21 April 2006
Six out of ten charities say they do not receive adequate payment for services they provide to the public sector.
Joint research by the CIPFA charities panel and the Charity Finance Directors' Group has revealed that public bodies exploit their purchasing power to refuse to cover the full costs of services. They will pay for the direct activities covered by contracts, but not for all the associated overheads. Respondents say they do not expect this to change, even though the government has stipulated that public bodies should provide full funding from this month.
Typically, the Full cost recovery survey found, charities receive around 85% of the costs of providing services. The problem is exacerbated by the demands made on charities for detailed financial and operating information.
Chris Harris, chair of CIPFA's charities panel, said the research exposed the problems caused by the imposition of flawed contracts on the voluntary sector.
'The beneficiaries suffer because the quality of service is not acknowledged, the charities suffer because compliance is onerous and the public sector suffers because resources are not used appropriately,' he said.
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