Watchdog slams funding methods

There have been no significant improvements in the way the state
funds voluntary sector bodies three years after a critical Treasury
review demanded change.

That was the verdict of a damning National Audit Office report on
government funding of charities to provide services, released last
week.

Working with the Third Sector says most charities have
seen little progress in funding practices since the 2002 Treasury
review, which found charities were too often reliant on annual
funding deals and were not having all their overheads met.

While the Treasury’s recommendations have mainly been implemented,
the report finds this has not been enough to drive change.

The report finds that annual funding deals remain the norm,
reflecting a lack of trust in the sector within government and
councils, while little progress has been made on charities
recovering the full cost of services.

Government agencies and councils too often fund charities through
grants rather than contracts, which imposes a far higher burden of
monitoring on voluntary bodies, it adds.

However, it says there has been progress in ensuring that charities
are funded before they spend money on services.

The report recommends the government issue a best practice guide
for funding the sector, establish a panel of experts to advise on
funding practice and train staff to specialise in working with
charities.

Last week, the Charity Commission issued a statement of principles
for charities delivering public services, saying they must maintain
their independence and only act in the interests of their
organisations.