I welcome the new government’s ambitious plans for growing and strengthening the third sector (now rebranded ‘civil society’). But the vision is the easier part – implementing it is more challenging.
There are two key objectives to be achieved. First, increasing the sustainability of civil society organisations so they can better contribute to building thriving communities. Second, helping those organisations benefit, where appropriate, from long term investment in the form of public sector contracts. That first task requires a new, more businesslike approach to charity funding. The second requires a fundamental rethink of how local public services are commissioned.
So how should the government invest in civil society? One-off grants are important but it is crucial that organisations are made sustainable for the long term which is why the model we use is one of mixed investment – grants, loans and expert business support. It’s an approach we call being an ‘engaged investor’. We hope our investees continue their good work for a long time. And as an investor in what can often be very small, financially fragile organisations we recognise that means our relationship with them needs to be long-lived too.
Two separate independent evaluations, by London Metropolitan and Sheffield Hallam universities, have found that this method builds financially sustainable organisations. And strong organisations can provide help and support to more people, year after year. Moreover, money that is lent is repaid with interest and can be re-lent leading to an evergreen fund. Grants come and go, the needs of the people that charities support are constant.
The government will always subsidise the sector in one way or another; to ensure best value for public money during this age of austerity ministers should consider whether some of the money that is used as grants should be redirected into programmes that combine them with loans and support - the mix proven to deliver sustainability.
One a different note, one of our wisest trustees (and we obviously have many!) said ‘always chase the money’, and there will always be money available in the form of public sector contracts. But the current commissioning environment makes it hard for civil society organisations to participate. By definition they are small, and lack the specific experience of writing tenders that established public and private sector providers have whole departments of staff to handle.
To enable them to compete on a more level playing field we have helped set up 3SC, a management company that bids for large government tenders on behalf of the sector and then brings together a consortia of community organisations to deliver the services. Not only does this model allow the tiniest to participate, but instead of profits being given to shareholders, instead they go to building sustainability in the very organisations providing the services; exactly the type of organisations at the heart of the governments’ Big Society vision. Already successful in winning a large welfare to work contract, we are keen to expand this model to other public service delivery areas.
Interestingly, part of the message from the Canadian example of successful deficit reduction was getting social enterprises much more involved in delivering public services as, according to former PM Paul Martin, they represent a 'perfect marriage of compassionate social policy and entrepreneurship'.
Realising the vision of a Big Society will require big changes – from government, from commissioners and from the community organisations themselves. Continuing with the old ways of only small ticket grants for charities and large public sector contracts for the usual big providers won’t deliver that revolution. New ways of strengthening the sector, and new ways of organizing the sector, might.
Jonathan Lewis is chief executive of The Social Investment Business
