‘Government has abused our charitable status’

Disability charity Scope faces a cash crisis. A £10m budget deficit – 10 per cent of its annual income – has forced it to institute emergency measures to prevent financial ruin (news, 12 January).

Chief executive Tony Manwaring, who last week presented trustees with a strategy to transform the charity’s fortunes and secure its future, lays much of the blame for its problems at the government’s door.

Years of subsidising statutory services – to the tune of £174m in the past 14 years – have caused the charity’s reserves to dwindle, he says.

“The voluntary sector is under pressure to take on more public services but government has not put in place the funding mechanisms to make that happen,” he says. 

Savings within statutory services, such as through the Gershon review of public sector funding, have meant councils and health bodies have found their funding is “under attack”.

“Local authorities are telling us that they are operating within severely constrained funding,” he adds. “It’s impacting on the funds they have, which is then what we negotiate around.”

Consequently, Manwaring says, funding bodies “prefer not to pay the level of cost [of our contracts]” and have sought to “abuse our charitable status and the money our donors provide”. This gives Scope “no choice but to fund core services through our charitable income”.

Many charities report similar frustrations with trying to obtain true costs.

But given that it depends on cash from contracts for half of its £100m income, Scope should arguably have been quicker to develop a strategy for full-cost recovery.

Manwaring says: “If you want, you can argue that the trustees of Scope have been too generous over the years and have taken charity too far. But they have had that money, there are pressing needs, they are disabled people or parents of disabled people and they know what those needs are like in the community. “If that’s a fault, I’d rather have that sort of fault than have all of the money.”

He says Scope’s contracts tend to be much more expensive than those of other charities because it works with people who have very high levels of need. Losing money on one contract can therefore end up costing £1m or £2m.

Beaumont, in Lancaster, is one of the few further education colleges for severely disabled people in the country and is run by Scope, which has had to make up a £2.5m funding shortfall to meet the costs of providing for services.

But other changes beyond the charity’s control have also affected its income. In the past two years, says Manwaring, local authority funding for out-of-county placements in the educational sector has fallen by 20 per cent. Scope could not have anticipated such a “sudden decline” in the market, he argues.

He believes there is a “sense of a possible collapse of the voluntary sector in its capacity to be a major provider of direct services in the way the government is calling for”.

“The passion and the goodwill and the sense of wanting to change society that run though organisations like Scope from the shop volunteer right up to the trustee are virtually infinite and a fantastic resource within British culture,” he says. 

“I think that has been exploited and squeezed and squeezed. I think the voluntary sector has to protect those values and part of protecting those values is about saying when it’s been squeezed too far.”