Let’s consider this suggestion. There could be advantages to undertaking work delivered under contract, specifications are often more exact and, therefore, clearer to the service deliverer what is expected of them.  Indeed, one Not-for-Profit  recently told me they preferred a contract to a grant; it creates a more equal relationship, not one of patronage. 

Additionally, as contractors we have the freedom to set a price, don’t we?  Well, apparently not.  It rather depends on the purchasing power of those procuring the contracts.  Private sector care homes in the North West of England have accused the NHS of using its monopoly purchasing power to try to force down the price of caring services.  It makes a good headline for a service commissioner, or elected member, to show the tax paying public that they are squeezing profit margins and driving down prices.  However,  such a policy can hide the real cost of care (not to mention that providers end up taking so many short cuts that they deliver a less than optimal service which leads to additional services being required). An approach to the delivery of care services that is focused largely on price, seems to be short sighted and a recipe for short term gain and long term pain – and more Southern Crosses! 

There is a confusion of business models here – the introduction of private market practices to public sector planned services is supposed to produce efficiency and drive down prices.  However, the model is premised on the idea that providers are free to set their own prices.  In this interesting hybrid, it seems to be the commissioners driving down prices and the providers resisting.

Most NfPs will explain the move in terms of either saving money or ensuring that their services are more sustainable.  Call me cynical but sustainability is defined as “support or bearing the weight of, especially for a long period” and not as “transferring from financial to physical dependency”.  Moving into lower cost accommodation does result in financial savings in the short term, of course, but is it a long term solution?  It may also (I did say “may”, not “will”) result in a loss of freedom of action and a perception of loss of independence.  Is such a loss worth what may turn out to be a short term financial benefit? 

In the current political and economic environment I suggest that we need a radical rethink about our ways of working, including our business models – we need to consider partnerships and mergers; long term trading models to generate unrestricted income and, shock horror, perhaps even to question whether, not assume that, our organisation IS still sustainable.  The latter question is one that we don’t always ask ourselves, partly, I suspect, because the social need never seems to go away.  However, continuing to do what we have always done, but in a more cost effective way, doesn’t seem to be to be an appropriate response to the “chaos and disorder “ (quoted from an early Francis Maude explanation of the Big Society) around us. 

The world has changed and if we want to be truly sustainable organisations, we probably need to, too. 

Most of us would, of course, support this call – and then go on to suggest that the LGA takes its own advice.  Not-for-Profit organisations across the UK, Hampshire included, have been calling on local authorities with similar thoughts.  Approximately, 2% of government spending is reputedly spent on funding the NfP Sector. 

Cut the lot (as, appallingly, some local authorities have) and it would make precious little impact on what local government has to find in savings.  However, the impact, not just on NfP organisations but on the services that they deliver and the disadvantaged people that they support would be disasterous. 

NfPs bring huge leverage to the funds they receive – they lever in a volunteer workforce and additional funding that only they can access.  We accept that NfPs may not be exempt from the hardship created by the actions of the banking industry (is everyone else as fed up as me of hearing the Government blame its predecessor not the real culprits, the banking industry – or parts of it).  However, repeating the LGA’s argument back to its members, for want of a small per centage of public sector spending, a huge resource was lost – and some of our most vulnerable and needy community members left without support.

This was the message that members of the Hampshire Voluntary Sector Consortium (HVSC) gave to the CEO and other senior officers of Hampshire County Council recently.

With the current economic and political backdrop we all have to find different ways of working.  By focusing on principles, not cash, we could develop a more productive and equal (yes, idealistic, I know) relationship:

These are the key principles we put to HCC:
• better, more regular and consistent information flows
• joint impact assessment before funding cuts are decided upon
• earlier engagement with the Sector to capture intelligence about the what and where of services to be commissioned
• better understanding between commissioning and procurement officers and ourselves.
• statutory bodies could deliver less and commission more

HCC acknowledged that this is all “doable” and we await details of how change may be implemented.  But let’s not forget what we need to do.  For those of us who want to deliver public services (and given some of the stories I am hearing about procurement practices, I am staggered that there are many that still do), we need to work more collaboratively and be clear about what outcomes (not outputs or paperwork) we can achieve.  We need to promote ourselves differently – stop acting as supplicants and start focusing on what makes us a valuable partner.  If we get this right, there just might be more funding, not less, for us – but there I go being idealistic again!

These two tenets of Conservative party thinking, one, perhaps, more recent than the other, are at the heart of the future of Dover Harbour.  Apparently the Department of Transport favours selling the port to a private sector, probably non-British, investor.  However, the local Conservative MP favours the establishment of the Dover People’s Port Trust – owned through £10 shares by the local community (Dame Vera Lynn is reported to be singing, sorry, swinging her vote behind the People’s Port).

This seems to highlight a tension between the Coalition Government’s ideas for creating a “Big Society” (as Francis Maude put it: “granular, hyper-local, small scale and bottom-up”) and the increasing economic imperative to scale up contract sizes in order to obtain economies of scale. 

Whichever modus operandi turns out to be the successful one, may give us an idea of how serious the Coalition are about bringing about “the Big Society”.  Those of us who work in the Not-for-Profit Sector know that if communities are really going to be able to do things for themselves they will continue to need access to information, support and a supportive policy backdrop. Without the latter, in particular, “Big Society” will become, like the Compact, well intentioned but largely ignored when money is being discussed.

Sharing services and staff is becoming a trend in the public sector, look no further than East Hampshire and Havant Councils sharing a CEO.  The assumption is that shared services will reduce waste and create “efficiency savings”.  If this is true, why shouldn’t it also apply to the Not-for-Profit Sector?  Indeed, one of the questions most frequently asked about us currently is “why don’t more charities merge”? 

So, perhaps we should combine CAH’s back office services with those of other NfPs in Hampshire and establish a central administrative/ reception function in a cheaper location than Winchester.  That would make the Sector more efficient and eliminate the waste of more than 1 such function –wouldn’t it? 

CAH’s administrator/ receptionist estimates that 50% of the calls that she receives, she can deal with herself without referring to anyone else.  This is because she is part of the team and because her work is not done in isolation- in fact she is central to the flow of information and work that comes through CAH.  This is also part of the job that gives her satisfaction as she feels most useful to other organisations and, most importantly, it means that the enquiries of CAH members are addressed as soon as possible, ideally within 1 phone call.

I suggest that a centralised, remote service will not have that detailed knowledge  and will spend its time, not answering members’ queries but developing processes to forward calls to someone who might be able to do so.

It does seem that in some bureaucratic organisations these activities have become an end in themselves and we assume that a new centralised function, that has increased the number of calls that it takes from 50 to 100 a day, has been a huge success, because we do not always look to see whether the increase in calls are from the same people calling back as they couldn’t get an answer in the first place. (See John Seddons’ book “Systems thinking in the Public Sector” for a fascinating exploration of this subject).

A central standardised or assembly line approach, is fine for cars but it seems to work less well with people (including the staff) and their complexity– which is what we deal with in our Sector.

Food for thought!

Most of the SSE “fellows”, as they have now become, have come on difficult personal journeys and they are utterly determined that their new enterprises will, in some way, contribute to making society fairer.  Their motivation is actually very similar to that of many founders of charities, going back hundreds of years.  However, it seems to me that the SSE approach may be a more appropriate model for the times that we are living in.  Charities can no longer rely on generated funding simply because they “do good.”   Additionally, as many charities have become increasingly dependent on the state for funding, they are forced to align their work to that diminishing pot.  This means they have money to address what the state sees as need, not what the user/ recipient sees as need.

So, for a section of the Not-for-Profit sector there is an emerging choice – deliver what the state has identified as needed or peddle your own canoe.  The SSE fellows, as other social entrepreneurs, should be better equipped to survive independent of the state and able to meet need, not state targets. 

Imagine a world which has not had the benefit of our campaigning – and I don’t just mean the high profile campaigns about poverty in developing countries, I am referring to how society in Britain would be – if you are female, have a physical impairment, suffer from mental health problems, are a carer, cannot get a bank account, cannot afford a solicitor, have been a victim of domestic violence, are not heterosexual, are black or Jewish or Irish or Asian (substitute almost any non- British nationality here) or a Traveller, elderly, a child, an armed forces veteran, an animal lover  etcetera, your life would undoubtedly be the poorer. 

Campaigning is the essence of what the Sector is about – no-one comes into the Sector because they think things are going swimmingly, people join the Sector to make social change – whether by providing a service to a small local group or by campaigning on international issues.  We are still amongst the most trusted of British institutions because this is what we do and it is unlikely that the general public will continue to financially support charities the way they currently do, if we simply become deliverers of statutory services. Which would, of course, leave a funding gap across all of those statutory service contracts where we currently use other monies raised to subsidise the service.  It is also the reason why the current Government says that it relies on the Sector to articulate the voice of those who do not vote or engage with statutory bodies.  It can be argued that the Sector is a driver for positive change in this country – by being close to people in their communities we pick up on issues as they emerge and often provoke timely and necessary debate with policy makers e.g. the recent Autism bill.  It follows then that politicians should welcome our campaigning – on issues of poverty, human rights, social cohesion – the Sector provides a route to peaceful and legitimate pressure for social progression.  

So, I would personally rather that we did less delivering public services under contract (see previous blogs) and more campaigning but I also wish the politicians would speak less (was tempted to say spend less time clearing out their moats) and listen more.        

Health Secretary Andy Burnham recently announced that the NHS itself remains the preferred provider of health services, less than 18 months after the Prime Minister wrote that “in the next decade we will see a growing role for independent public service providers, voluntary organisations and social enterprises”.

It does strike me that most contracting verges on the antithesis of what the Sector is about and what it generally does so well.

Reasons not to contract:

• Margins are low and, if you’re not organised around contract delivery with very low overheads you probably wouldn’t be competitive anyway
• Contracts are rarely Compact compliant
• Services tend to be standardized, not person-centred
• Contracts are driven by targets that need to be achieved by a statutory body, rather than being based on the needs of the individuals receiving the service
• Financial, performance, insurance and other risks are often disproportionately transferred to the contract holder from the commissioner
• Too much of your income could be coming from a single client creating an unacceptable risk to your organisation
• Monitoring is often onerous and rarely done with real proportionality.

Additionally, advice about how to manage in the current economic climate suggests we should maintain maximum flexibility in order to reallocate resources as and when needed – how can you do that when you are delivering services under contract?

Given all of the above I am still surprised to see so many Not-for-Profit organisations turn to contracting as the new alternative to grant funding, whilst few seem to be considering other trading activities as a priority.  But why not?  Just as there are so many reasons not to contract, there are so many reasons to undertake trading, or social enterprise; some of the most important being that you can set your own margins/ costs, there is no monitoring or unfair risk transference and the income is absolutely unrestricted – and can be used to address real need, not statutory targets.

So why don’t we look at social enterprise more?  It does take some thought and planning – a business case needs to be made, the financial risks are different though they may not be any greater.  Trading or developing social enterprise activity does not even mean you have to form a separate governance structure (CAH remains a charity and a company limited by guarantee, even though it delivers some of its projects as social enterprises) – though this may not be sufficiently well understood.  Whilst the phrase social enterprise is now ubiquitous, those with a real understanding of it and able to give accurate and informed guidance remain as rare as a bad Clash song.  However they are out there, CAH’s own Cris Jezard being one, I would urge you to give up the contracts and start trading.

Several of “the rich” spoke about what worked for them, when being asked for money. 

Common key messages were:

• Do some research on your potential donor.  Find out what they are interested in.
• Don’t ask for money immediately, approach them on the basis of opening a dialogue.  The long term results are often better this way.

Not rocket science, really, and messages that ought to be rather obvious.

The last key speaker at the event was Sir Richard Branson.  I gather that, in the presence of the uber-wealthy Virgin boss, however, many of the delegates forgot or ignored the key messages from the morning and made direct and precipitous pitches for their own causes.  I cannot verify this as I had left before Sir Richard arrived, but it does seem that we are often frequent  pitchers for funding but not always wise ones.

Why is this?  It may be because it feels justifiable to ask for money, at every possible opportunity, as long as it is on behalf of others.  However, we need to be mindful that it can still look like asking money for ourselves – as it is often to keep our organisations going and ourselves in a job. 

We, and our funders, need to keep focused on our services and our beneficiaries, more than on the organisation that is doing the delivering. 

I was at a meeting, a few weeks ago, where the participants were discussing how to raise money, now that the original purpose of their enterprise was no longer required.  The conversation focused on what could be done to generate new funding, however, at no point did they consider just winding up because they no longer had a purpose.

Perhaps we should be framing our, usually valid and needed, funding requests differently.  Fundraising is always a two-way activity. 

What is it that we are offering to our donors, be they philanthropists or Government?  We can offer either a service or something less tangible but just as valuable; a brand, a feelgood factor, the credibility and kudos of being associated with good causes such as social justice. 

Maybe by valuing ourselves more highly, our funders will do so too.