Back from the brink?

This time last year, the Grants 4 Good campaign declared that public grants to charities were in terminal decline and could face a total wipe out by as early as 2020.

The campaign group, formed by sector organisations including the NCVO and Directory of Social Change (DSC) to promote grant giving among funders, said austerity coupled with a trend among public sector funders towards contracting were chief factors.

With the NCVO’s Civil Society Almanac of 2015 showing a 60% reduction between 2004 and 2015 in the proportion of charity income coming from grants, they certainly had strong evidence on their side.

This NCVO research also showed that 83% of government money to charities was through contracts or fees rather than grants.

Added to this sense of gloom was an increasingly frosty relationship between the charity sector and ministers, particularly over controversial plans to curtail lobbying activity among grant recipients.

This included outrage from charities when then Cabinet Office minister Matthew Hancock said last February that “taxpayers’ money must be spent on improving people’s lives and spread opportunities, not wasted on the farce of government lobbying government”.

The demise of Kids Company, which had benefitted from £42 million in central government grants, added more bricks to this growing wall between the voluntary sector and Whitehall.

But with Theresa May replacing David Cameron as Prime Minister in June, hope has emerged that grant giving can be brought back from the brink of extinction.

Progress

Acevo director of public policy Asheem Singh has already noticed a change in direction under May and was pleased that “one of her first acts as Prime Minister was to nuke that anti-advocacy clause”.

For Singh this opens “a window of opportunity where we can make a case that grants should be part of the funding mix”.

He adds: “Under Cameron and Chancellor George Osborne I often felt that charities’ foibles were treated as fatal flaws, messiness as incompetence, eccentricity as weirdness and passion as a sign of trouble making.

“It is up to government to shed that baggage and for the voluntary sector to earn that trust. The opportunities are there.”

A set of grant giving guidelines for government departments, published in December, represents “a starting point” and “is a statement from government that they are not looking to get rid of grant funding,” says Jay Kennedy, DSC policy director.

This administrative document aims to better define the relationship between government grant givers and recipients, with a strong focus on greater transparency on both sides.

Its 10 standards include stipulations that government departments should appoint a named officer responsible for each grant and publish details of current grant schemes and awards via a newly created Government Grants Information System.

An advice panel to look at “high risk, novel and contentious” new grants, as well as the need for departments to present a robust business case for creating each grant, are included.

In addition, all grants must be open to competition, have clearly defined outcomes and be subject to due diligence and fraud assessment.

But controversially its sixth standard on “robust grant agreements” appears to leave the door open for departments to resurrect the anti advocacy clause through seemingly conflicting lists of eligible and ineligible lobbying activity.

In this standard scope is given for lobbying and advocacy work, such as giving evidence at select committees, advising ministers, carrying out research and responding to public consultations, but also says that “paid for lobbying” is ineligible.

Kennedy says while May’s abandoning of the anti-advocacy clause was a “victory” it was also a “fudge”, due to the inconsistencies in standard six.

Singh shares these concerns, saying that the contrasting lists show that “some vestiges of this very harmful and very spiteful” advocacy clause remain.

Acevo is now looking for greater clarification from the government around lobbying activity and Singh says it will be keeping an eye on how the standards are interpreted.

“If departments are creating grants that make egregious use of the standards and if they are disallowing charities from campaigning in a disproportionate way then we would consider that harmful and the wording should perhaps be amended,” adds Singh.

Kennedy believes that charities, rather than government, need greater protection from political influence.

“I’ve always thought the debate about public grants and lobbying is the wrong way round. The problem is when government departments expect the money to promote a particular policy agenda, which may not be effective,” he argues.

The National Association for Voluntary and Community Action (NAVCA) is another charity sector organisation with concerns around the guidelines, not only its conflicting stance on lobbying, but also another clause in standard six that says grants should be structured to “avoid paying significant portions of funding up front”.

Barney Mynott, NAVCA head of public affairs, says this is “ill thought through” and that front loading grants “for smaller charities in particular is vital” to help them be more effective.

A true test of the standards, particularly around transparency and auditing, will be how they affect Libor Funding.

Announced in 2012 these distributed fines, gathered from the banking sector for manipulating Libor rates, “support armed forces and emergency services charities and other related good causes that represent those that demonstrate the very best of values”.

Last July, £14.4 million was handed out, including a £375,000 grant to the Royal Voluntary Service, which is supported by the memorial fund set up in memory of murdered MP Jo Cox.

Kennedy questions whether in its current form the funds meet the Government’s “own grant standards”.

He says: “Libor is great for those charities that have got into it. But it’s not strategic and is a weird kind of state philanthropy.

“The strategy seems to be giving money from the nation’s worst to the nation’s best. Which is translated as from bad bankers to good military charities. Lots of the charities are worthy. But why them?”

Singh adds that Libor funding “is about the elites deciding what their pet projects are and funding them. It is classic patrician politicking and has no place in a world of grant standards and good practice”.

Shared society

Another move under the May administration that is seen in the sector as positive, in terms of keeping grant funding on the agenda, has been the launch of her “shared society” policy initiative.

Unveiled at the Charity Commission, this was her first major domestic policy announcement and focused on the need for government to do more to improve the lives of the vulnerable, those “just about managing” and people with mental health problems.

Although light on details, especially in terms of potential grants, it did guarantee an additional £15 million in funding to improve community support for those with mental health issues.

Kennedy says the location of the launch, at the Charity Commission, as well as support from senior charity figures, such as Mind chief executive Paul Farmer, is to be welcomed but ultimately the shared society will be judged on the details.

The grant standard stipulating that departments avoid paying up front fees doesn’t bode well, says Kennedy.

“If you want to get the majority of the charity sector involved in the shared society then you have to get those details right. Saying that those organisations can front costs to hire people and then be paid in arrears is nonsense,” he says.

With government funding continuing to be squeezed Kennedy also fears that the shared society agenda could “die on the cross of austerity” as David Cameron’s Big Society policy initiative did.

Mynott’s concern is that the shared society could follow the Big Society’s “damaging” trend of “trying to politicise” the charity sector.

But Singh thinks the sector will be more wary following its experience of this flagship Cameron policy.

“If we learned anything from the Big Society it was not to be swayed into following a government agenda rather than our own charity agenda,” he adds.

Cuts

Another worry is that the continuing squeeze on resources, particularly across local government and in the NHS, may mean that, for mental health charities at least, even if government money is forthcoming it may not filter down to the voluntary sector, either as contracts or grants.

The government’s Future in Mind initiative, which handed clinical commissioning groups (CCGs) £1.4 billion to improve local child and adolescent mental health services up to 2020, is a case in point.

Damning evidence published by the charity Young Minds in December found that two thirds of CCGs had used some or all of this extra money to backfill cuts or spend elsewhere.

Young Minds director of campaigns and communications Tom Madders says that while May’s recent rhetoric is “certainly positive” this “has to translate into real action”.

Singh is pessimistic in terms of potential health grants as “the NHS is bankrupt so it goes towards deficit”.

Brexit could also hinder efforts to boost public grant giving, with last year’s vote leaves question marks as to whether the UK government will step in and replace EU funding long term.

Mynott is concerned that the charity sector will not be able to compete “with some vociferous lobbies such as farming and universities” in persuading ministers to replace EU funding long term.

“We are not as well placed unfortunately even though the work we do is equally as important. The farming lobby, especially among Conservative MPs, is a very powerful lobby. If you look at Cornwall it is an area with lots of EU money and also with lots of marginal Conservative seats,” he adds.

Singh is also worried that the charity sector’s voice may get lost, particularly among key government cabinet members, Brexit secretary David Davis and international trade secretary Liam Fox.

“I’ve written to both and haven’t received much of a response yet,” he laments.

A Department of Culture, Media and Sport spokeswoman said: “Government recognises that charities and other civil society organisations have important views on Brexit as they will be affected too. We are listening to their concerns and talking to them about potential opportunities.”

Despite concerns over the long-term future of EU funding, one potential benefit of Brexit to charities is an expected overhaul of state aid rules.

These EU regulations put in place a series of what the UK government concedes are “complex” rules over the way governments offer funding through grants, loans, tax breaks and sale of state assets.

Singh says: “Currently they are a barrier to grants with lots of red tape involved. If there were new rules in place to make grant giving easier then that could be positive for the sector.”

With Brexit and a continual struggle to access funds from cash strapped public bodies, Mynott says charities will have to be more innovative if they are to access grants.

One way that smaller local charities are doing this is through a single point of contact model.

This involves a charity or local voluntary sector organisation acting as one contact point with a grant giver or contractor to enable multiple charities to come together and bid for money.

An example of this is the work of Voluntary Action Rotherham, which has been managing a ‘social prescribing’ contract with Rotherham CCG for the last four years. This involves dispersing grants and smaller contracts to charities to provide support and care for vulnerable local residents with long-term conditions and mental health issues.

Janet Wheatley, Voluntary Action Rotherham, chief executive, says: “Some support we contract out such as befriending services or advice through Age UK and Citizens Advice Bureau. Some we give out as small grants to small community groups to stimulate activity in the area. These are less than £1,000 and we gave out around 30 of these last year.”

She explains that the model is ideal for charities, who are able to compete for large contracts and grants, and funders “who do not have the capacity to manage the small level work we are doing here”.

This last part is key to keeping grant giving alive, as “the days of CCGs and councils administering small pots of money themselves are probably gone” due to constraints on their time and staff, adds Wheatley.

Mynott says that such work shows that grant giving still has a future as long as the voluntary sector is willing to fight for it and continue to offer public sector organisations flexible ways of offering them money.

Joe Lepper is a freelance journalist