Some charities that work in consortia to deliver public services do not check the financial health of their fellow consortia members and do not discuss the potential risks of consortium working at board level, according to a new Charity Commission report.
The report, Consortia For the Delivery of Public Services: the issues for small and medium-sized charities, outlines the results of a study by the commission of charities that were members of five consortia: the Birmingham Disability Consortium, the Rotherham Children, Young People and Families’ Consortium, the Northumberland Learning and Employability Access Partnership, the Sheffield Well-being Consortium and the 800 Group.
It says that with some charities there was "a tendency not to carry out any form of due diligence (for example, checks into financial health) on other consortium members despite planning to enter into a contract to deliver services with them".
Some charities said these checks were not necessary because they were familiar with the work of their fellow consortia members and had worked with them before, the report says, and others had decided not to carry out the checks because they were wary of red tape or because they expected the consortium or the commissioning body to do so.
"The lack of due diligence checks on other consortium members prior to entering into contracts to deliver services with them may be a sign of positive relationships based on trust, but it exposes charities to an increased level of risk," the report says.
The report also warns that trustees were sometimes not involved in the decision to enter service-delivery consortia. "The Charity Commission was concerned at how little evidence there was of trustee engagement in decision-making, or clear delegation of decision-making, at any stage of consortia working," it says.
"Given that consortia working may involve a degree of financial, capacity and reputational risk, it is surprising that the decision to join a consortium is, in some instances, being taken without trustee involvement."
The report says many charities experienced "tangible benefits" from working as part of a service delivery consortium, such as sharing expertise, building capacity and increasing access to funding.