How sustainable are charity contracts for public services?
Lots of chat about the role of the VCS sector in delivering rural services at the RSN conference this week. This article raises some interesting areas for debate in that context. It tells us:
Think of it as a £2bn reality check. That’s probably what charities have lost over the past five or six years in terms of reduced net income from contracts for delivering public services. It’s a far cry from some of the giddy growth forecasts that were still being made even as austerity kicked in. As recently as 2011 Tory peer and sometime government “big society” adviser Nat Wei was predicting that the value of payment-by-results contracts to voluntary organisations could rise to £60bn a year, dwarfing any revenue lost through cuts in conventional funding. As it is, charities’ total revenue from national and local government bodies is at its lowest level since 2007-08. According to voluntary sector umbrella body NCVO it stood at £13.3bn in 2012-13, with income from contracts and fees accounting for 83% of that. This figure is down £1.7bn from 2009-10. The corresponding preliminary estimate for 2013-14 is £12.9bn total revenue, pointing to a £2bn drop in contract and fee income since 2009-10. When you combine that with the high-profile collapse of Kids Company, and the far lower-profile but arguably more alarming closure of adoption and fostering charity BAAF, it seems clear that the sustainability of the contracting model is under strain.