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Was the £100m Transition Fund due to be allocated to the sector anyway?

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The dust has settled a little following the comprehensive spending review, and it may be time to take a look at whether the Office of Civil Society did well or badly out of it.

At first glance, it looks like it suffered worse than average. Three years ago, when it was the Office of the Third Sector, the annual spend was £167m. Now it’s £117m, which is a drop of 30 per cent. After inflation, it’s more like 36 per cent.

However there are two other factors to think about.

One is the £100m Transition Fund.

This has been presented as new money – a bonus designed to soften the blow for charities losing government contract income – so at first glance it looks as if that shouldn’t be counted in the general OCS budget.

However, if that were the case, the general budget for the OCS would drop to £92.25m a year. This is a real-term drop of 50 per cent, twice as much as most departments.

A more likely scenario is that the £100m Transition Fund was money due to be allocated to the sector anyway, and has just been given a new name.

This looks similar to the time, back in the days when it was the OTS, the department pulled together various bits of existing funding and underspend, slapped the name Hardship Fund on it, and presented it as  cash that was “new to the sector”.

Stephen Bubb called the Transition Fund “a rabbit out of the hat”, but it looks like it was the sector’s rabbit in the first place. The OCS, employing the smoke and mirrors Nick Hurd abhorred in the Labour government, has skirted around that fact.

This isn’t bonus money. It shouldn’t be considered a replacement for either the £100m the sector’s lost from transitional relief, or the £143m extra the sector will have to pay in VAT from the start of next year. Those two rather fat rabbits have disappeared into the government pot, and are going to stay there.

The second confounding factor is the youth volunteering budget – and here the situation begins to look a bit more hopeful.
The previous government spent £117m in three years through youth volunteering charity v. Now, however, there’s a fresh wind blowing through that sector, and it’s blowing towards the government’s flagship programme, National Citizen Service.

The OCS will pay an initial £50m for two NCS pilots, but thereafter the programme will be transferred to the Department for Education. It looks likely that little youth volunteering money will be spent by the OCS. Some back-of-an-envelope calculations suggest this will save the department £80m a year.

So where does this leave us overall?

If you assume that the Transition Fund should be counted as part of the general budget, then discount the youth volunteering spend, then you discover the OCS has lost around a quarter of its budget – just like everyone else.
 
 

Nice transition fund – what about the rest?

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There are a couple of striking things about the new hundred-million-pound Transition Fund for the voluntary sector, announced in the yesterday comprehensive spending review yesterday.

The first is that it happened at all, given the overall 19 per cent cut in public spending over the next four years. The civil society minister, Nick Hurd, has done well to secure it.

The second is that the sum is more than twice as large as the £40.5m the last government managed to find for the third sector action plan, designed to help the sector through the recession at the start of 2009.

The amount might be small in the overall scale of things, but it is no doubt partly intended as a symbol of the government’s often-stated commitment to the big society and the role in envisages for the sector.

Other figures remain more obscure. The Office for Civil Society has been given a budget of £470m for the next four years. This compares to approximately £500m that the last government allocated to it for the three years 2008-11.

The extent to which the figures are comparable will depend partly on the value of OCS youth volunteering functions that will eventually be transferred to the Department for Education. This will no doubt emerge in the coming days. But it is clear that there will have been cuts, which is no surprise.

Now the overall figure is set, we need to hear from the OCS how much it is going to spend on flagship big society programmes like Community First, the National Citizen Service and match funding for local endowments.

Hand-holding by the Office For Civil Society

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The Office for Civil Society issued two short documents last week. There was a consultation about how it should take forward capacity-building in the sector, and a policy statement about building a stronger civil society.

Does the policy document add greatly to the sum of human knowledge? Not really. It was mostly a recapitulation of themes and programmes that have already been promulgated.

So perhaps its appearance had more to do with timing.
It came just after the announcement that Capacitybuilders and two other sector quangos were being abolished, and just before this week’s comprehensive spending review, widely perceived as a sort of Armageddon.
It reads, in fact, like an exercise in hand-holding – the government trying to tell the sector that, despite the knocks and the cuts, the Office for Civil Society remains committed to working with the sector.

The document also contains a welcome decision and an interesting new idea. The decision – subject to the spending review – is that contributions to local endowments will continue to be match-funded by the government. This was a popular aspect of the last administration’s approach, and Nick Hurd, the minister for civil society, has done well to keep it.

The new idea is to set up local community funds and arrange for people to contribute to them with small voluntary surcharges on local purchases. There have been experiments with this, some of which have brought difficulties about how the ‘voluntary’ bit of the deal is organised. It will be instructive to see how it all develops.

The consultation on capacity-building has its moments too – especially the final few sentences, which make you really sit up and take notice. They are a beautifully logical description of how capacity-building in the sector should work.
But cynics might ask whether this is akin to all the beautifully logical descriptions of how the benefits system should work, all of which have so far been thwarted by the messy practicalities of real life.

Stereotyping beneficiaries can have adverse consequences, but let’s not get over-sensitive

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So, 57 per cent of Third Sector readers do not agree that it is acceptable to stereotype beneficiaries when making fundraising appeals, according to last week’s online poll.

And I have to say that I agree with this majority – to a point.

First of all, I must say something in agreement with the findings of the recent Centre of Charitable Giving and Philanthropy research, which found that homeless people don’t mind being stereotyped in fundraising campaigns if it leads to an increase in donations.

We must not let our terrified-to-offend culture scare us away from ever using any effective imagery which could help generate much-needed funds for needy causes.

It is always important to remember that without any funds, charities would not exist or be able to help anyone.

At the same time, there surely has to be limit with something like this.

Just because the people you are stereotyping say they do not mind the use of that imagery, it does not automatically mean that there are no other adverse consequences to putting such ideas and typecasts into the public domain.

Reinforcing stereotypes can have some far-reaching ramifications in our society far beyond initially causing offence to the group directly involved.

Furthermore, using stereotypical imagery in fundraising campaigns can be a very easy option. We should be driving ourselves to be far more creative in our efforts to fundraise than simply regurgitating the obvious for each campaign.

What it is about is making sensible decisions and weighing up each image according to its potential negative and positive consequences. Sometimes stereotyping will be appropriate, other times it will simply be unnecessary.

But, let’s not get over-sensitive.

There is absolutely no point in dancing around this to the point where fundraising campaigns, which are supposed to emotionally draw people into donating funds, become so boring and plain that would-be donors barely give them a second glance, let alone part with their hard-earned cash because of them.

Does every little really help?

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There has been a lot of buzz on Twitter this past week about a website which offers the chance to donate small amounts of change to the charities of your choice.
 
Ploink!, which launched last year, is free to join and lets you donate as little or as much as you like to up to three of your favourite charities. Money is donated once your virtual ‘piggy bank’ has at least 99 pence in it.  The site also has an ‘auto-plonk’ feature that allows you to give change daily.
 
Several people I have mentioned the site to have been sceptical about how profitable it could be for Ploink or the charities.

The point is, though, that if everybody signed up and gave one penny a day it could make a real difference. And even if they didn’t, isn’t the Tesco mantra right when they say ‘every little helps’?

Website founder Marc Simpson has created the site based on this belief and says: ‘If we are talking about a big society and needing to take more responsibility, Ploink allows everyone to do their bit. If one million people gave 1p a day for a year, that’s £3,650,000.’

So far, 240 charities have registered on the site, which demonstrates that charities are also receptive to the idea. Each charity can put information about its services on the site, along with YouTube videos showcasing its work and raising awareness of what it does, which again is hardly a bad thing.
 
And if you can’t find the charity you want, Ploink promises to approach the organisation for you to encourage them to get involved.
 
Given the current financial situation, some charities may find donations dip as the public tightens its belt. But as momentum around this new donation site gathers, does 1p every day, or even only now and then, really seem like too much to give?

 

Why aren’t there more social entrepreneurs?

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At a social investment conference last week, a number of lenders and intermediaries stood up to say there aren’t enough good businesses in the sector to accommodate all the people wanting to lend them money.

They accepted there were good reasons for this: most social businesses are relatively new, and will take longer to grow their governance structures, financing strategies, and media relations, than it does to secure a promise of future cash.

Another obvious explanation, though, is a shortage of would-be social entrepreneurs.

Perhaps they do not like the risk-reward ratio. Social entrepreneurs often have to put a lot of their own time, and sometimes their own money, into their businesses, but don’t get much out at the end of it.

A regular entrepreneur, in exchange for the risk he takes, may get really, really rich. A social entrepreneur may get to be the boss, and have his name on the door, but he gets little else if it goes right, and he still loses the same amount if it goes wrong.

This same lack of financial reward for the people involved also goes some way to explaining the relatively small numbr of mergers among charities and social enterprises. Many mergers in the private sector are driven by the financial ambition of the major shareholders, the senior staff and the non-executive board. A merger means they get rich.

In the third sector, even if everything goes well, all the top people get is a lot of work. If it goes wrong, they get the blame. Whether it goes well or badly, many of them will end up out of a job.

Take the recent example of Craig Dearden-Phillips, who founded Speaking Up, a charity and social enterprise which recently merged with Advocacy Partners.

Dearden-Phillips put in loads of work to build the business, and was rewarded with its success and the recognition of his peers. But when the merger went ahead, he walked away with only a good reputation and a lot of time on his hands. When he began a new business, he started from scratch, with no great personal resources.

Of course, he knew what he signed up for, and seems happy with his choice. And many would argue that all social entrepreneurs be happy with only the numinous rewards he received.

It’s a worthy belief. But it’s a bit much to ask people, if they’re forgoing the chance to get wealthy, to risk their financial security to build a business they don’t own. Or, having done so, to selflessly walk away when the time is right. Some people with excellent ideas will inevitably be dissuaded by these high standards.

So how to get around this?

One school of thought says the sector should just take a much more relaxed approach to personal profit on behalf of a social entrepreneur. Another, which I prefer, says existing sector bodies should step in to remove some of the risk: provide more start-up support for people with good ideas, and more funding for organisations that want to merge.

Cameron needs to start getting the party’s rank and file excited about the big society

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The big society was the big theme of the fringe events at the Conservative Party conference this year.
 
All kinds of groups managed to shoehorn the phrase into their events: health charities, think tanks, social enterprise groups, local government bodies, housing firms and welfare-to-work providers all used the magic words. So did Starbucks, by hosting a debate on big brands and the big society.
 
David Cameron’s speech to the conference gave the big society a similar prominence. I counted nine uses of it.
 
But the reaction from the audience suggested party members were less enthusiastic about the idea than the Prime Minister was.
 
Cameron had, as expected, received loud applause for his statements on foreign policy, the deficit, Labour and Europe. But his big society announcements, including a Citizen University and International Citizen Service (which were among a very small number of new policy announcements in the speech) got a lukewarm response.
 
Granted, those statements were not designed to be rabble-rousing in the same way that statements on the Lockerbie bomber and Labour’s failings were. But they seemed to pass by unnoticed, with quiet, polite applause at best.
 
They seemed to have been written into the speech as padding, or – worse – a way of bringing in some light, happy policy news when the spending review was preventing the government from announcing anything else.
 
The big society was undoubtedly popular among the policy types, the think tanks and the lobbyists at the conference. But it’s not about them: the philosophy is based on grass-roots, local activists getting passionate about an issue and taking action. If it’s going to catch on, Cameron needs to start getting the party’s rank and file excited.
 

Could lifetime legacies fit the bill if Gift Aid reform fails to satisfy?

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In the very near future, a group of third sector bodies will put forward a series of recommendations to the Treasury for Gift Aid reform.

Sadly, these look likely to be relatively modest, compared with what sector figures once hoped to achieve. And as a result, some sector figures are looking around for other models they can use to improve tax reliefs for giving, and it looks like lifetime legacies might fit the bill.

The lifetime legacy is a type of giving that has existed for several decades in the US. A donor decides he wants to leave something to charity, but is worried about income when still alive. So he bequeaths the capital, but keeps some rights to the income. If he gives cash, he receives income from it, typically 5 per cent a year. If he gives property, then he can carry on living there. In either case, there’s no tax liability to the donor or the charity.

It’s most commonly given through something known as a charitable remainder trust, and it’s now simplified to the extent that you can download a document, fill it out, and send it off.

Donors surveyed here seem keen on it. And charities here like it because it offers certainty of income, and an asset they can borrow against. A new campaign has attracted a wide range of support among legal firms and umbrella bodies. And there’s likely to be little cost to the exchequer.

However it has proved impossible to introduce the necessary legislation here – essentially, campaigners say, because of a “can’t-do” attitude on the part of HMRC.

It sounds like a familiar tale. This idea would take some working up from civil servants, some legal expertise, and some time and effort from civil servants. It presents a couple of potential problems, including the potential for abuse, which, the US proves, could successfully be ironed out. All of this is doable. But little is happening.

It’s essentially a question of political will. If any of the big guns in the cabinet takes a liking to the idea, it will go forward. Otherwise, no way José.

The sector is already mustering its considerable powers of lobbying to make it happen. It sounds a concept worth backing.

Ranking charities – interesting, but unrealistic.

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I attended Martin Brookes’ RSA lecture last night, in which he called for someone – I’m not entirely sure who – to look into developing a ranking system for charities according to how much they benefit society. The idea is to inform people’s decisions on their charitable giving.

To me it was clearly a very interesting debate, but it can only really be taken seriously on an intellectual level.

The practical implications of putting such a list in place boggle the mind, and in my view render the whole idea unrealistic.

First of all – and I am in agreement with Stephen Bubb on this – who on earth would have the moral authority to put together such a list?

Secondly, the needs of our society and environment are so fluid that this list would need to be continually updated, almost on a daily basis, if it was ever going to reflect accurately which organisations are the most beneficial at any time.

And finally, where is the cut-off point for something like this?

If, for example, you decide that giving money to a charity which helps starving children is far more worthwhile than giving it to a donkey sanctuary, at what point is it all right to start giving a proportion of the available funds to the donkeys rather than the next starving child?

This is a question which I fear can only really have one answer: when there are no starving children left to help.

I would obviously love there to be no starving children in the world, but is it realistic that this is ever going to be the case? And is Brookes saying that every other slightly less worthy cause should be abandoned until it is?

I would never judge anyone who donates to charity. As Brookes himself pointed out in his speech last night, the number of people in our society who donate to charity is steadily falling.

To my mind any donation to a charity, however worthy or unworthy some may believe it is compared to another cause, is to be applauded, and it is just not a good idea to go down the dangerous path of finding flaws in it.

The good news is that there are many charities out there which do fight very obviously ‘worthy’ causes and are very successful in their fundraising. They are some of the biggest and most generously funded charities in our society.

So in my view there’s no need for this proposal from Brookes .
 
 

Ed: isn’t he our man?

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Many people in the voluntary sector will feel a small glow of satisfaction at the election of Ed Miliband as Labour leader, no matter what they think of his politics, the mode of his election or the fraternal ‘psychodrama’.

His first job in government was at the then Office of the Third Sector, a new mini-department created in the Cabinet Office by Tony Blair in 2006. He made a success of it and it boosted his upward trajectory. So there is a small sense of ‘we made him’ – of ‘he’s our man.’ In a fit of boyish enthusiasm, he once described Third Sector as his bible.

Of course, he now has a much wider constituency and the huge challenge of trying to take the party beyond both Old and New Labour. Bigger policy questions will be on his mind, not least the economy and the deficit.

But an important part of opposing the government will be developing a cogent response to David Cameron’s big society agenda, which is closely bound to the role of the voluntary sector. We can count on the new leader to realise that and keep the needs of the sector in mind.

So perhaps the most important next step is for him to appoint a strong shadow civil society minister to start challenging Nick Hurd, who has had a pretty clear run so far. It’s time for proper opposition politics to begin again, not least in the sector’s affairs.