Friday, 2 March 2012

Putting context on Voluntary Sector Cuts

Tangible evidence is slowly coming to light that cuts to voluntary sector groups from public sources is now stretching into the £billions for just the current financial year; with the situation expected to worsen for the future. This blog tries to explain who is being hit hardest and why.

Public income to the voluntary and community sector (VCS) comes from a variety of sources:

  • Grant aid – generally small donations (£500 - £25,000) from a general pot, often administered by a local authority or other public body. Grants are a general donation to local organisations and require no specific outcomes or services as a result. Funds must simply be used for ‘charitable purposes’. 
  • Commissioned services – these are locally important services, which are procured by the public body. These are contracted with set contract requirements and are often won in open competition. Funding for commissioned services (such as homelessness support) often comes from national funding streams such as ‘Supporting People’ through local public bodies. 
  • Earned income – services sold by the VCS and purchased by the public sector. These include room hire, training, catering services, event management etc. 
  • In kind services – these do not involve financial transfer but include public sector in kind support, such as free meeting space, access to training opportunities, in kind administrative support, and HR or finance services.

At present we have clear evidence that all of these sources are reducing and that this is having a devastating effect on VCS frontline services. But who is being affected most?

The VCS is highly diverse and includes all organisations from very small, purely voluntary led organisations, with low turnover and working at very local level. This is the stuff of ‘Big Society’. This part of the VCS is mainly supported by local or direct philanthropic donations, membership fees or small charges for services, made cost effective by the added value from volunteers. This ‘micro’ VCS is generally stable and not particularly susceptible to cuts in public sector contracts, but may feel the pinch as in-kind support is withdrawn.

The next layer is those delivering more formal services and employing some staff. Generally with an income of between £50,000 and £1,500,000 pa (equates to 1-30 employees). These organisations will often be recipients of public support at local level (neighbourhood, district, county and regional level) to deliver highly specialised local services, which are made efficient by further volunteer support. Classic examples include Citizens Advice Bureaux and community based learning and employment centres.

Above this layer there is a complex striation of national charities, which deliver services to increasing scale and against greater public contract value.

In all this, it is that middle layer that is most at risk – delivering essential local services based on tangible need, too large to sustain purely on donations and local support but too small to compete with the private sector and larger national charities. These groups are in crisis, as the public sector drive for efficiences cuts here first.

Cuts to service provision therefore come from many angles including:

  • Loss of delivery contracts due to closure of funding streams 
  • Reduction in grant aid sources Loss of ability to earn income 
  • Competition from private sector and large or national charities with more aggressive contracting strategies 
  • The public sector, where former contracted services are being taken in-house.

One EM and our colleagues across the country have been tracking real examples of how this impacts on people and organisations. The following is a list of organisations who have been hit by cuts. The people and communities who benefited from these services are profoundly affected, and employees are facing cutbacks and redundancies.

If you are one of these services and are not listed below but would like to make the impact of your cut known then please reply to this blog and leave your contact details. The easiest way to explain the truth is through real examples – please let yours be heard.

Examples and links:

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