NAO: Improve funding for voluntary sector
Government departments must substantially improve the way they provide funding to the charitable sector, according to the National Audit Office.
The Government is committed to increasing the involvement of charities and voluntary organisations – the so-called Third Sector – in the running of public services.
Charities and voluntary organisations are already heavily involved in running a wide range of public services, such as hospice care for terminally ill patients.
But today’s report suggests that further progress is dependant on the willingness of departments to embrace new ways of working.
A Treasury review in 2002 set out recommendations for improving funding practices for charities, but the report says the action has not been enough to bring about a “substantive change”.
Its says ‘full cost recovery’ – where the funding department contributes to the overheads of charities as well as the direct costs of the project – is not yet embedded; while annual funding continues to cause uncertainty and is diverting charity staff from the frontline to the negotiating table.
Going forward, the NAO suggests identifying beacon funders at all levels of government to help spread good practice; developing joint teams across departments to deal with charities; and training staff to specialise in working with the sector, including encouraging secondments.
Sir John Bourn, head of the National Audit Office, said: “Developing shared centres of expertise across departments would enhance effectiveness in working with the third sector through, for example, application of specialist procurement skills. They would also assist in streamlining monitoring processes and building relationships based on trust and professionalism thereby securing the full contribution which the third sector can make.”
The report acknowledges that charities also need to play their part in improving the funding relationship with Government.
Stuart Etherington, chief executive of the National Council for Voluntary Organisations (NCVO) said: “Both Government and the sector need to act to improve the funding relationship. It now simply requires the commitment, on both sides, to deliver this. We look to all levels of government for progress in the coming months on the recommendations the NAO has made.
“However, the voluntary and community sector also has a role in driving change. There are several steps that VCOs should take to improve the way they approach public service contracts.”
The NCVO has published its own report on the role of the voluntary sector in improving the funding relationship with Government, and is publishing a series of research briefings on the impact of Government funding practices on voluntary organisations and their delivery of services.
