Smaller local charities are increasingly losing out to local authorities' own departments, despite the Government's declared drive to increase voluntary sector service delivery.
In a survey by the NACVS, more than 36 per cent of councils for voluntary service said charities in their area had lost funding as a result of bids from local authority in-house providers. "This is very much contrary to what the Government wants and to what we want to see," said Kevin Curley, chief executive of the NACVS.
The survey found evidence that competitive tendering is replacing grant aid to service-providing voluntary groups in many local authority areas.
Forty-one per cent of respondents had seen "a significant increase" in competitive tendering in the past year.
Nearly two-thirds of local authorities still provide some grant aid, but in nearly 10 per cent of cases this will end after the current round of grants.
Curley said the rigidity of competitive tendering meant it often ended in "perverse results", with national charities or private-sector organisations outbidding local voluntary groups, even when councillors wanted to support the local sector.
He said the NACVS would continue to argue the case for grants with national bodies such as the Local Government Association. "We think it's very important that councils retain a grant budget," he said. "It's a flexible way of funding and, in effect, becomes a fund for innovation.
"Contracts follow tightly defined local authority ideas of what they are trying to achieve, whereas grant aid funding can enable people to find new ways of meeting needs that haven't been predicted in a contract specification."
Nearly 15 per cent of respondents said they had lost funding because of rival bids from national charities. Seventeen per cent had lost out because of competition from the private sector.
- See Finance News, page 9.