Competitive contracting behaviour 'leads to poorer outcomes for beneficiaries'

Competitive behaviours between service-providing charities can lead to poorer outcomes for the people they serve, the interim findings of a research project indicate.

The Rebalancing the Relationship project, which is being conducted by the National Council for Voluntary Organisations, the charity leaders body Acevo and the Lloyds Bank Foundation for England & Wales, is looking at the relationship between large and small charities in contracting.

Researchers have issued an interim report on the findings so far, which include that competition for contracts is having a negative impact on the sector, organisations, beneficiaries and communities.

It says the project’s emerging recommendations include that organisations should consider the impact on existing providers and beneficiaries before deciding on whether to bid, and they should put a focus on serving the community not the commissioner.

Other interim recommendations include that organisations should adopt a “just because you can doesn’t mean you should” mindset that focuses on improving impact rather than just becoming larger.

The report says commissioning and procurement practice can incentivise harmful organisational behaviour, but this behaviour is also driven by internal culture and ways of working.

It says there is a perception in the sector that some larger organisations are operating more like for-profit businesses than charities and succumbing to mission drift and bidding for contracts when they are not best placed to deliver the service.

The interim report says there is a lack of trust within the sector, even though some organisations say they recognise the value of others.

“Smaller organisations often view larger ones in a distrustful manner, expressing a lot of anxiety about loss of control or appropriation of ideas,” it says. “They also struggle with what they perceive to be a patronising attitude from larger organisations.”

The report adds that some organisations recognise behaviour in the sector needs to change but struggle to acknowledge that this should include their own.

Sarah Vibert, director of policy at the NCVO, said: “We’ve known for a long time that there were concerns about how organisations compete for government funding, but this significant study unveils the extent of the impact.

“I hope this report is the jolt the sector needs to take these issues seriously, and it should be on the board agendas of all public service-providing charities.”

The project’s interim conclusions are based on evidence from about 150 organisations through an open call for evidence, a selection of interviews and the views of steering and advisory groups.

A consultation on the findings so far will run until 27 March, with a final report expected in the summer.

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