Charities must merge and curb senior management pay to weather funding storm
Third Force News, by Graham Martin
A whirlwind of closures is about to engulf Scotland’s care charities – which must make a choice between paying senior management salaries and providing essential services.
Third sector groups are about to be caught in a perfect storm of increasing need and evaporating funding streams.
Deborah Dyer, voluntary sector organiser at Unison Scotland, says the narrative over the next two years will be one of projects and even whole social care charities folding, with no-one there to pick up the pieces for vulnerable people denied lifeline services.
Care charities have increasingly tendered for – and won – local authority contracts to run services.
However, the cash coming from councils has dried up or has been frozen, forcing third sector groups to fund themselves using the finite resource of cash from Big Lottery and other funders.
When this runs out, they are forced to use their own reserves to continue, as was seen in the case of Aberlour’s Bridges Project, which closed last week.
Adding to the uncertainty has been the Scottish Government decree that all social care workers must receive a living wage of £8.25 per hour, though Holyrood has already put £250 million into this.
Dyer, who has 600 Scottish charities on her books, is well placed to have an overview of the crisis facing the care sector.
She says charities must adapt or die and that hard decisions must be made. However, she insists that a transformation to “smarter working” can be done without shedding essential frontline jobs or services.
Charities must become meaner and leaner – even if that means mergers and a bonfire of big paying senior management positions.
She told TFN: “The big change now for the care sector is that lottery funding for many projects is coming to an end. These are vital community projects – but the problem is that when they finish they close and that’s it – there’s nowhere else for the people they look after to go because the local authorities can’t pick them up and the charities can’t pick them up.
“Like at Aberlour, many do try to fund them through reserves. But reserves are running out and projects are starting to run in deficits. We will increasingly see closures, whether that’s charities or projects.
“At root, the problem is unrealistic funding from councils. In some cases there has been no uplift in funding in eight – ten years, so it’s hard for charities to do what they’ve been asked to do.
“Charities will be forced to hand projects back to local authorities so In terms of projects, in some cases will re-tender but in many cases they won’t and these services will be lost.
Charties have a vital role to play in the care sector, she insists, and with increasing need, the future could even be bright, with new opportunities opening up.
However, voluntary groups will have to make some hard choices.
She said: “but the reality is that charities need to pull their socks up and work smarter, look at back offices, senior staff, look at where they are spending cash, look at chief exec pay, assistant chief exec pay, assistant to the assistant chief exec pay, having 12 people on a leadership team. Good charities are beginning to ask: do we need a leadership team that big? Could we reduce it?
“Charities must take a long hard look at themselves and stop doping the nice to haves, they must say what is our business? It’s care. We need to fund care, we need to pay decent wages.
“We need to look at mergers. At Unision, I’ve got 600 charities on my books, the city council has 200 charities it procures with – that’s 200 chief execs, 200 heads of HR, there’s a lot of replication. We need to have that debate.”
The upshot of the crisis will not just mean jobs in the charity sector going. It will lead to children’s centres, addiction services, care homes and other essential services closing, with all that entails for wider society.
However, Dyer says there is hope: “Both the councils and the charities need to talk to each other. The need is growing, people are living longer, disabled people are living fantastic lives into old age so the third sector will survive this, but in order for it to survive the charities will have to make some difficult decisions.
“We can envisage the frontline staff growing to meet this need – but can we continue to fund the growth of chief executives and senior managers as well?”