Smaller charities feel the squeeze

According to the Small Charities Coalition, 97% of charities operate on less than £1 million per year.

At a time of higher and more complex demand, these charities are seeing their funding reduced, and are often considered as an after – thought in terms of policy design and structure.

Navigating Change, published by the National Council for Voluntary Organisations (NCVO) and the Lloyds Bank Foundation found that following the 2008 financial crash small and medium sized charities lost more income proportionately than their larger cousins, mainly as a result of reduced grant funding.

As government and local authorities move from grants to commissioning as a way of funding services, small charities are increasingly at the mercy of the commissioning process, which some argue deliberately or inadvertently preclude them.

Commissioning in Crisis concluded that bad practice in commissioning far outweighed the good, with many charities being excluded from bids through unnecessarily high requirements concerning previous experience or size. Cash – strapped councils are also increasingly opting for larger contracts, for which many small charities are unable to compete.

In the past, smaller charities would often look to Infrastructure organisations for support, but they too are feeling the pinch. 

Paul Streets, CEO of the Lloyds Bank Foundation States:

“Infrastructure bodies were the first to be cut, so it has become really hard to build capacity if you are a local organisation.”

Neil Cleeveley, CEO of NAVCA adds:

“The places where Infrastructure organisations are struggling also tend to be in areas of high deprivation and most in need of support. Big funders rely on Infrastructure bodies to provide intelligence about the organisation they should fund and support small organisations when they apply. In the areas where a lot of Infrastucture organisations have disappeared or shrunk in size, funders say they aren’t getting enough quality applications.”

The instability is making it difficult for small charities to look to the future, with may starting the year with gaps in their budgets.

One oft-touted solution to the funding problems of the sector is social investment, but many smaller charities struggle to exploit the opportunity this brings.

Tony Armstrong, CEO of Locality states:

“The government’s guilty of seeing social investment as the answer to a lot of things, but many services are difficult to make profitable, and the products are just not cheap enough or at the right scale for smaller charities.”

Funders have a crucial role to play in supporting smaller charities, and there are some signs that change is starting to happen. In December of 2016, the government organised a Local Charities Day to help raise the profile of community based organisations, and a number of measures were announced to help smaller charities bid for public service contracts.

Sally Young, CEO of Newcastle CVS says the answer is simple:

“Bring back grant funding. There seems to be a rhetoric that grants are a waste of money, but they’re quick and easy, and there is simply no evidence that grants aren’t spent in proper ways. Small charities need to be making the argument for grants by pointing to the value of the services that they provide.”

And so with a circular motion we move back to the thorny issue of demonstrating social impact.

Support Cambridgeshire is looking to form a Cambridgeshire wide steering group looking expressly at the issue of social impact, and how it can be achieved within an easy to use framework. If any organisation would like to be part of this initial group, please contact Russell Rolph, Development Manager on 01480 420603 or at russell@huntsforum.org.uk.

Extracts taken from the Third sector Magazine: February 2017