Sustainable Funding and The Big Society

The information below was first sent out as an e-alert to those subscribed to the Sustainable Funding Project's mailing list. To receive future alerts and our newsletter visit www.ncvo-vol.org.uk/sfp/preferences.

We've been asked regularly what the Big Society means for Sustainable Funding. It's a hot topic of the moment so here's a summary of what you need to know with relation to funding. If you work for a small VCO, you can also read our update, Big Society opportunties for small organisations.

• What is the Big Society?
• What are the implications for VCS funding?
• How will the Big Society influence funding schemes' criteria?
• What can you do now?
• Where to keep up with developments

This page is quite long - but important - so please keep reading!

What is the Big Society?

The Big Society is a Government agenda that seeks to shift power from politicians to people. It formed a key element of the Conservative 2010 election campaign and was the subject of the first major policy announcement of the new coalition government on 18 May 2010.

Its aim is to give people much greater say in local decisions and to encourage them to get involved in their communities. This is an agenda that should have resonance with Civil Society (which refers roughly to what used to be referred to as the Third Sector – although also to the huge amount of informal voluntary activity and social enterprises) as it is what many of us have been championing for years. It has three strands – promoting social action, empowering local communities and opening up public sector contracts to give Civil Society organisations greater involvement.

It has received some negative press because of the implications that a lot of activities will rely on volunteers and that more can be done for free, or little money. The coalition have been anxious to separate the discussion of the cuts from that of the Big Society – which they see as a separate vision for the country – however there are a lot of unanswered questions. But the Big Society could provide new opportunities for local organisations and for a new dynamic within local voluntary action.

What are the direct implications for the amount of funding for the voluntary and community sector?

There are two things in tension here...

• The government has been vocal in its support for the sector – particularly smaller, 'grassroots' organisations.
• But it has also been announcing a seemingly unending series of cuts. In particular, the government departments who are absorbing the largest cuts are those that have given the most money to the voluntary sector.

Their Supporting a Stronger Civil Society consultation, which came out on 15th October 2010, explicitly states that the government are looking to enable a greater role for the sector in delivering public services. Public service delivery will therefore continue to be a growth area for the sector, especially with the government’s pledge to 'open up public sector contracts' – although growth will probably be at a more modest rate than in previous years and will depend on individual departments' strategies for dealing with cuts (whether to deliver in-house or outsource).

The government has pledged to:

"support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and support these groups to have much greater involvement in the running of public services".

It should be remembered that there is a continued movement to support public sector workers to set up their own social enterprises – and it has been suggested by the government that many of the 'quangos' become independent charities. So the competition for public sector contracts could increase with the addition of these new organisations.

Some additional capital will be available from the Big Society Bank. This initiative will create social investment funds from unclaimed assets that are sitting in dormant bank accounts. They will be distributed through existing intermediaries – so you won’t be able to apply to the Big Society Bank directly. The emphasis is on investment – so probably loans not grants. The bank is likely to have between £60-£100m to invest by April – a large amount, but less funding than the sector is likely to have cut from elsewhere and the funds probably won't reach the front line by the end of this financial year. So the Big Society Bank is something to consider for future planning, not an immediate solution to funding problems.  

** Please see this very useful briefing from Charity Bank for more information about how the Big Society bank is likely to operate **

How will the Big Society influence funding schemes' criteria?

The feeling from speeches and documents emphasises the contribution of the volunteer (referred to as 'social action') and the importance that the sector levers in support from non-statutory sources.

There is a strong likelihood that this will be increasingly reflected in criteria for funding applications:

• organisations that are able to demonstrate match-funding both in-kind (including volunteering) and in finance (from other supporters or from earned income) are likely to be in a strong position.
• It is also worth remembering that the Big Society places a strong emphasis on a participatory approach, which will probably mean that the trend for funders to ask for evidence of beneficiary involvement in planning services as well as engagement with the community is likely to continue.

Organisations that are not in a strong position to demonstrate grassroots activity would benefit from partnerships and collaboration with those who can. Conversely, those who can demonstrate grassroots activity could benefit from a partnership with larger organisations who can help to keep their costs down (we must never forget the context of cuts...) This preparatory work can be done now.

So what can you do now?

A lot of the principles behind the Big Society will be very familiar to the sector, but familiarise yourself with what your organisation could do to take advantage of opportunities – especially if you are involved in public sector delivery.

• Look at how you can involve your service users, community and volunteers with your work in a meaningful way – and evidence this.
• Begin looking at forming partnerships to enable you to increase your reach and scope if you want to get involved with delivering public sector contracts.
• Look closely at your organisational form to see if it is fit for purpose. You might feel you should be forming a social enterprise arm – a coop, a mutual, a Community Interest Company or similar to give you the flexibility to compete.
• Work on potential match-funding – funds from non-governmental sources that you could use to add value to applications. Don’t forget to value in-kind contributions and volunteers.
• If your organisation is not likely to be able to get involved in public service delivery, there has been very little mentioned about future funding streams. You may therefore wish to strengthen your unrestricted income – particularly from the gift economy or trading. If your organisation is interested in further support in these areas, SFP now offers a range of direct support options, offering you hands on help with your strategy for income generation.   
• Read and respond to the government's consultation on Supporting a Stronger Civil Society – find out more on the NCVO website.

Where to keep up to date with developments:

The Sustainable Funding Project’s Annual Gathering will hear from Lord Nat Wei, Government Advisor on Big Society. There is also a workshop on local enterprise and a panel debate on how funders are responding the new environment, amongst other inspiring sessions. So to find out more about the issues of the Big Society in relation to funding, come along on 23rd November.

General information can be accessed on NCVO’s policy pages on The Big Society - http://www.ncvo-vol.org.uk/thebigsociety, including a great presentation from Karl Wilding, Head of Research at NCVO.

The Public Service Delivery Network offers guidance and support for those involved (or wanting to get involved) with public service delivery. http://www.ncvo-vol.org.uk/psdnetwork

And to keep up to date with information on the cuts, try David Kane’s blog, or to help us to track what’s happening, fill out our crowdsourcing exercise.

What next?

• Go to The Sustainable Funding Project's web pages on planning for change.
• Go to The NCVO Funding blog for new updates on the funding environment