Charities in need?

Rickford reports on whether recent difficulties facing children’s
charities, such as the Children’s Society and NSPCC, are
symptomatic of serious financial problems in the voluntary sector
as a whole, and whether the growing crisis in local authority-
provided services for children and families has also spilt over
into the sector.

When the
Children’s Society announced last month that it was closing down
all 13 of its projects in Wales after more than a century of work
there, Welsh politicians and church leaders were outraged. The
following day it emerged that on top of the £1.3m cut in
Wales, the Children’s Society would also be axing £5.1m from
English projects – evidence of an obviously desperate financial
crisis for the charity rather than any act of regional

When the
NSPCC also announced redundancies and project closures despite a
massive fundraising campaign, the jitters seriously set in.
Children’s charities have sometimes been accused of compromising
their independence by relying too heavily on service contracts with
the statutory sector, but now the extent to which local and
national government have come to depend on the voluntary sector as
providers of key services to children and families has been thrown
into stark relief.

So are
the difficulties facing the Children’s Society and NSPCC
symptomatic of serious financial problems in the sector as a whole?
And, in particular, has the growing crisis in local authority
social services for children and families spilt over into the
voluntary sector to leave vulnerable children even more

It is,
of course, misleading to lump all children’s charities together.
The big names – NSPCC, Barnardo’s, the Children’s Society and NCH –
represent only the tip of an enormous iceberg of organisations
ranging from well-known national networks like Home Start to small
community-based projects run by unpaid enthusiasts. The National
Council for Voluntary Childcare Organisations represents around 100
organisations of all sizes, with another 100 subscribing to some of
its services.

But even
among the big four (the fifth big name, Save the Children, has
already withdrawn from most of its UK social care work), there are
huge differences in their finances and their strategies.

recent suggestions that charity income from donations is falling,
it has in fact been rising steadily (see chart on page 30). The
NSPCC more than doubled its voluntary income between 1995 and 2001,
from £35m to nearly £80m, and while it also doubled its
funding from statutory sources, voluntary donations remain a much
more important source of income. The Children’s Society too has
driven up its voluntary income from £14m in 1995 to nearly
£20m in the year ending last March.

what’s the problem? Children’s Society chief executive Ian Sparks
explains that difficulties arose because of an expansion plan based
on over-ambitious fund-raising targets, combined with the impact of
falls in the stock market.

“In the
mid-1990s we had very high reserves so our trustees agreed we would
expand our work with children and young people, and pay for that
with £12m from the reserves plus an increase in fund-raising.
Since then we have faced increasing deficits, peaking at nearly
£11m last year. Now, because the pension fund is not
performing well we are having to contribute to staff pensions

insists that the Children’s Society can maintain its mission as a
“social justice” organisation, despite the coming cuts, by careful
targeting of its activities. “For example, we have been funding
Safe on the Streets work from our own money for 15 years, and our
view is that by the end of 2003, because of our campaigning, there
will be publicly funded services in place for those children. So we
will be reducing our own projects to two or three and recycling the
money into something else.”

the Children’s Society and NSPCC, NCH relies very heavily on
statutory funding, and is pursuing a strategy of increasing even
further the proportion of its income derived from government and
local government contracts and grants. Between 1994 and 2001 its
statutory income grew from £29m to £75m, and from 60 per
cent to 75 per cent of its total income.

chief executive Deryk Mead says there’s been no radical change in
the organisation’s strategy – it has always had a policy of working
in partnership with national and local government. In the past five
years, however, growth has been rapid. The number of projects that
NCH runs has doubled, and as well as providing services under
contract for social services departments the charity – or its
trading subsidiary NCH Children’s Services – is working
increasingly with, or for, education, health and central

sees NCH as a prime example of a non-public sector organisation
improving the quality of public services, and argues that NCH
brings a strong set of values to statutory work. “When I started
working in the public sector there was a strong public service
ethos, but over the past 20 to 30 years it has been eroded and a
lot of people working in public services don’t feel those public
service values as they used to.”

too has its financial worries and is now reviewing its fund-raising
strategy. “There has always been a gap between our voluntary income
and costs, but we’ve had significant reserves, largely because of
land and buildings,” says Mead. “We’ve been selling off these
buildings because we no longer believe large isolated children’s
homes in the countryside are a good idea, and that money has helped
us to bridge the gap between our voluntary income and the costs of
our services.” But clearly when all the family silver has been sold
off, that particular source of income will dry up. Pushing up the
proportion of expenditure recovered from central and local
government, and raising more money – especially from legacies –
will, Mead hopes, enable NCH to balance the books in the future. If
the strategy doesn’t work, social services departments and other
statutory agencies that have hived off core services to NCH will
have to do some fast thinking.

Children’s Society’s withdrawal has dented the confidence of policy
makers and funding bodies in UK children’s charities’ commitment to
Wales, according to Jane Stacey, director of children’s services
for Barnardo’s in Wales and south west England. “It is a difficult
climate now. People do feel concerned about the UK voluntaries and
we are busy trying to reassure them that we are not all in the same

Barnardo’s, she says, aims for a balance between statutorily funded
work and innovative work funded by the charity’s voluntary income.
“We have a clear sense of what we are trying to do with our
voluntary income, which includes ensuring the participation of
service users and promoting inclusion. But Barnardo’s does keep a
very close eye on voluntary income and the trustees are very
careful that we always maintain enough reserves to support us for
nine months.”

irony in the current situation is that the voluntary sector as a
whole is very popular with the present government. While local
authorities struggle to provide even a bare core of statutory
provision, chancellor Gordon Brown seems to have pots and pots of
money for new partnerships to prevent social exclusion among
children and young people – and it is the voluntary sector that at
least in theory takes pride of place at the partnership table.

Hughes, regional communications officer at the National Council for
Voluntary Childcare Organisations, says that although the climate
is favourable, the administrative burden on medium-sized
organisations is very heavy. And the short-term funding timescales
create waste and inefficiency.

“You get
the impression that the sector is in favour and growing and there’s
money going into it, but that doesn’t mean they’ve got a lot of
scope for what the voluntary sector is supposed to be good at.
Sustainability and infrastructure are a problem with the current
funding situation. Where organisations have got something existing
and working well, they often have to reopen it differently and
present it as something new to get the money.”

Stacey also reports that the squeeze on the statutory sector means
that much of the available funding is for short-term initiatives.
“But this work is not about short-term fixes, so a lot of time gets
taken up in sustaining funding.”

fragmentation of funding between different initiatives – Sure
Start, the children’s fund and Connexions in England, for example –
also exacts a heavy cost in time and personnel from voluntary
sector organisations, which may have to send representatives to
dozens of committee meetings. In Wales plans are now afoot to
create a single framework to run the equivalent funds – Sure Start,
the Children and Youth Partnership and Extending Entitlement.

adds that it is important that the contribution of small community
organisations is not lost from the current picture, and that large
voluntary organisations like Barnardo’s have a responsibility to
make sure it is not. But even for medium-sized charities, the
administrative burden of engaging with the new government
initiatives can be almost overwhelming, according to Sue Blake,
chief executive of the Ormiston Children and Families Trust in East
Anglia. The trust runs family centres and other family support
services and works extensively with families that have a member in
prison, and although it is not short of work, there is a shortfall
in funding for its growing administrative and management costs.

“One of
the most satisfying things for Ormiston is that the government’s
objectives are coinciding with our own. We are expanding our work
with families as a result, and we are the lead agency in two Sure
Starts in the region.” Ormiston also has service level agreements
with several social services departments, some of which are now
managed by primary care trusts.

problems are not so much to do with being able to secure funding,
but about the requirements for monitoring and financial feedback.
These are increasing our core costs and we are not always able to
get that money back.”

although Ormiston is benefiting from central government funding of
preventive services for families, Blake reports a gaping hole
between the new services and core statutory social services for
children and families.

is a sadness that social services departments are really battling
with a very difficult situation. They are being starved of
resources and it is very difficult for them to keep pace with the
needs of the most vulnerable children. We are trying to get a
service from social services for many of the families we work with
and they are simply not able to respond.

“Initiatives like Sure Start will make a big difference in the long
term, but at the moment they are uncovering more need for core
services, which social services departments cannot meet.”

makes the same point. “Apart from funding issues, the new
initiatives are taking good managers out of the mainstream. The
government has to make some decisions about this core work with the
most vulnerable children.”

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