New forms of contracting between local government and the voluntary sector could be stifling entrepreneurial creativity and giving rise to "mission drift" among charities, a new report warns.
The Cost of the Cuts: The Impact on Local Government and Poorer Communities, published by the research charity the Joseph Rowntree Foundation, examines the effects of the government’s austerity measures at a local level.
One section of the report considers the effect of the cuts on the local voluntary sector and is based on interviews with 25 staff members from voluntary organisations, most of whom work in operational management positions, and a small number of front-line staff, representing a wide range of voluntary sector services.
It says that there are six main ways in which the cuts have affected voluntary organisations, including reductions in staff and services, concerns about mission drift and commercialisation, and new contracting arrangements that stifle entrepreneurial activity.
"A number of the voluntary organisations had experienced a change in their relationship with the local council as a result of the transition from grant funding, via service-level agreements, to tendering for contracts," the report says. "Interviewees from two organisations providing advice and children’s services respectively, both in the same area, suggested that at each stage of the process, terms became more prescriptive, leaving less room for innovation and creativity."
Some interviewees said that a drive by councils to make voluntary sector organisations less dependent on grants and to carry out more income-generating activities gave rise to concerns about mission drift, the report says.
"Of particular concern was that taking on more commercial activity could lead to ‘mission drift’," it says.
It cites the example of a charity that ran play activities for disadvantaged children but lost all its council funding in 2012. The charity started to sell play services more widely to schools and parish councils and had developed a shop where donated commercial waste was recycled.
"It was also approached by the council to provide services unrelated to its core play remit – smoking-cessation advice to parents of children attending its activities, funded through the council’s new public health budget," the report says. "While this approach was acknowledged by the interviewee as intended to help the organisation to mitigate its loss of funds, they were conscious of ‘mission creep’ and felt this could detract from the service’s core focus on play." This approach, however, was turned down by the charity.
The report adds that some charities that diversified their services said they had greater freedom and were able to be "more self-determined in terms of our income".
The Joseph Rowntree Foundation is a separate organisation from the grant-maker the Joseph Rowntree Charitable Trust, which has been in the media recently over the grants it made to the human rights organisation Cage.