As part of its inquiry, the Committee visited Manchester on 16 November 2016 to meet with representatives from the Greater Manchester Combined Authority (GMCA) and the Greater Manchester Centre for Voluntary Organisation (GMCVO), and to hold a roundtable with small charities.
The following Members took part in the visit:
Baroness Gale, Baroness Pitkeathley and Lord Rooker.
They were accompanied by the following House of Lords staff: Matt Korris (Clerk) and Simon Keal (Policy Analyst).
The Committee met with:
The GMCA noted the very diverse nature of the voluntary and community sector, increased further with the growth of Community Interest Companies (CICs) and social enterprises, and how different their needs were.
The GMCA noted the tensions in local government relations with the charity sector around funding cuts. They said that there were growing expectations on the charity sector at the same time as declining resources, and that local authorities were not able to support the sector as much as they had done in the past.
The GMCA representatives said that sustainability was a key issue for the charity sector. They noted the pressure the sector was under and the fact that Citizens Advice Bureaux had been forced to merge across local authority areas.
The Committee was told that there was a changing relationship between the citizen, state and society. While the traditional relationship between charities and local authorities had been a paternalistic one, there was now more of a partnership role and local authorities looked to the voluntary and community sector for creativity and innovation. The GMCA representatives said that they had a partnership group to ensure that the voice of the third sector was heard. They also said that a memorandum of understanding was being drawn up for how GMCA would work with the voluntary sector, on a similar model to a compact.
The GMCA noted that small- and medium-sized charities were nimble, quick to adapt and had an ability to reach communities and engage and motivate people that was really important. The GMCA representatives said that there were lessons for councils in the way that the charity sector worked with people.
The Committee heard about a leadership development programme organised by the GMCA that supported representatives from the charity sector. The GMCA noted that leadership development was usually delivered through and within particular sectors and professions. Their programme sought to deliver it through ‘place’, to join up people working in different sectors in the Greater Manchester area. The programme was funded through the Greater Manchester reform budget and other sources and made all its programme materials open source on the internet. The Committee asked whether charity trustees could apply to be on the programme, and was told that they did not rule out such participation.
The GMCA spoke about their support for volunteers and said that they were looking to encourage the private sector to develop links with the voluntary sector, and share their skills and experience. The Committee heard that some local authorities in the Greater Manchester region, such as Oldham Council, had supported volunteering by allowing employees to take up to three days a year off work to volunteer.
The GMCA said that as public funding had moved from grants to commissioning, it was important to maintain respect for the distinctiveness and voluntary essence of voluntary organisations. They said that this could be achieved through good, transparent commissioning and purchasing and by encouraging charities to come together to win a contract. The Committee was told that Wigan Council was investing more money in their voluntary sector through commissioning processes.
The representatives from the GMCA noted that commissioning could involve jumping through a lot of hoops and that small charities needed support to ensure that they could participate. They suggested that charities might need help with pitching skills and with demonstrating outcomes and impact. The Committee heard about the Society Works scheme in Oldham that worked to support collaboration between charities with, amongst other things, funding, commissioning and procurement opportunities.
The GMCA said that it was important to recognise social value in commissioning and that, while they had a social value policy, they felt that they could still do more. They noted that they had a lot of flexibility in their decision-making through the use of social value considerations in commissioning if they chose to use it.
The GMCA noted that commissioning did not always work for small organisations and that the contract climate mitigated against infrastructure development for the sector. They said that there was still a very important role for grant funding and they had established a £5m community investment fund that they hoped would pay for itself over time.
The Committee heard that some councils, such as Oldham Council, had been able to free up dormant funds to allocate to charitable projects in their areas. Community asset transfers had also taken place in the Greater Manchester area, which had been tricky to navigate but were seen to be worthwhile.
The GMCA emphasised that devolution in Manchester was not just about central and local government but also about the community and the voluntary sector. They noted that it was a significant challenge to make it work, with a lot of territoriality among voluntary sector organisations and individual district councils still responsible for their own budgets and arrangements.
The Committee heard that the local authorities in Greater Manchester were looking to go beyond compact arrangements, and were undertaking more focused work to assist hard to reach groups.
The GMCA said that they had noted increasing difficulty for organisations seeking charitable status and delays in registrations. They noted that it was hard to stop new charities forming that duplicated the work of existing ones, but that it was for charities, not the GMCA, to identify need in the area. The GMCA said they might be able to help existing charities fade away gracefully in some circumstances.
The GMCA explained that on their formation they had inherited a charity—the Greater Manchester Disaster Fund—but had found that the legal rules regarding its structure were very restrictive which had made it difficult to spend the money.
The Committee met with:
The Committee heard that there were around 15,000 charities and voluntary sector organisations in Greater Manchester. The GMCVO said that the sector worked differently in Greater Manchester to other parts of the country, and that there were stronger and more equal relationships with local government and universities in the area, although there continued to be major problems with funding.
The GMCVO said that the voluntary ecosystem across the Greater Manchester region had been affected in different ways by funding reductions in recent years. The areas with a long history and tradition of charitable operation, such as Manchester and Salford, had proved more resilient, while those without such deep roots had not fared as well. The GMCVO noted that small, local charities that had been the “well-kept secrets” of the charity sector were now a bit less secret, as a result of a growing trend towards having an online presence.
The Committee was told that voluntary organisations were often not aware of the dangers of getting involved in public service delivery, where funding was more readily available. The GMCVO said that charities risked losing their strategic expertise and roots in the community by being diverted into public service provision. They said that in cases where charities had been over-exposed to service delivery, and the funding had subsequently been withdrawn, the community connection was often lost and was difficult to rebuild. The GMCVO said that charities should ask themselves the question as to whether they are funding-led or needs-led.
The GMCVO questioned the extent to which commissioners understood community need. They noted that voluntary organisations in Greater Manchester serving black, Asian and minority ethnic (BAME) communities received limited funds, despite the region having a significant BAME population as well as a large proportion of refugees and asylum seekers.
The Committee asked about the extent to which funders required charities to demonstrate their outcomes and impact. The GMCVO said that enthusiastic funders would be happy with whatever they received in terms of demonstrating impact, while sceptical funders would look critically at what they were sent, no matter how detailed it was.
The GMCVO noted that high interest rates deterred charities from engaging with social investment, and that in some cases charitable organisations had taken on unsustainable levels of debt.
The GMCVO noted that, despite having a better relationship with local authorities than elsewhere in the country, the culture of local government was not well adapted to engaging with and partnering the voluntary sector. They said that commissioners rarely consulted properly with communities and tendered for large contracts that did not take sufficient account of the different needs of different areas and were therefore unsuitable for voluntary sector involvement. They noted that the amalgamation of local authorities to form the GMCA had meant that some of the power had been drawn up and away from the more local level of individual authorities and that this could risk weakening relationships between local authorities and the voluntary sector. The GMCVO welcomed the leadership programme run by the GMCA and were keen to see an increase in the number of places offered to voluntary sector representatives.
The Committee heard that devolution in Greater Manchester was still at an early stage. The GMCVO said that they were hopeful that it might bring more funding into the area, and give the region a chance to pursue distinctive policies. They said that the voluntary sector was keen to contribute to a place-based approach.
The Committee asked the GMCVO representatives what they would recommend to help sustain the charity sector on a national level. GMCVO Chief Executive Alex Whinnom responded in writing after the meeting:
“We’ve had a discussion and agree what we want most is for government and politicians to encourage all government departments, local authorities and other public bodies to promote and support small grants and grant programmes for small charities.
“This is a huge issue because so often a grant is the most efficient and effective way to commission an outcome, or to invest in the long term work of a small organisation. Investing in small organisations is in turn often the best and best value way to achieve the outcome and can bring immense added value as well. Yet there is a seemingly unstoppable fashion for intricate tendering and contracting exercises, at larger and larger scales with little consideration given to other commissioning options. This trend is leading to more resources being concentrated in the hands of fewer whilst small charities are still bearing the brunt of increasing need in communities.
“If we had a second bite at the cherry it would be for government and politicians to encourage the public to donate more to the small charities on your doorstep … a shift of only a few percent in public giving in favour of small charities would have an enormous positive impact. It isn’t enough to promote online schemes like Just Giving and so on—smaller organisations can struggle to use them. We need awareness raising that small charities are good deserving causes which can easily be found through local infrastructure organisations and can make a little money go a very long way.”
The Committee met with:
The discussion took place in a roundtable format, with charity representatives divided into small groups to discuss key issues. Three topics were discussed among the groups: innovation, the advice and support available to charities, and funding challenges.
Participants said that charities see innovation as part of their core values, but that there needed to be a stronger national infrastructure to help them innovate.
The Committee heard that charities felt under pressure to demonstrate innovation to potential funders in order to secure funding, and to show that they were different from statutory services, rather than in response to the needs of their beneficiaries. The participants suggested that innovation was usually interpreted by funders as managing with fewer resources, rather than improving services. They also said that there were risks associated with innovating to provide services free at the point of delivery, as replacing paid services could result in a loss of funding.
Participants said that innovation should involve service users and that it should be treated as a journey, with services developed over time in partnership with users.
The Committee also heard that BAME charities in Manchester were particularly focused on innovation. An example was given of one charity’s work on dementia needs in south-Asian communities, undertaken in partnership with the Alzheimer’s Society.
The Committee was told that much of the advice and support available was government-funded through large providers, and that this was not necessarily helpful, as national advice and support schemes did not always work for small charities. The participants suggested that it would be better if such schemes were delivered through GMCVO and their equivalents elsewhere. They said that not all small charities had the capacity to engage with national-level services and that neighbourhood-based training, which was of greater value, was often under-resourced.
The Committee heard that charities were keen to develop expertise, but limited resources meant that it was hard for them to access training. Some participants said that banks had assisted local charities with funding for structured management training.
The participants said that they were unlikely to go to the Charity Commission for advice. They said that the Commission had some good policy documents and other supporting material on its website, but that support from its helpline was limited.
The Committee was told that there had been disproportionate public sector cuts to cities like Greater Manchester, and Payment by Results contracts were having a big impact on some third sector organisations. The participants suggested that the sector would have been hit even harder, were it not for the contribution of the Big Lottery Fund, which offered longer-term funding and supported training and development for charities. They noted that one-year funding was the norm elsewhere, often with very short notice as to whether funding would be renewed or not, which made it hard for charities to plan and give staff certainty about their employment.
The Committee heard that there were unrealistic expectations from funders about the work that charities could do for free and that commissioners were often unwilling to cover charities’ core costs. Participants also said that there was a tendency among commissioners to use the highly-detailed EU tendering and procurement rules even for small amounts of money, which was a significant burden for charities.
Participants said that charities were used as “bid candy” by larger contractors that sought charities’ knowledge of issues, and incorporated them into their bids to help win contracts, but then did not use the charities to actually deliver the services that they won. Alternatively, small charities would be offered subcontracted work on unsustainable terms and would therefore be unable to participate.
A number of participants said they had sought and secured funding from EU sources as UK public funding had decreased. They said that the likely removal of EU funding as a result of Brexit meant that a safety net was disappearing.
The Committee was told that it would be good to have more funders for unpopular causes. Participants said that there were significant areas of unmet need and wider social problems that the charity sector could seek to address if funding was available.
Participants said that social investment was not an option for many charities, as it often required unrealistically high rates of return.