Acclimatising to cuts
In a letter to The Times six days before George Osborne’s Comprehensive Spending Review (CSR), research and medical charity chiefs make the case for state funding of their work, observing, “Ministers are mistaken if they believe charities are a substitute for government expenditure.”
As it happened, science emerged relatively unscathed from the most draconian spending cuts since the Second World War. Other areas have not been so fortunate.
The economic reasoning behind why the £81bn cuts have to be made is generally accepted – as Sean Reynolds of Hempsons puts it: “at the risk of trivialising the process, we are all with Mr Micawber in his observation that the usual consequence of spending more than you earn is misery.”
So the sector just needs to get on with it and this does present some opportunities to call the shots now it is in a position of relative bargaining strength. A clue was the one-year £100m transition fund for ‘big society’ projects along with the approach to social care – a shift from centralised to localised power and the expansion of personal care budgets. The terms of engagement have indeed been rewritten.
Liz Hazell, head of charities at Pricewater-houseCoopers’ told Caritas that she sees the key CSR themes of growth, fairness and reform are mirrored in a sector that is highly diverse in terms of what it does and how it is funded. The reforms have presented a ”huge opportunity for growth within the sector”, but with that must come fairness. She points out that it is all very well Osborne saying “we are all in this together”, but it’s not a fair playing field if the state “just passes the charity sector all the basket cases.” As for reform, the sector has been pretty good at that, but, as picked up in the PKF/CFDG Managing risk – moving towards the vision report (see page 5 of this issue), commissioners need to identify sustainable ways of contracting with charities to deliver services because these organisations can’t just be turned on and off at the drop of a hat.
This means finding a way to work with commissioners to get the contracts on the right footing from the start. Outcome-funded deals mean that charities need the infrastructure in place to deliver first and then get paid on delivery. With most charities staring at shrinking reserves levels, this is not healthy. New Philanthropy Capital’s timely report, Preparing for cuts, reminds charities that they will “need to drive the agenda for reasonable evidence and measurement, rather than have unreasonable demands dictated to them.”
The Treasury-funded Charity Commission has stated its cuts of £8m over five years make “business as usual simply not an option” which has got to mean changes in the way charities are supported and regulated. So an open mind about charitable purpose, sources of funding and how to move forward in a very changed external environment is a matter of survival.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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