23 October 2012
Responding to the announcement by the Prime Minister that the
Government will extend payment by results contracts for charities
and private sector providers working to reduce reoffending rates,
Rhodri Davies, policy manager at the Charities Aid Foundation
“The Prime Minister is right that payment by results contracts
have potential to help charities use their expertise to tackle
intractable social problems such as reoffending.
“But Ministers need to improve the way these contracts are
designed so charities are not simply squeezed out in favour of
large private sector providers. Most charities simply cannot afford
to take on contracts to tackle social problems without up-front
funding because they are not allowed to carry large financial
reserves and have limited access to capital compared to for-profit
“There are socially-motivated investors who are eager to help
charities and non-profit organisations to overcome these
difficulties and get involved in public service delivery, but the
system is currently making it very difficult for these investors to
back payment by results schemes.
“These problems need to be addressed, as the potential prize is
huge. By working closely with beneficiaries whose needs they
understand very well, civil society organisations are well placed
to maximise the social impact of public funding and reduce
CAF, which promotes charitable giving and provides financial
services and social finance to not-for-profit organisations,
published a report last month highlighting the need to reform
payment by results contracts to help charities put their expertise
to work in delivering public services.
Download the report 'Funding
good outcomes - Using social investment to support payment by
For further information please contact a member of our media team.