Editorial: We should spend money to save money

Stephen Cook, editor

Is there perhaps a common denominator in fundraising and full-cost recovery for charities and the voluntary sector? The question emerges from the latest survey by Acevo of service contracts between the sector and public bodies - national and local government and other public agencies.

It's a scenario which has become depressingly familiar: chief executives who responded to the poll reported that things are getting worse rather than better, and that for every step forward there's another step back.

Despite declarations by ministers and improvements in the Compact, contracts still seem mostly to involve subsidy by the sector of the service it undertakes to provide. This is a state of affairs confirmed by several organisations that have contacted Third Sector to relate disillusion in their experience of service delivery. One of them reports being told by a local authority demanding cuts in a service contract: "You're charity - you can get your own funds." The worst thing about it is a kind of double jeopardy: people don't give money to charity so it can be used for services which are meant to be financed by taxation.

One hopeful sign, however, is that Acevo's respondents reported an increased willingness by public bodies to move away from a take-it-or-leave-it approach and negotiate over fees. Perhaps the ice-floes are beginning to break.

If so, the next question is whether that is likely, over time, to lead to an improvement; and this is where the comparison with fundraising comes in. Just as you need to spend money to raise money - that issue we fear the donating public will never understand - so you might also need to spend money on getting a satisfactory outcome to a contract negotiation.

You might have to employ, or share the costs of employing, someone with specialist skills who knows how to tease open the purse strings of public organisations.

Multi-skilling is a noble art without which many charities couldn't survive, but it does have limitations. There are times when specialists are worth their weight in gold. This is what Leonard Cheshire discovered when it began its drive a couple of years ago to cut down its subsidy of the contracts it undertook. The organisation trained people in negotiation skills, and has begun to reap the dividends: it now estimates that the £6m it was contributing to public service contracts has come down to nearly nothing.

And if negotiations don't bring a fair result, there is always the power to walk away.

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