Paul Streets: Understanding the true value of small charities

The job of a funding organisation is to improve people's lives, not prop up inefficiency, writes our columnist

Paul Streets
Paul Streets

I’ve just come back from an energising visit to two Newcastle charities that support refugees and asylum seekers, the North of England Refugee Service and the Action Foundation, both funded by us. Both charities support new arrivals as they are welcomed into our "sharing society".

Generally this means putting them through an undignified process (no doubt reminding them why they left their homes in the first place) by dispersing them – usually outside the home counties  and then, after their applications have been considered, giving them 28 days to get out of government accommodation into the private rented sector.  

Faced with unrelenting challenges, these charities do a great, but difficult job, providing advice and support at the point of entry and offering educational support and decent housing after the state has processed their claims and effectively abdicated its responsibility. One Iranian supported by NERS told me: "This was the only place I’ve been that sorted out my immigration and housing issues. At other places I was just given a cup of tea."

It’s difficult not to be moved by the powerful difference small and local charities – which most people have never heard of – make to people’s lives.

I often get accused of being a "small charity evangelist", and it’s true that, in meeting hundreds of small charities and seeing their work in action, I’ve experienced my own damascene conversion and tend to proselytise about their unique ability to touch lives.

But as a foundation we invest a significant amount of money in small charities in the belief that they are best placed to have a positive impact on people’s lives locally. So it’s important that we remain objective and we continuously need to check our approach and focus are still on the right track.

Over the past three years we’ve started a journey to unravel these issues.

First through Navigating Change, a report based on research commissioned from the National Council for Voluntary Organisations that showed small charities are under the cosh, with funding collapsing as the state withdraws and shifts from grants to contracts and from small specialist providers to large generic provision.

Second, through demonstrating exactly why this is a problem to the survival of small charities in our Commissioning in Crisis report, which showed the shift to commissioning is exacerbating the problem. Acutely. Finally, we recognise that small charities should be Facing Forward to meet the hurricane of social, political and economic changes heading their way.

But these have all focused on the charities themselves and, ultimately, why should we give a jot about them

No charity has a right to exist unless it is making a difference.

There are some who’d see the research above as a demonstration of straightforward economies of scale and efficiency to achieve more standardised outcomes; and there are others who would claim there are too many charities and only the fittest should survive.

Intuitively, there are many reasons why small local organisations make sense. They engage local people, adding to social cohesion and understanding. And because they’re local, they usually leverage high levels of volunteering that provide good value for money. They’re a magnet for money from outside that would otherwise be spent elsewhere. And money invested in local organisations usually stays local, so it creates local economic multipliers.

But the litmus test is this: does it matter for the people on the receiving end?

We think we know the answer, but do we?

Last year we went out to tender for independent external research to understand what the true value of small and local charities is, both socially and economically; research that would ask whether other organisations could do the same or better more effectively, whether the direction public service commissioners have taken (large contracts and large providers) is actually cost-effective and whether the large providers, such as Serco, G4S and large charities, that move into this space can deliver the same quality of provision.

The Centre for Regional Economic and Social Research at Sheffield Hallam University will be leading the research in partnership with the Open University Business School, the Institute for Voluntary Action and Sheffield Business School, and we’re eagerly expecting early findings next year.

Our mission is to "break disadvantage and better lives", not prop up inefficiency. If we find we’ve got it wrong, we will have to change our approach, and I’ll be looking for a new messiah on my return from Damascus.

Paul Streets is chief executive of the Lloyds Bank Foundation for England & Wales. Let him know what you think: @PaulStreets_

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