As part of its inquiry, the Committee held a roundtable event on 23 November 2016 in the Palace of Westminster with representatives of a range of small charities.
The following Members took part in the roundtable:
Baroness Barker, Lord Bichard, Lord Foulkes of Cumnock, Lord Harries of Pentregarth, Lord Lupton, Baroness Pitkeathley, Lord Rooker and Baroness Scott of Needham Market.
They were accompanied by the following House of Lords staff: Matt Korris (Clerk), Simon Keal (Policy Analyst), and Gabrielle Longdin (Committee Assistant). Also attending were Rosie Chapman (Specialist Adviser) and Natasha Hallet and Tara Jane Kerpens Lee from the Houses of Parliament Outreach and Engagement team.
The Committee met with:
The Chairman introduced the roundtable event, explaining to participants the purpose of the inquiry and the format for the session.
The participants were split into three random groups and were joined by two or three Members of the Committee. Each group was asked to discuss questions covering three themes and then to feed back to the rest of the participants. The three key themes for discussion were funding and accountability, support and training, and governance and trustees. The following reflects the points made by participants in the discussions.
There was discussion among participants about the wide variety of funding sources that charities rely upon. The Committee heard from small charities whose funding sources included personal donations, endowments, short-term grants, and commissioned work. One participant had set up a Community Interest Company (CIC) with other charities, with support from the Clinical Commissioning Group (CCG). It was noted that fundraising could sometimes be a risky activity in the context of limited resources because it was not always clear which activities would pay off.
The Committee was told that commissioning was at times too restrictive and often based on rolling annual funding, which made it hard for charities to plan ahead and be sustainable. Decisions on commissioning were also often awarded to the lowest bidder, with no assessment of quality. Commissioning decisions often meant that local experience and input was lost when local organisations were outbid by larger external organisations. Where this happened, local ‘organic’ networks may disappear in the lifetime of the contract. Commissioning had become ‘commoditised’ and the level of reporting required could be excessive. Payment by Results contracts were about securing ‘quick wins’ rather than the interests of individuals.
A participant highlighted that, in many cases, individual donations amounted to a small percentage of a charity’s funding and suggested that tax changes could encourage further donations.
The Committee heard about changes in funders’ requirements, with the need to measure the impact of charities’ work being more prominent. This was largely seen as a good thing, however the Committee was told that it was often difficult for charities to demonstrate impact and outcomes for a number of reasons. In particular, it could be challenging for some charities to demonstrate impact and outcomes in the short term, when success might need to be measured over a longer period of time, for example five or ten years.
The Committee was told that charities with limited resources were disadvantaged when it came to funding, particularly when applying for commissioned work. Small charities with less unrestricted funding found it harder to apply and there was risk involved in investing time, effort and money into applications. Small charities also found it difficult to compete on costs with larger charities when bidding. The Committee heard that more recognition was needed for core costs funding. Small charities needed a secure base of funding and money translated into security. Participants agreed that there was sometimes reliance on in-kind support. With the increasing involvement of charities in service delivery and income generation, a different set of skills were required.
Innovation was another key topic discussed. The Committee heard that small charities were often forced to innovate due to cost pressures and one participant suggested that an innovation fund was needed to support this. The Committee was told that funders would ask for innovation and, as a result, charities were incorporating this into their bids to increase their chances of success, even though innovation was not always necessary. It was emphasised that smaller charities had the capacity to innovate and were often at the forefront of innovation, and that it should not be seen as a separate activity from the core functions of a charity.
The Committee heard that support from the Charity Commission was limited and that they were considered a regulator, not an enabler. Whilst it was recognised that some of the guidance provided by the Charity Commission was helpful, in relation to compliance issues and information for trustees, the website was difficult to navigate, they often took a ‘one size fits all’ approach, and there was nervousness about contacting the Commission for support in case this impacted negatively on the charity. It was commented that Charity Commission advice was often more helpful for trustees than for staff.
Participants explained that limited resources amongst small charities meant that it was difficult to set aside money for training, which was both time-consuming and costly. The Committee was told that small charities struggled to receive specialist, professional, expert advice because of their limited budget, yet small charities were often being unfairly held to the same standards as large charities and businesses. A participant also explained that relying on support from Councils for Voluntary Service (CVSs) and membership organisations such as the National Council for Voluntary Organisations (NCVO) was challenging, because they themselves were dealing with similar issues that the small charities seeking advice were struggling with. It was argued that while the likes of NCVO and Association of Chief Executives of Voluntary Organisations (ACEVO) were useful, there could be a more systematic support structure, particularly given the reliance of government on charities to provide services. A ‘trade organisation’ was needed rather than an umbrella group.
It was noted that while London had a relatively good support network, this was not the case elsewhere in the country. CVS support was also patchy. There was agreement that specific advice was extremely costly, for example support for human resources-related issues.
The Committee heard that even when resources were available for training, there were very few options to choose from, with many training schemes no longer being provided. Participants highlighted that the London network of Home-Starts had been useful, but Home-Start UK no longer provided the training offered previously and CVS support was limited to start-ups only.
The Committee was told that finance, legal, marketing and digital were all important areas where support and training were needed and that financial support for boards and chairs was equally absent. High quality finance and IT support was necessary but not always available at short notice. A number of pro bono organisations were acknowledged as providing support, including Pilotlight and Lloyds Bank Foundation. Lloyds in particular was generous with mentoring opportunities such as matching with bank managers. A participant suggested that an umbrella body for training and support should be set up to tackle the issue.
The Committee heard that trustees often remained in post for long periods of time, which could lead to complacency and a lack of new ideas. There was agreement amongst some participants that having a limit on the time trustees could serve would be beneficial. One participant suggested that there should be fixed terms of two or three years and that trustees should serve for a maximum of two terms, unless under exceptional circumstances where re-appointment was acceptable. One participant explained the innovative approach they had taken to their board of trustees, with the role of Chairman on rotation.
The Committee heard that it was sometimes difficult to find suitable trustees and that interest in becoming a trustee was often lacking. The average age of trustees was relatively high. Many participants agreed that the DBS checks were time-consuming and demanding, with over 20 pages to complete, which put people off considering the role. There was also agreement that it was difficult to encourage younger people to consider taking on a trustee role, not least because they lacked the time to do so. Interest could be improved by demonstrating the value and benefit of taking on such a role, in terms of future career prospects. One participant felt that the risk of having younger trustees was that they did not tend to have built up the skills, experience and contacts needed for the role.
The Committee heard that training and development of trustees needed to be improved. In many cases, trustees did not get an induction and there was reluctance to invest in trustee and chair development because it was not considered ‘frontline’ spending for the charity. In some cases, trustees were unaware of what their responsibilities were, and were more interested in their cause than in governance, which imposed limits on what they were willing to do. A participant noted that smaller charities were dependent on their trustees being very involved, but that often when a charity developed and grew, longstanding trustees struggled to adapt to the changes. The Committee heard that skills audits might be beneficial to identify areas for improvement.