Charities: special report

Charities that get over 70 per cent of their income from the state should lose their charitable status – including tax breaks, and become “statutory agencies”, to preserve the integrity and independence of the voluntary sector, think-tank Civitas said this week in a new report, Who Cares? 

Author Nick Seddon outlines his case below, and the bosses of three charities with a high percentage of income from statutory sources, Lord Victor Adebowale of Turning Point, Clare Tickell of NCH, the children’s charity and Bryan Dutton of Leonard Cheshire answer back.

Nick Seddon, author of Civitas report Who Cares?
“The proposal to reclassify charities is designed to promote debate and dispel some of the confusion surrounding what charities are and what they actually do. It is intended to address two levels of concern, one the inherent risk associated with becoming over-dependent on a single source of funding, the other more broadly the balance of power within the sector.

The Charity Commission recommends as best practice that organisations diversify their funding sources. Many ignore this, yet all the signs are that a body getting the vast majority of its money from one source is influenced by the values of that funder and reluctant to criticise it. Often, such charities grow to resemble the local and central departments on which they depend for money.

Mission creep can occur, when charities stray from their objects in pursuit of funding. Leonard Cheshire, which receives 88 per cent of its income from statutory sources, tells us on its website that grants and fees do not pay for… the projects that can truly be termed ‘charitable’.  Isn’t this a tacit admission that nine tenths of the work it does now is not truly charitable?

There is a need to shore up the whole sector. Charities need to be free standing, not subject to the vicissitudes of party politics. But what if the next government decided not to fund the types of activity favoured by the current government? A funding framework might help the likes of Turning Point reorganise their income portfolio before push comes to shove.

From another angle, while no one doubts that the likes of Barnardo’s and NCH do good work, there’s a category difference between a charity with thousands of staff taking millions of pounds from statutory sources and a small community based charity which is largely dependent on volunteers and the generosity of local benefactors. Yet they currently compete on the same playing field, both for service contracts and the goodwill of the public.

Differentiating between bodies might be one way to help charities choose how they define themselves – and help donors choose what they support.”

Turning Point chief executive, Lord Victor Adebowale responds
“The two main concerns of those who question charities’ role in service delivery – that state funding will impair our ability to campaign effectively and that we run the risk of losing our independence from the state – simply fly in the face of reality.

Turning Point’s service users have multiple and complex needs. They are people who the private sector cannot profit from and the public sector cannot reach. The third sector has become, for them, the only effective intervention, combining highly responsive services and hard-hitting campaigning.

Our very public campaigns on issues from the closure of long-stay hospitals to the shortage of services for crack users could hardly be described as timid. Turning Point receives public money to run specific services the state does not provide and has always been prepared to lobby hard on issues and to develop innovative new services for those who cannot get what they need.

We refute the claim that delivering bespoke local services on a national scale somehow morphs us into an arm of government. It’s precisely our values as a charitable, social enterprise, unencumbered by shareholder interest that makes us so responsive and engaging for those who need us. It is important to remember what we do is deliver a much needed service to the public, but that is not the same as becoming a state-run public service.

The inverse care law says that those who need the most receive the least. Let’s not make it still worse for them.”

NCH chief executive Clare Tickell responds
“The values and ethos of NCH, enable us to meet the needs of over 160,000 children, young people and their families across the UK. We act independently of the state and use our income to break the cycle of deprivation for the most vulnerable children and young people throughout the country – this is our primary motivator. 

At NCH we cherish our independence. We speak out and campaign when we think government is wrong and we are not afraid to shirk from difficult issues because they may play badly to a populist agenda. For example, we oppose the extensive use of antisocial behaviour orders as well as the withholding of housing benefits as a tool to reduce antisocial behaviour and we are not afraid of telling policy-makers or ministers. 

But at the same time, we have led the way in developing the intensive family support service to reduce the antisocial behaviour of families at risk of eviction. NCH is not ashamed to work in partnership with local government as well as others in pursuit of shared goals. In fact, in line with our values, we have an obligation and responsibility to do so.   

Furthermore, it is the voluntary sector that often steps in and delivers services because it is better placed than other providers.

At NCH, this is not about changing the way we work or relinquishing part of our core mission. It is about building on and using our strengths: being innovative and pioneering in our approach; having the ability to effectively engage with the most hard to reach children and young people; and using our years of experience to successfully reach out to those in most need.

For NCH, service delivery is not about the source of our funding but about our ability to deliver high quality, safe and flexible services to the children and young people we aim to help.
We are specialists in supporting society’s most vulnerable children, young people and their families. Our independent charitable values have informed this work for nearly 140 years and will continue to do so.”

Leonard Cheshire director general, Bryan Dutton responds
“While Civitas have not actually sent us a copy of their report, nor did they speak to Leonard Cheshire while writing the report, the coverage suggests that it fundamentally misunderstands how the funding from government to many charities is used.
 
Leonard Cheshire provides social care services to many disabled individuals across the country. We do not receive grants from central government to provide these services – rather our services are based on the needs of individuals within local communities, generally funded by a local authority. This means that we are providing local, personalised services tailored to individual disabled people’s assessed needs. We are in effect 180+ small, local charities.

There is no ‘mission creep’ – if it is not a core part of our purpose then we won’t do it. And we are not influenced or swayed by government agendas. Unless, of course, they are the agendas we have persuaded the government to take on.

Leonard Cheshire ensures that contracts from local authorities and primary care trusts fully cover the costs of provision.

Donated income is not diverted to subsidise the state – we use it to enhance these services to create something that is unique, personalised and of the highest possible quality. We can guarantee that all donations to us are used for charitable purposes.

Using voluntary income, we are also able to develop and provide innovative projects, such as our Ready to Start or Discover IT schemes, which provide training and support for many more disabled people. We are also able to campaign on important policy issues affecting disabled people at a national, and indeed international level.

Leonard Cheshire believes it is essential that charities maintain their independence, and crucially, maintain whatever unique identity it is that makes them a worthwhile and valuable cause. It is a gross over-simplification to suggest that the source of a certain percentage of their funding determines this value.

It is the work they do, the values they embrace and the impact they make that should determine a charity’s worth. On this basis, Leonard Cheshire is proud and confident to call itself a charity.”