Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 440 - 455)



Mrs Organ

  440. From my experience of being a constituency Member of Parliament, I am always overwhelmed by the bureaucracy, the difficulty, that small voluntary groups have to go through. Many of them fail, yet obviously enough get through when you say that there is 10.6 of bidding but only 1.8 of distribution. Do you provide any sort of expertise, any support centrally, to the myriad of voluntary organisations when they are getting together their bid for the Lottery funds?
  (Ms Bush) It is fair to say that a lot of the support comes from the CVS, the Councils Voluntary Service, and the rural community councils. They are more at the front line providing that sort of service, particularly CVSs. In fact, we have heard from a lot of CVSs, in preparing for today, about the help that they give and the problems their beneficiaries have experienced because of the complexity that you have talked about. We have examples of that which we could share with you.

  441. I find it interesting that you are saying about the community councils. Yes, they do help particular voluntary organisations, but you will be aware that there are a lot that do not have contact with those organisations that you have just mentioned; that are just a tiny community voluntary organisation. They are not even aware where to go for help but they do know about you. But you do not offer any pathway or any support? Is that what you are saying?
  (Mr Etherington) If community groups approached us through a helpline—we take about 15,000 calls a year—we would refer them to a local organisation to give them help. Often the help that they need can be provided by funding advisers in the localities. It is true to say also that some local authorities have been extremely helpful to community groups as well. More and more community groups are being asked to become engaged in a variety of funding programmes, which include Lottery funding. In those circumstances, they will often turn to any advice they can get. We would tend to refer back locally if they approached us because principally it is the only way we can cope with the demand if there were hundreds or thousands of community organisations. But what you will often find, of course, is that the actual weight of applying for and accounting for funds of this nature, particularly some of the large partnership funding programmes, they do in themselves dissuade community organisations. There is a slight paradox that people want community organisations in, but the actual cost of the transaction is so high that they just will not do it.

  442. I am glad you have made that point because I have to say that from my point of view—and Mr Buse is nodding his head emphatically—the real crux of this issue is that we all want the money to go to the little community groups but it is impossible.
  (Mr Buse) It is a very strange irony, yes. The people in most need are frequently the most difficult to help and to get to. One of the issues that we would like to explore would be the question that many of these grants are for discrete projects. With organisations that have structures and processes to submit projects, that is a relatively easy task. With a group where it needs to come together to start with, to get to the stage where it is discussing a project, then what we are engaging in, in that situation, is capacity raising. Engaging with a community in self-help. To date it has been quite difficult for the Charities Lottery Board to extend that level of expertise and that level of help into those very groups that you have identified, yes.

  443. When the National Lottery distribution bodies were in front of us just a little while ago, they made the point that they tried to get to smaller groups, and you are saying that they have been a little more successful. Derek Casey from Sport England said that they hold regional surgeries, particularly interfacing with the voluntary sector, such as yourselves, and the Charities Distribution Board has regional offices. Is that enough though? Is there more you would like to see those bodies doing? If you are talking about regions, if you take my region of the south west, their regional office will be in Bristol, which is not much help for those people in Redruth or those people who live in Mitcheldean in Gloucestershire.
  (Mr Buse) The evidence coming forward from our members begins to describe several areas we would argue that need a spotlight. One of them would be that it not always clear why a bid is being turned down. There are one or two examples that are deeply disturbing, when apparently the goal posts move part way through the process. You are turned down on the first count for one reason and that reason is addressed, and then all of a sudden there is another reason put forward. So there are real concerns about that. Helen is spot-on when she said there were concerns about sustainability. Many of these projects, on the face of it, are funded for three years. When you are in a large organisation, with a discrete project, that can frequently be a right and meaningful intervention. But when you have to bring a group of people together for the first time, solely to do something real and purposeful, if there is a sense that there is a real chance that it will not go through and expectations are raised; and that the funding, if it comes through, is for three years, and then a huge exposure at the end of three years—in fact, quite a serious concern that no further funding then comes forward—then we would be arguing that for such groups one should be looking at other forms of support over time. This is why loan schemes and endowment funds and local chests of one sort or another begin to support organisations beyond that three-year critical grant phase, because for me it is a little bit like starting up the motor only to see it then stop. The damage to beneficiaries is not so much the charities but the beneficiaries, when they can see their expectations raised and then damaged so severely after a period of three years. So this is also something we would like to see end.

  444. So are you advocating that Lottery funds should be core funded for charities?
  (Mr Buse) We argue that it is immensely damaging for all organisations, and particularly for small organisations, where core funding is not supported to any extent which enables that capacity to be raised. We feel that if you bid through two or three or four different grant makers, all of whom contribute nothing towards core costs, then you risk damaging the underlying effectiveness of the organisation. You are then reliant on public giving. If public giving becomes volatile, you can put your core purpose at risk, yes.
  (Ms Bolton) There is a real problem as well, where Lottery distributors are not recognising that when an organisation develops a project, that will increase its core costs. There are examples of distributors saying, "Okay, so this very large project will mean that you will need extra finance officer capacity, but we are not prepared to fund it." That is a really difficult issue for voluntary organisations. They are being encouraged to develop projects to get access to funding but it is eroding their core, so they are finding it very difficult to maintain these projects. I think that is another point which is very important in relation to core costs.

  445. Since you are predominantly dealing with small community groups, one of the things which we think is so good about our Lottery system here, as opposed to the ones we saw in the United States, is that we have this identification with the projects locally. You can wrap your arms round something that you have done very locally. There is also a concern that some constituencies—mine is one—where my constituents are putting more into the Lottery then they get out. How would you view the proposal that maybe 20 per cent of all the Lottery funds go to a community chest? For, say, the Forest of Dean, 20 per cent of what my people put into it goes back, which goes to community groups, such as those groups that you represent, for maybe their core funding through the Lottery. How would you view that?
  (Mr Buse) It is highly supportive. Helen can fill in some of the detail.
  (Ms Bush) We would certainly support the development of community giving and a greater delegation for giving to the local level, particularly using the expertise of existing grant given to do that. So, yes, in that sense.
  (Mr Etherington) We have also been rather attracted to the idea of community endowments for the poorest areas. There are examples that already exist, which are not funded by the Lottery but by other means. The Isle of Dogs and in the north east, where there have been significant endowments created for local communities—often very poor communities—where people from those communities actually play a part in engaging in discussions about distribution. I am rather attracted to the idea of the Lottery boards being able to endow for community benefit. Perhaps all of them because, in a sense, they all deal with slightly different policy areas, coming together to endow local communities with funds. Obviously they would need expertise. They would need to bring in people able to manage those funds. But I have always been attracted to empowering people locally in poor communities by giving them a source of cash that was theirs to control.

Mr Maxton

  446. One of the problems in this area is: what is a charity? Are you happy with the definition of charity?
  (Mr Etherington) The Scottish are obviously looking at this because they are looking at redefining their charity law. The law, as it stands, is very complex. We are, ourselves, bringing forward proposals next year to look at whether any changes could be made in charity law but Margaret is our resident expert on charity law, so perhaps she could bring us more up-to-date on that.
  (Ms Bolton) In terms of access to Lottery funding, who is eligible?

  447. It is very difficult but I think I am right in saying that Eton is a registered charity, but I do not think many of us would consider giving very willingly to that particular charity.
  (Ms Bolton) As Stuart said, we have been working on this issue. We have been reviewing the law on charitable status. Obviously the charitable status of public schools is an issue which has come up. At the moment, our thinking is very much along the lines that the law on charitable status needs to realign itself more closely with public benefit. That public benefit needs to be more at the centre. That applications for charitable status should in the future be looked at in that light. However, I should say that we are at quite an early stage. We are developing proposals and we need to consult our constituency about them.
  (Mr Etherington) If I may just say on the definition of charity, the NLCB use a wider definition than charity in distributing money. That is helpful. I suppose one of the things that might be helpful to us is if you could encourage your colleagues on the Home Affairs Select Committee to have a look at charity law at an appropriate time. We might find we could look at this more.

  448. Derek Casey from Sport England was saying that he would like to see many more sports bodies being giving charitable status because that would allow them to claim back the 17½ per cent VAT they pay, including on Lottery funding. It would then give more money to sport.
  (Mr Etherington) That is true. The irrecoverable VAT burden on charities is pretty well documented. It is now about £400 million a year. Whilst the tax review on charitable giving was extremely welcome, it did not deal with the tax on spending that charities face.

  449. Anyway, that is not really the issue. Well, it is, because it makes a difference as to how the Lottery give money—to some extent anyway. Can I switch a little bit. Obviously charities just do not benefit from the National Lottery Charities Board. They benefit right across the whole area. Are you happy with what you might term as charities: that the co-operation between the various giving bodies is sufficient? Obviously the Paralympics is a very good example of what, in normal terms, would be considered as a charitable giving, if you like, but in fact was funded from the Sports Council, not from the National Lottery Charities Board. Do you think there is insufficient co-operation between those givers on this?
  (Ms Bush) It is fair to say that things like the Awards for All scheme show very good levels of collaboration between boards. Certainly small charities that we deal with have really welcomed the Awards for All scheme and sing its praises. But we would like to see more of that collaboration going on. We have also had some concerns over the collaboration between the New Opportunities Fund and Charities Board. Our members tell us that there are still confusions and that projects are falling between the two boards. Maybe they could work more closely together.

  450. Do you think there is some argument for working out some form of single application; so that you have one application form which would go to three or four of the distributing boards for money, rather than simply being a matter of sending out applications to three or four?
  (Ms Bush) The Awards for All scheme is a good example where that has already been achieved. Some of our members say it is difficult for their beneficiaries to access funds from boards other than the Charities Board. It may help if the guidelines were more unified and the application forms were unified across the different distributors.

  451. Will the disappearance of the Millennium Commission make a difference to that? That is yet one more board that people are asking for money from.
  (Mr Etherington) It might be helpful if the money was equally distributed between the boards.
  (Mr Buse) There is just one point which I had hoped Helen might have addressed when that question was asked, because the guidance given by the different boards is very different, as well as the application form. The guidance given by the New Opportunities Fund (I think I am right in saying) runs on 26 pages.
  (Ms Bush) The policy directions.
  (Mr Buse) Yes, the policy directions. We were wondering whether there is something beyond the application form that could also be simplified amongst the various bodies.

  452. May I ask you, you have talked about the problems that smaller community bodies have in getting funds. To what extent are you, yourself, regionalised and do you, yourself, provide expertise to organisations applying for money?
  (Mr Etherington) We have 1,700 members. We do not have a regional structure ourselves, simply because we do not have the money to do it. This is quite an expensive option for us. But what we do have is pretty good ways of communicating with our members. Many of our members—I would guess, around 6 to 700—are umbrella organisations themselves, like us, so they pass on the information. For example, we have about 200 councils of voluntary service in membership of NCVO. Therefore, we would tell them what was going on; what changes were happening in policy. They would tend to use that information to advise their own members. It is quite difficult to estimate how many organisations NCVO's advice ultimately cascades down to, but it cannot be short of 10,000.

  453. Do you do anything to encourage some of your members, who have been successful, to offer their assistance to others who maybe are struggling?
  (Mr Etherington) I do not think there is enough of that because it is a competitive market that they are in. Therefore, they want to make sure that they get the funds. There are some examples of larger charities assisting smaller charities and we try to encourage that. We do quite a lot of joint working together. But it is not that common because they are all after a relatively small pool of funds.

  454. I know that you carry your charitable work into your leisure activities as well, because you support Surrey County Cricket Club.
  (Mr Etherington) I do. You mean the county champions for the last two years!


  455. Thank you very much indeed. The perspective you have given us is very important indeed. Thank you.
  (Mr Buse) Could I make one last point. I know that Helen, in particular, has gone to enormous lengths in talking to a host of our members who have come forward with some absolutely wonderful case studies. If you would allow us to put those forward after the meeting I think they would be helpful.

  Chairman: Of course, absolutely. Thank you.

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