Charities must plan for less cash from public contracts_2

5 Mar 09
Third sector organisations planning to bid for public sector contracts have been warned to prepare to tighten their belts as the recession affects public spending.

06 March 2009

By Alex Klaushofer

Third sector organisations planning to bid for public sector contracts have been warned to prepare to tighten their belts as the recession affects public spending.

The deputy chief executive of the National Council for Voluntary Organisations, Ben Kernighan, said that while not-for-profit organisations have to be ‘optimistic and go for public sector contracts’, they should plan for less public spending.

‘Recognise that it could be very tight and don’t let it come as a surprise if your funding from public services goes down,’ he told the NCVO’s Public Service Delivery Network Conference on March 3.

NCVO’s head of research Karl Wilding warned that – with charities currently receiving £12bn a year in statutory funding – public expenditure cuts could easily eat into charities’ revenues. ‘If government finds itself in a position of cutting 10%, that’s more than £1bn for the sector,’ he said.

The downturn threatens to jeopardise government plans to increase the role of the third sector in providing public services. Last month, the NCVO published research showing that charities’ income from public service contracts rose to £7.8bn in 2006/07 from £3.8bn in 2000/01.

Pat Samuel, deputy director of public sector partnerships at the government’s Office of the Third Sector, told Public Finance that one way of recession-proofing charities’ growing role in public service provision was through mechanisms such as Local Area Agreements.

‘Instead of having the money siloed in packets, you channel it directly to the local area as one big lump of money,’ she said. She cited youth offending as a ‘huge potential area for growth’ for charities interested in public service provision.

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