It can be worth spending money on consultants, but it's important that they understand the sector.
Michele Armstrong runs a small Council for Voluntary Service in the north-east of England. Her budgets aren't big, but she didn't flinch at spending £10,000 on a management consultant. "I'm from a business background and I'm used to targets," she says. "We needed to look at the organisation to see where we were going and how we could survive."
Armstrong, chief officer of 2D, which supports the voluntary sector of Teesdale and Wear Valley, hired Cath Gregory to develop a performance management system that brought a private sector target culture to the local community sector.
After Gregory completed her stint, the Northern Rock Foundation awarded 2D a grant of £70,000. "We quoted the consultancy work as part of our application," says Armstrong. "If it helped us get £70,000, it was money well spent."
Armstrong says management consultants are part of the voluntary sector fabric, even though some are "crap". The most common reason for employing them is to plug skills gaps. "Seventy per cent are taken on for that reason," confirms Lynda Purser, director of the Institute of Management Consultancy.
Most charities we approached thought there was little correlation between cost and quality, and they shared common concerns about consultants failing to understand the sector. "Larger firms have developed their own culture, which doesn't fit easily with the community sector," says Mark Parker, network development manager at umbrella body Bassac.
Parker says trustees sometimes pay undue respect to management consultants.
"Many come with answers pre-packaged and lead organisations to their conclusions," he says. "But it's difficult for a committee to say 'that's rubbish' if it cost £1,500."
Occasionally, charities use outsiders to break bad news. "They want to blame it on the consultant," says Ian Flack, project manager at ethnic minority council Cemvo, which, like many voluntary bodies, has established its own consultancy business.
Sheikh Aliur Rahman, director of the Davenant Centre in the London borough of Tower Hamlets, is a former management consultant. He admits that some members of his one-time profession are "very, very bad" and only "do half a job, so you have no choice but to reappoint them".
Few charities can afford the large international consultancies. One of these, Accenture, has addressed this by setting up a voluntary sector business unit to give charities access to its consultants while furthering its own corporate social responsibility credentials. About 100 staff worldwide are seconded to Accenture Development Partnerships for six months at half their salaries. They advise large NGOs on organisational issues, such as supply chains and finance systems, or support their programmes in developing countries.
"This is not philanthropy - it's a contractual relationship," says Gib Bulloch, director of Accenture Development Partnerships. He won't say how much it charges charities because of "commercial sensitivity", but says the unit does run as a non-profit-making enterprise.
Precise figures are hard to pin down. Purser says: "You won't get much lower than £400 a day, but you can go up to £2,000." She estimates that 1,000 of the UK's 80,000 consultants serve the sector.
Similarly, the NCVO has no research on the area, although it has published the guide Getting Value From Consultants. Karl Wilding, head of research at NCVO, suggests £500 a day as the going rate.
Cass Business School has 40 associate voluntary sector consultants. They charge an average of £700 a day and have together earned £400,000 in the past two years. But it too knows little about the market. "We've done no research on how big the charity consultancy market is," says Denise Fellows, head of consultancy and training services at Cass.
GAMEKEEPERS TURNED POACHERS?
Organisations making the most of their assets
Councils for Voluntary Service in Derbyshire are using the combined knowledge of their staff to run their own consultancy business to raise extra funds.
South Derbyshire CVS established the scheme after being commissioned to run community projects by a local authority and a primary care trust.
Deciding it had the skills in-house, it set up a social enterprise called Creativeness, which draws on the letters c, v and s. Councils in Staffordshire and Leicestershire have since joined the six in Derbyshire involved in the scheme.
"We see consultants brought in and the outcomes aren't always that great," says John Chell, social enterprise development worker for South Derbyshire CVS. "This initiative gives us the chance to use our own skills and provide staff development, so the benefits include knowledge and skills as well as economic ones."
Creativeness bids for contracts and pays each affiliate member for its contribution to the project. It recently won a £10,000 contract from the Governance Hub and is currently preparing to bid for a £25,000 contract.
If it succeeds, it will pay High Peak CVS, an associate member, £400 a day to carry out consultancy work while charging the client up to £500 a day for the service.
High Peak CVS also runs a web design consultancy. "Part of the sustainability of the third sector has to be about us learning skills," says Kevin Skingsley, chief executive of High Peak CVS. "The less money that goes out to consultants, the better."