Daniel Ferrell-Schweppenstedde

Former Policy and Public Affairs Manager

Charities Aid Foundation


30 July 2019

Every year, our Charity Landscape survey asks leaders in the sector about the challenges they face and how these affect their organisations’ ability to deliver on their mission. The recent edition included questions about their role in public service provision in addition to their perceived influence over public policy through campaigning and advocacy. The survey produced some worrying answers that highlight key questions percolating within the sector.

Serving the best interests of the people and communities they work with is core to a charity’s mission and this can, indeed sometimes needs, to involve criticising government policy and giving voice to those who may struggle to do so.  The recent use of ‘gagging clauses’ in government contracts and the wider impact of the Lobbying Act now begs the question of whether we have reached a point where taking public money undermines a charity’s ability to fulfil that wider mission. 

Survey respondents overwhelmingly agreed (92%) that government now expects charities to fill gaps in public service provision. What constitutes a gap has also shifted.  Public libraries began life as philanthropically-funded institutions before being adopted by the state when their public value became evident. But we are seeing things shift back the other way, with libraries being taken over by charities and community groups. A more worrying example came when an east-London school asked Children in Need to cover funding gaps to support disadvantaged children. From the charity’s point of view, the need was evident, but should they be the ones drawn into addressing such a clear failing of public provision?

Over 78% of charity leaders told researchers that they believe government will continue to see them as public service providers and they will be expected to fill more gaps in the next five years through the public sector commissioning process.  The NCVO almanac backs up this trend, reporting that the share of their income that the voluntary sector receives from government contracts has increased dramatically - £11.4bn in 2015/16 (roughly 24% of total spent), up from £5.8bn in 2003/4 (16% of the total). While there was a dip of £0.8bn in 2016/17 and an increase of £0.7 in government grants, the charitable sector’s income from government contracts remains historically high. Add to that the questions around the very viability of many of these contracts given that it has been recently reported that funding pressures led more than half of social care providers to hand contracts back to local authorities and a clear path to the future relationship becomes even murkier.

Where charities believe they stand in the eyes of government also made for unpleasant reading in the research with 59% agreeing that ‘government will see charities as a nuisance for criticising government policy’ over the next five years.

This sense that they are an unwelcome voice comes amid  increased use of non-disclosure agreements (NDAs), the so-called ‘gagging clauses’ in government contracts, which charities believe prevents them from speaking up on issues. Despite reassurances that NDAs  will not prevent the sector from criticising government policy, doubts remain among charity leaders, especially given what many see as the ‘chilling effect’ of the Lobbying Act on legitimate advocacy by charities.

Sir Stuart Etherington’s 2019 ‘State of the sector address’ noted that the speedy growth phase for the sector – fuelled in part by government contracts - may be coming to a close, but also noted that colleagues are beginning to ask  fundamental questions about why and how their organisations are operating.

To take the issue a step further, and with an eye on the debate rumbling on around  the ethics of accepting donations in the wake of the Sackler family’s donations and the links drawn to the opioid epidemic, does accepting money to deliver public services count as an endorsement of the government’s approach, and does  it therefore naturally undermine the ability of charities to speak out when they should? Have we not been critical enough when taking on government contracts? And if this is the case, is there a need to rebalance the relationship with the state?

In the short-term, simply giving up on government money is not feasible for many organisations. Even when current contracts are not sustainable, charities might be locked into them; or moving away from contracts requires a time-consuming overhaul of their business model. At the same time, demand for services has intensified and charities might struggle with the idea of rejecting beneficiaries with genuine needs because they collide with a wider strategic vision - the concern will always be, “if we don’t help them, who will?”

This feeds directly into the wider discussion of mission. If these contracts undermine a charity’s wider mission to speak out on behalf of their beneficiaries, they cannot then serve as a barrier to a longer journey of rebalancing the funding mix to ensure that an organisation is maximising its ability to meet the needs of its beneficiaries, including speaking up on their behalf.

We shouldn’t be naïve: the commissioning system has a massive pull and regaining independence from public funding is a big ask for charities who rely on it – but not impossible. Charities are not tied to a fixed destiny, but we need to start the conversation now if we are to ensure that we get the balance right in the long term.


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