Giving something back

13 Feb 09
MELISSA BENN | The tone was positively Churchillian: ‘Britain can beat this… just like we’ve beaten everything else this world has thrown at us. We’ll win by pulling together, not by facing the storm alone.’

The tone was positively Churchillian: ‘Britain can beat this… just like we’ve beaten everything else this world has thrown at us. We’ll win by pulling together, not by facing the storm alone.’

But such stirring language came not from beleaguered national leaders at a world summit but from a bog-standard government press release issued earlier this week. It quoted the rather colourful Liam Byrne, Cabinet Office minister, on the pledge to give £42.5m to help charities weather the effects of the recession.

Despite Byrne’s grand claims, the government is giving relatively little. Late last year, charity leaders asked for £500m in government aid. This was later scaled down to £100m. Now they have just under half of that, although ministers hint that more help will be forthcoming.

But the decision didn’t halt the trenchant and predictable headlines contrasting the apparently paltry sum with the £500bn shelled out to the banks late last year and the failure of ministers to stop HBOS paying out huge bonuses.

Even so, the charity bail-out signals a change of heart on the part of ministers. They had previously ruled out any direct aid, despite mounting evidence of the damaging impact the recession was having on voluntary organisations.

Managing the downturn, a report published last December by the Charity Finance Directors’ Group, the Institute of Fundraising and PricewaterhouseCoopers, revealed a slump in income and soaring costs while demand for services was rocketing, particularly in areas such as debt and housing advice.

It’s hardly surprising that much charitable income is drying up. Worst hit are groups reliant on individual bequests: due to the collapse in the property market, money from the sale of houses has dropped by up to 10%.

And with 20% on average lost on all stock market portfolios, many wealthy individuals have halted charitable giving, including businessman Sir Tom Hunter, who once pledged to give away £1bn but has just announced that massive stock market losses now make this impossible.

The picture is not all bleak. Oxfam’s charity shops are doing brisker business than ever. But the National Society for the Prevention of Cruelty to Children will soon declare a £2m shortfall and a third of charities have said they will have to cut jobs in coming months.

It was almost inevitable, then, that the government would step in, not least because the third sector attracts extraordinary cross-party support.

Politicians of all parties love to paint a picture of little old ladies or enthusiastic stay-at-home mums moderating the arid, controlling influence of Stalinist local planners and the untrammelled greed of champagne-guzzling hedge fund managers.

In fact, much of the modern third sector is made up of experienced social entrepreneurs and quasi-governmental organisations such as Capacitybuilders and Futurebuilders, bodies specifically set up to help the voluntary sector manage public sector contracts more efficiently. The work of these organisations was this week praised in a special ‘value for money’ report published by the National Audit Office.

The voluntary and public sectors are clearly entwined at every level. A recent survey, jointly commissioned by the government and opinion pollsters Ipsos Mori, questioned 50,000 charities, voluntary organisations and social enterprise groups about their relationship to local government. Their answers affirmed the importance of the relationship, whether it was the 58% expressing a positive view of their local authority or the 51% who thought the council could do more.

But just as last year’s market downturn pinpointed the fatal weakness and lack of regulation of global capitalism, this week’s hand-out to charities confirms the ultimate importance of steady-as-she-goes tax revenue. At times of economic boom, we might laud those who spend their surplus capital on the less fortunate, but few would be happy at the idea of our local or national infrastructure being underwritten by such unpredictable largesse.

One of the strongest criticisms of the academy schools programme was its early reliance on private capital and its subsequent disconnection from local authority agreements and, crucially, accountability. Come the downturn and the withdrawal of some sponsors, this proved to have been a prescient concern. With delicious irony, the state, in the form of local authorities or government-funded universities, is now the preferred sponsor of newer schools.

If the last few months have shown us anything, it is that the state, that much maligned and unloved creature, remains the financial bottom line for most citizens. But let’s leave it to Liam Byrne to find the appropriately stirring and lyrical imagery to illuminate this rather prosaic truth.

Melissa Benn is a writer and journalist

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