Spreading the glue

Spreading the glue
Patrick Butler
The Guardian

Hope, the minister for the third sector, has first-hand experience of this world. He gave up a career in teaching in the 1980s to work on community-based projects with young offenders. It was the high tide of Thatcherism and the prevailing logic of the time held that ‘short, sharp shocks’ were the way to tackle unruly teenagers. ‘It was pretty challenging,’ he recalls. ‘I was trying to set up alternative custody projects, and the challenge of raising sufficent sums to support very small frontline organisations…’ His sentence tails off in laughter. Getting cash was difficult then and, as community groups tell him all the time, it still is.

Hope is anxious to promote the government’s £130m programme of ‘grassroots grants’, first announced in the third sector review in July and launched last week. The fund is split into a three-year, £80m pot for small grants and an intriguing £50m endowment fund, designed to encourage donors to give on a matched-funding basis, with the aim of providing a long-term, local source of grant funding. Grants of as little as £250 may be given out, and will go to groups with an annual turnover of less than £20,000.

The idea, says Hope, is to get accessible funding down to grassroots level, to invest in the micro-relationships that help create healthy, resilient communities, encourage neighbourliness and build up social capital. ‘It’s all that stuff you wouldn’t expect or want the council or the government to run, that you just want the community to get on with itself,’ he explains. Bigger organisations are purposely excluded. ‘I’m setting the £20,000 [turnover limit] deliberately to be sure it [the grassroots grant fund] isn’t snaffled by existing voluntary organisations,’ he says.

While there will be two cheers from the voluntary and community sector for the initiative, it is not thought to address the sector’s concerns about the funding crisis it faces. The £20,000 limit, people point out, effectively excludes any organisation that has a salaried employee. The fund is realistically for the smallest of small voluntary enterprises. The government, some fear, is in danger of overseeing the withering away of many small and medium-sized charities and voluntary groups.

Rhetorically, at least, it is not supposed to be this way. For the past two years, ministers have made it clear, in speech after speech, that the third sector must be a vital part of local service provision. Councils and primary care trusts have been implored to contract with community groups and consult them over the design of services. The supposed virtues of neighbourhood organisations – local credibility with marginalised, ‘hard-to-reach’ groups, high levels of service user expertise – are constantly trumpeted as a means of ’empowering’ local people and encouraging social cohesion. At a strategic level, provisions for involving charities, social enterprises and community groups have been written into the structures of local authority performance management, in public service agreements and local area agreements.

And yet the widespread feeling in the community sector is one of gloom. ‘The funding environment for local groups is getting very difficult,’ says one observer. Anecdotal evidence suggests local authority grant funding – to Women’s Aid groups, Rape Crisis centres, local advice services and the like – is being cut, and that such groups are struggling to stay afloat. As councils switch to contract funding – and increasingly to fewer, bigger service contracts – small local charities say they are unable to compete with larger regional and national rivals from the private and voluntary sectors. The big outfits may not possess the local know-how but have the capacity and financial muscle to impress local commissioners who, facing demanding government-imposed efficiency targets, are attracted by low-price bids.

Funding crisis

Hope is aware of the concerns but argues that the government is building into the system the levers and incentives that will persuade local authorities to engage seriously with the third sector. He is convinced, for example, that many councils will choose to make third-sector involvement a core priority in local area agreements currently being negotiated (though there is some evidence this is not yet happening). He points to government support for the Compact, the agreement designed to facilitate good relations and understanding between councils and charities, and to the government-funded training programme to teach commissioners of the value of third-sector providers.

‘I’m saying that, when a local authority is looking at users’ needs and thinking about how it can change their lives, the third sector at its best has a real part to play.’ Commissioning, he believes, should recognise this. ‘So within contracts, they may want to build in some model social clauses: employing local unemployed people, putting in a wider community benefit. These are entirely right and proper ways of running the service; you are not trying to fix it [in favour of the voluntary sector]. The third sector is well placed to bid – who wins is a matter for the contract team.

‘Every year there will be a comprehensive area assessment, which will include a view about how good the third sector relationship is [with councils]. It is not that every voluntary organisation has to be funded for ever and a day, no matter how good they are … [but] in general we want to see a thriving third sector’.

Critics argue that some local authorities nonetheless pay lip service to the Compact and ignore guidance on commissioning. So how can ministers persuade them to do otherwise? ‘Where there are specific breaches [of the Compact], the Compact commissioner will challenge the local authority on its performance.’

Hope hints that the Compact commissioner’s role may be more steely than it has been hitherto: ‘We are currently recruiting a new commissioner. I would hope that, because of their stature and reputation, they are the kind of person who would make considered judgments, who would be seen by a particular local authority as someone who can help, who can … help them to move on from where they are. . . I’m not going to tell the commissioner how to do their job … [but] they will evince a response, a serious one, so the local authority will put its hands up and say, ‘We understand. Help us develop a better strategy.”

Hope makes it clear, however, that charities will be expected to demonstrate the added value they often claim to provide. ‘I’ve challenged councils but I’m also going to challenge the voluntary sector: you have got to show what it is that you achieve. Just saying, ‘We’re the voluntary sector. Fund us because we’re the voluntary sector’ – those days are over,’ he says. ‘The new world is: if you want substantial public-sector funding to deliver services, you have got to show you can deliver them.’

Charities have often found it difficult to measure what it is they do. But Hope says they can’t avoid performance measurement: ‘What are we trying to achieve? What outcomes are we trying to achieve, and how do we measure success? Everybody should be asking those questions. To those organisations that don’t want to, I say, ‘So why are you here then?”

Many charities, particularly smaller frontline organisations, fear that performance monitoring will be costly and bureaucratic. Hope is not convinced: ‘There’s nothing to fear for voluntary organisations. If you are a large organisation getting large sums of money, you have probably got to fill out a few forms. But it has to be proportionate and relevant. If you are a small organisation, getting a small, simple explanation of what you are trying to achieve and how the money is going to be spent, I think that is exactly right.’