Dilemmas for charity grant-makers

A briefing on public service commissioning from sector consultancy NPC aims to help funders understand their choices in the changing landscape. While grant funding for charities has shrunk over the last decade, contracts have increased £6.5 billion.

Considerations include:

  • Funders may have legitimate concerns that, as the state withdraws from directly providing some statutory services, they will end up substituting for government work, or even subsidising private profit if they support charities who act as sub-contractors to companies.
  • They may also worry about whether a charity’s work could be adversely affected by the shift from grants to contracts. These concerns range from the uncertain volumes of work and unstable income sometimes associated with sub-contracting to the risk of ‘mission drift’ as charities juggle their aims with the demands of contract.
  • Funders should nonetheless make funding decisions based ‘above everything else’ on the social impact achieved by a charity. They should avoid ‘hard and fast’ rules on giving to charities which also deliver government contracts.

The Children’s Society used NPC’s recent Leading Impact conference to announce that the charity has “walked away from millions of pounds worth of lower impact public sector contracts so we can focus on the work we know has the highest impact” to protect the integrity of its charitable mission and to focus on what they do best.

See NPC news release or go to the ‘Times of Change’ download page. The briefing was originally prepared for the trustees of the Henry Smith Charity.