last Wednesday, voluntary bodies with two or three-year grants were told by the Department of Health that their Section 64 awards for 2006/07 could not be confirmed because all central budgets for the financial year were under review. They were told they would receive an interim payment, which would amount to a quarter of a year's grant.

However, the Department of Health added that the payment would "not as such represent a funding commitment for the whole of 2006/07".

Acevo also believed this to be in breach of the Compact because organisations are supposed to receive three months' notice if funding is not to be renewed.

Two days later, the chief executive's body was assured that if any grants had to be scrapped as a result of the budget review, the Department of Health would issue the appropriate notice, as required under the agreement.

The department said it recognised the "inconvenience and financial uncertainty".

It added: "In our letter ... we reconfirmed our commitment to honour the undertakings set out in the Compact Code by giving adequate notice where appropriate and where changes were necessary."

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