NCVO data shows that income from the government has declined over the last five years for all charities, except the very largest ones with annual incomes of £100m or more.
This decline has occured at the fastest rate for small and medium charities with annual incomes of less than £1m.
And yet, it is these small and local charities that are uniquely placed to identify local needs, cultivate trusting relationships with their communities and respond to their needs.
These charities, which are created with, by and for the communities they serve, play a distinctive role within their communities and create social, economic and added value.
Large generic contracts, unrealistic deadlines and the competitive commissioning environment has meant that small charities have been squeezed out of accessing funding.
At times, when collaborating with larger charities to bid for these contracts, smaller charities have fared poorly, lacking both power and voice. All this comes to the detriment of the people and communities who rely on these services.
Since 2018, Lloyds Bank Foundation has been working with the NCVO and Acevo on the Rebalancing the Relationship project, to look at the way in which smaller and larger charities can work together to deliver public services.
We have explored how charities of different sizes can work within the constraints of commissioning and procurement practices, and overcome past negative experiences to rebuild trust and effectively work together when bidding for and delivering public services contracts.
The report, published earlier this month, identified the different ways that public services contracting has hindered partnership working, and showed different examples of what this led to.
Case studies range from smaller charities being used as "bid candy" by larger organisations to win contracts only to find the work and money not going their way, to larger charities, which lacked the local knowledge or lived experience, winning bids over the smaller charities who are already delivering these services well.
But the research also found many examples, particularly during the Covid-19 pandemic, of smaller and larger charities using their individual strengths and investing time to build strong relationships based on trust to jointly bid for and deliver services.
When larger charities combine their reach and resources with smaller charities’ diverse representation, local knowledge and expertise, it benefits people facing complex social issues who rely on these services.
By shedding their egos and competitive rivalry they can provide food and essentials for families in need, find safe and secure accommodation for women and men fleeing abuse or those facing homelessness, support people experiencing mental ill health and isolation and ease the demands on the NHS.
Charities and their leadership teams have a key role to play in fostering the power sharing collaboration needed to address societal issues.
This won’t be easy at a time when charities, large and small, have seen their income streams shrink, demand and complexity of their services increase, and greater criticism and restrictions on charities’ ability to campaign.
An internal cultural shift that prioritises collaboration is essential. It should be part of a charity’s values, strategy, processes, staff, skills, and roles and responsibilities.
Larger charities that abandon rivalry and see their role as serving communities and the small charities that work with and for their communities can achieve this.
This starts with the leaders within these charities. They are the ones that can set the direction of a charity, and nurture the kind of culture that will lead to better collaborative practices.
Charity leaders who are committed to pushing for the change needed to be a better partner can find useful questions and prompts in the report to help them achieve this.
These prompts have been pulled together from charities that have successfully bid for and delivered collaborative public services contracts.
We would all do well to heed the recommendations in this report because, if this last year has taught us anything, it is that we are stronger together.
Paul Streets is chief executive of the Lloyds Bank Foundation England and Wales