Conclusions and recommendations
1. Funding to the voluntary sector represents
less than 1% of central government expenditure. Only
limited progress has been made in increasing the sector's involvement
in delivering government programmes, although it is often well
placed to deliver public services to hard to reach groups in particular.
2. Voluntary sector organisations are often
subject to greater scrutiny and monitoring processes than private
sector providers. Funding may be received
late, and contracts are often subject to annual renewal. The sustainability
of the sector in delivering public services is dependent on departments
applying fair funding practices.
3. The Home Office's Public Service Agreement
target to achieve a 5% increase in the volume of public services
provided through the sector by 2006 is likely to be met but represents
only a limited challenge. The Home Office
and the Treasury should set a revised target beyond 2006 which
provides a real incentive to departments to increase their engagement
with the sector. The Home Office should agree supporting targets
with individual departments, and timescales for implementation.
4. Little hard data exists on how funding
is distributed between voluntary sector organisations of different
sizes, by region or demographically. The
Home Office should establish a proper monitoring and reporting
framework with departments to collect such data. It should then
evaluate such data to ascertain, for example, that new organisations
are not deterred from entering the market, and that the poorest
communities are not disadvantaged by the way funding is distributed,
programmes constructed or targeted, or by the absence of active
VSOs in some communities.
5. Issuing guidance to departments has had
limited success to date. The Treasury
and the Home Office should put more emphasis on practical support
and incentives to enhance skills across departments in dealing
with the voluntary sector. In particular, the Treasury, the Home
Office and Office of Government Commerce should establish a centre
of expertise in voluntary sector funding to make available expert
advice to funders across departments, and in particular to support
funders who may be too small to build their own professional capacity.
6. Application and monitoring procedures can
be unnecessarily burdensome for voluntary sector organisations.
The Treasury and the Home Office should
work with departments to promote the concept of a lead funder
and, in particular, to consolidate funding streams. Such an approach
would also generate administrative efficiencies across government.
7. Annual arrangements for funding services
delivered by voluntary sector organisations are inefficient for
departments and increase risks and uncertainty for voluntary sector
organisations, which are likely to be reflected in a higher price
for the services provided. The Treasury
should make clear to departments that longer term funding arrangements
are acceptable where value for money can be demonstrated, for
example by contracting over a three year term where there is an
intention to provide a service for longer than a year.
8. Voluntary sector organisations often receive
funding late from departments, requiring them to use their other
resources to finance services initially, which presents particular
difficulties for smaller organisations.
Contract renewals are often not formalised until after the renewal
date, diverting resources from the front line to negotiations
with departmental officials and creating uncertainty of employment
for those delivering the service. Departments should maintain
contract registers to prompt timely renegotiation of contracts
where renewal is appropriate. Timing of payments should be agreed
as part of the contractual arrangements and such commitments should
be met.
9. Monitoring, control and audit of the voluntary
sector can be more rigorous than that applied to private sector
suppliers. For example, more detailed
data on costs may be sought. The sector should expect to account
for public monies received, but monitoring should be proportionate
to the level of funding provided as excessive procedures undermine
value for money.
10. The Home Office has a lead role in promoting
good practice in engaging with the voluntary sector and yet some
72% of its own funding contracts are for less than one year.
The Home Office should undertake a review of its own engagement
with the sector across the whole department and implement its
own and the Treasury's good practice procedures.
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