Paul Streets: We're not big enough to replace state providers

Charities are minnows by comparison with the power of central organisations

Paul Streets
Paul Streets

As local public service budgets are increasingly stretched by the double jeopardy of falling income and rising demand, local public bodies have little choice but to look at different ways to reach the people many local charities also exist to serve. Even if Chancellor Philip Hammond eases his fiscal stopcock a little later in the year, the demand side of this equation isn’t going to change.

And yet cut the data any way you like, charities are minnows by comparison. In England alone, there are more than 800 major local authority and local NHS bodies with an average spend of £277m. They each spend 900 times more than the average English charity. And as most large charities are located in London, the data would look much worse outside the capital.

Most local public authorities struggle to engage with the sector because the people at the top – whom I find tend to understand our potential strategic significance as a "local collective whole" – are a long way from those who actually "manage" the relationship with us.

The people tasked with sector engagement often lack the power to take important decisions because they are pushed into some minor directorate with a meaningful and worthy name – such as patient and public involvement – but with little clout. They are occasionally seen ticking boxes, but rarely heard in decision-making. This problem can be compounded by existing historical sector relationships that are too often driven by a wish to "be seen to engage" rather than any sense of discrimination about whether the charities engaged with are effective or not. At the Lloyds Bank Foundation, we are always mindful that grant-making must not be conflated with paternalism or nepotism. We should be challenging local authorities to be equally discerning about which providers they fund, as a number of foundations wrote in the NHS VCSE Review in 2015. If they do, the chances are they’ll still engage many small and local charities because, as the research shows, they’re delivering a great deal of social value per pound.

Having set out the challenge for local public bodies, the sector also needs to work harder actively to influence local public authorities, not just be a supplicant to them. At the foundation we’re acting on that through our new development directorate and through our work with five other big funders to think differently about how we can make a difference together in particular places. Our hope is that philanthropy can play an important intermediary role as a concerned party with independent resources, but we can never be the answer. We’re just not big enough to replace local and national state providers, and we never will be because most foundations are endowed and will rightly draw out a finite proportion of capital to maintain a commitment to the future.

The future depends on local symbiosis. The public sector locally needs to start reflecting its warm words about the role of the voluntary sector in prioritising resourcing it as part of the solution to the demand and cost pressures it faces. That’s best done by effective, discriminating grant-making, not clumsy contracts that might catch a few private sector whales but will miss the charitable plankton where life starts.

Paul Streets is chief executive of the Lloyds Bank Foundation

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