Are charities often too small for the Big Society?

The Big Society was envisaged as putting more emphasis on charity and voluntary organisations leading the way in delivering services that impact both their own communities and the wider community in the UK. In direct contrast to the espoused ethos of the Big Society, many charities are still finding that their scale is a barrier to winning public sector contracts that still favour larger corporate Prime Contractors[1].

One of the key barriers that voluntary sector organisations face is that a great many of these contacts are front loaded.  This means that structures for payment on work carried out on government-funded contracts is oriented heavily towards payment by results.

Many of us will be in favour of more payment by results to help maintain incentives to keep quality and the number of positive outcomes achieved high. Unfortunately the balance does not seem to have been struck between on-going payments to cover cost of provision and staged, results-dependent tranches. In short charities that wish to provide many government-funded contracts are faced with a big gamble in the shape gaping cash-flow gap while they wait for outcomes to come to fruition.

The Welfare 2 Work sector for example shows the practical difficulties the charity sector can face. Providers are expected not only to place a candidate in a role, but on some contracts they must ensure that they have stayed in the role for 26 weeks before payment is released. Many charities are unable to finance this cash-flow deficit in the way many large corporates might. This is just one example among many.

Initiatives such as 3SC are helping counter the hurdles faced by the sector by allowing charities to form part of consortia to bid for larger contracts. This allows charity to have the scale to win more contracts for the sector but this still leaves the finance issue. As such, where charities are able to win contracts or more usually sub-contracts it’s vital to keep the cost of provision as low as possible while maintaining the quality of the service and ensuring a high level of outcomes. This is not always an easy balance to strike and a great deal of thought must be put into how service is run. This means thinking about:

  • Channels – where appropriate and as a complement to face to face services, encourage service users to switch to less expensive channels for lower level enquiries. I.e. if the enquiry is less complex, service users might be encouraged to self-serve information from a website, call a phone number or text a question instead of taking up face-to-face staff time.
  • Monitoring and reporting – If you have smart systems in place that can help you together outcomes data and take some of the work out of reporting both management information and outcomes data, this can take some strain away from staff time.  In many cases reporting systems are prescribed by the commissioner, but if your in-house systems allow you to gather and report easily it’s only one step  further to export data and then import or enter into the commissioners’ systems. This seems preferable to laboriously gathering data manually after the fact.

Connect Assist specialises in helping charities to provide service at a more cost-effective rate while maintaining quality and increasing reach. Please take a look at our Third Sector pages if you’d like to learn more.

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