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February/March 2013 Cover Story: Are charities special?

Written by Hugh Wilson
February/March 2013

Are charities special?

What is the role of charities? Are they unique? Or do charities increasingly ape what other organisations can do just as well? Hugh Wilson investigates


As part of its series of Third Sector Future Dialogues, the Third Sector Research Centre (TSRC) recently published a discussion paper on the ‘specialness’ of charities. What exactly is it that makes charities special, it asked, and how should we measure what the sector does.

It was a well-timed intervention. Charities have been wrestling with the need to better measure what they do, and what impact it has, for a number of years. And more recently still, critics have been suggesting that what many charities do isn’t so special at all.

The columns of national newspapers have been given over to discussions of charity independence, and what the authors claim are its gradual erosion in the race for Government contracts. Or, as Nick Seddon, deputy director of think-tank Reform, and author of Who Cares? puts it: “There’s a bit of a feeling of ‘he who pays the piper call the tune.’”

Before getting too far into that discussion, it’s perhaps worth restating the obvious. Charities are special in that they are not created by statute and they do not exist to make a profit. Their structures of governance are unique. They are united by charitable endeavour. But what about their role? Is that unique anymore, or do charities increasingly ape what other organisations can do just as well?

Sir Stephen Bubb, CEO of the Association of Chief Executives of Voluntary Organisations (ACEVO), is unequivocal. “The third sector is extremely unique,” he says, “because there are a variety of organisations that have specialist knowledge, commitment and enthusiasm to tackle problems within society.”

Current circumstances might mean more charities being contracted to deliver more state services, but that won’t undermine the sector’s independence, Sir Stephen argues. “The sector is rightly proud of its independence and there is no fundamental conflict between providing services on behalf of the state and maintaining that independence of purpose and action. There are countless charities that receive funding from government but are confident in speaking out and being critical of government where necessary.”

Forced by cuts
While that is undoubtedly true, others argue that questions about what makes the sector different need to be asked. The discussion has been forced by the cuts, says Angus McCabe, who authored the TSRC paper, but these are difficult issues the sector should have addressed before.

Should charities be delivering public services, asks McCabe, “and should we be a professionalised and contract delivering sector – with, in some cases, the increasingly marginal role played by volunteers in this process?”

Is this in itself a dilution of charity ‘specialness’? Ask a member of the public about the unique qualities of charities and the central involvement of committed bands of volunteers would probably come near the top of the list.

But the notion of specialness is a tricky one, McCabe argues, because in the past it has too often been based on rhetoric and sector mythology rather than hard fact and reasoned argument. “Voluntary, or social, action is clearly different from either the State or the private sector,” he says.

“But how much real difference is there between a corporate body delivering, for example, prison and criminal justice services on contract to Government and a large charity doing exactly the same thing?”

It’s a question that will soon be tested further, he believes. “How the sector reacts to the recently announced ‘privatisation’ of parts of the Probation service will be interesting.”

Less money
Charities are aware that taking Government money - and delivering services that used to be provided by the state – complicates their position. Kate Allen, director of Amnesty International UK, believes charities that do so have to work hard to maintain their crucial, criticising role.

“Receiving government money doesn’t mean that an organisation cannot be independent but it does need to think carefully about whether and how it can accept these funds while not pulling its punches when it comes to holding the government to account,” she says.

“In a climate where there is less money around – and not just government money – the challenge for NGOs is to keep their critical edge and not to let the fact that they are seeking government funds stop them from challenging the Government when it doesn’t deliver.”

Indeed, part of Amnesty’s specialness is that it relies very heavily on an army of members, each donating just £25 a year or so. The charity has 230,000 such donors in the UK and more than three million worldwide. That, says Allen, gives the charity a legitimacy no other type of organisation could match.

“I can speak to a government minister and she or he will know that those members and supporters stand behind me. Anyone who reads the research that underpins our work can trust that it has not been influenced by any political or other ideology.”

Lisa Harker, head of strategy at the NSPCC, says that issues of independence and holding power to account are ones that all charities are wrestling with, regardless of whether they take Government money or not. “Is it (a charity) speaking out, does it have integrity, is it being brave enough to ask critical questions of those in power?” she asks. “Those will always be important questions for the sector. At the NSPCC we take very little statutory funding so in some ways that makes our independence easier to maintain, but that question of ‘are we speaking truth to power’ never goes away, regardless of your funding base.”

Nick Hurd, Minister for Civil Society, also believes that “their freedom to speak truth to power” is one of the factors that, “makes our diverse charitable sector one of the things that make Britain great.”

Big Society
Nevertheless, Kate Allen says that she can see why you “might not want to bite the hand that feeds you”, especially when the fundraising challenge is so difficult. That’s clearly something the sector has to take seriously.

Can one of the things that make charities special – the ability to criticise and cajole from a position of independence, backed by an army of interested donors – be maintained when the object of your ire is holding a purse you have come to rely on?

The idea of the Big Society, much derided as it is, gives charities an ever more central role in communities. But if that expanding role is partly funded by Government, is there not a danger that the sector might come to be seen as just another arm of the state? “There’s a fear that a charity that takes too much Government money may be
seen to lose their independence,” says Nick Seddon. “It can’t complain as easily, for fear that money will be cut. Then you get a situation where it starts to look more like a quango than an independent charity.”

Having said that, Seddon is entirely comfortable with the idea of charities taking public money and delivering Government services. The main problem, he says, is one of governance. “From a board of governance perspective what you don’t want to be is overexposed. Those big sums of money may be beguiling, particularly now, but taking so much of your money from one source has to be high up on a board’s risk register, and more so when that money comes from government. Governments are notoriously capricious – they change policies and priorities and they change ministers. That’s a huge risk for a charity overexposed to public funds.”

Sector ‘specialness’
The worry here is not just for a charity’s independence, or ‘specialness’, but for its very survival, though Seddon says that ‘mission drift’ is one early potential consequence of the race for public funds.

It’s seven years or so since he wrote his book on charities, but he remembers incidents in even those relatively prosperous times of charities changing their mission statements after receiving public funds.

But if independence makes the sector special, so too does its unity of voice. Angus McCabe says that over the last two decades or so, the idea of a coherent sector has been pushed hard at national level to gain and sustain voice and influence with Government. Hundreds of disparate organisations have joined forces under the loose banner of ‘social justice’.

“Since the 2010 election, that voice and the structures which supported it – for example, Strategic Partners, national network organisations such as Community Development Exchange and so on – has waned,” says McCabe. “That unity – if it ever existed – has therefore cracked into at least two camps; those that broadly say they have a role to play in the Government’s Welfare Reform agenda (provided that role is paid for) and those who are opposed to such reforms as a mere guise for dismantling the welfare state.”

Does the sector speak with one voice anymore? Perhaps more importantly, can we talk seriously about a coherent ‘sector’ at all, given the term has to encompass everything from a small residents’ association to Oxfam.

“What was perhaps always the case – and is even more so now – is a picture of a series of sub-sectors with different purposes and functions. Hence the emergence of a terminology which reflects this – the faith sector, the BME sector, the voluntary arts sector and, most recently ‘the community food sector’,” says McCabe.

Lisa Harker agrees. The NSPCC, she says, is part of a children’s sub-sector, but also has a lot in common with other organisations, like the cancer charities, that don’t rely on state funding. This splintering of the sector is also reflected in the growing professionalism at its higher end. Many charities are quick to trumpet their private sector equivalence, and though private sector expertise and efficiency is broadly welcomed there is a concern that charities run in an overly ‘business-like’ way may lose some of the factors that make them special.

SROI obsession
That can be witnessed in the sector’s drive towards the better measuring of impact. Calculating Social Return on Investment (SROI) has become something of an obsession. Showing donors what impact their money has is clearly useful and beneficial.

But it also splits the sector again, into those who can accurately measure their impact and those who can’t, either because they can’t afford to put the appropriate systems in place or because their impact is not easily measurable. Angus McCabe welcomes “some way of thinking consistently about impact” but is also worried that such thinking can become too financially driven and, where delivering public services is concerned, too driven by saving the Treasury money.

“What then happens to advocacy agencies where effectiveness may actually cost the state money by ensuring citizen’s can claim their legal rights? Or what happens to those groups where their work has largely social purposes that exist beyond Government policy agendas?” he says.

What has to be resisted, say experts, is the temptation to use impact measurement as a form of competition. A sector squabbling over how much public money it can save may start to look dangerously uncharitable. If it consistently goes head to head with private companies in a race to the bottom, can it really claim to be special?

“It is impossible to compare the impact of one organisation with another, or even sometimes to see the true impact of a single event until much later, so NGOs shouldn’t be trying to compete over this,” says Kate Allen of Amnesty. “Better simply to concentrate on their own, often brilliant, work.”

There are plenty of examples of that ‘brilliant work’, of course. Much of what charities do is certainly special, and often uniquely so.

Amnesty UK couldn’t be as effective without 230,000 members whose commitment to its cause is shown by their willingness to donate. And Lisa Harker says that people use the services of the NSPCC precisely because it is a charity and is not a statutory service.

“Talking about child abuse is a big step and both children and adults can be concerned about speaking out. We can offer through Childline a level of confidentiality that statutory services can’t offer. We are a safe route into statutory services, a frontline service of a kind that can’t be provided by the State.”

The other thing charities have, she argues, is the freedom to take risks. While private companies are engaged in a race for profit and statutory bodies are bogged down in the day-to-day provision of services, charities have an opportunity to look further ahead. Nick Hurd, meanwhile, talks about: “The way charities bring people together and give voice to people who need it most, and their power to connect people with the chance to make a positive difference with their time or money.”

All that is undoubtedly special. To keep it that way, the sector as a whole may have to guard against what some see as the slow erosion of its independence, unity and sense of difference.

Hugh Wilson is a freelance journalist



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