Small charities and those representing specific ethnic groups are being locked out of government funding opportunities, a report into criminal justice sector investment is warning.

It found that almost all (94%) statutory funding in the sector goes to charities with an annual income that exceeds £2m, while less than 2% of funding is handed to charities with annual income under £500,000.

One charity representative surveyed for the report said: “These so-called contracts the government put out are aimed for these big organisations… they’ll sub-contract it out and cream off £2,000-3,000 for themselves.

“They’ve got the infrastructure, governance, and ISO standards that these contracts require.’

Also, just 3% of income to criminal justice charities goes to those working with specific ethnic groups, the research found.

Lack of statutory funding opportunities for smaller charities and those focused on ethnic groups is heightened in the criminal justice sector, the research warns, as more than half of its income comes from government sources, compared to round a quarter among the wider charity sector.

The report has been published by think tank New Philanthropy Capital (NPC), which also found “the costs of delivering contracts were not always fully recuperated, leading organisations having to seek funding to cover gaps”.

One survey respondent said: “All of the compliance that the statutory contracts required add to the costs of running the projects, but the contracts are not funding that.

“So, we're finding that we're often almost subsidising some of our grants.”

'Cash flow challenges'

Also, funding is blighted by delays, which is creating “cash-flow challenges for smaller organisations in particular”

“Government funders could be quicker at allocating funding and understanding that small charities need money in the bank before delivery of projects start,” said one charity representative surveyed.

NPC is calling for funders to commit to minimum standards of contracting, including covering the full costs of delivery. They should also “provide more opportunities for flexible and multiyear funding”, said the think tank.

Its report is based on data from more than 600 charities, a survey completed by more than 50 charities working in the criminal justice sector, and interviews with nine charities, five funders and three research and advocacy organisations.

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