Fears of the Leviathan

Malcolm Dean
The Guardian, 9th March 2005

This is a golden age for charities, but the future is not so clear, says Malcolm Dean

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Have voluntary organisations and community groups reached a heyday? In the last decade, the number of charities has risen from 98,000 to 166,000, backed up by 200,000 community and neighbourhood groups. The number of professional staff employed has grown to 1.5 million, while the number of volunteers is estimated to be 6 million. In a typical year, 6,000 new charities are born. Expenditure on services, advocacy and campaigning has almost doubled to £20bn and assets now total £70bn.

A decade ago, the independent commission on the future of the voluntary sector was launched and, in 1996, set out an agenda and 60 proposals, most of which are now in operation or in the pipeline. These include tax changes adding £400m to income; the biggest change to charity law in 400 years winding its way through parliament; new standards by which charities can be judged; and a compact signed by ministers that protects charities in receipt of large sums for delivering public services from restrictions on their right to campaign.

Yet just as the sector is pausing for breath, two big umbrella groups -the National Council of Voluntary Organisations (NCVO) and the Association of Chief Executives of Voluntary Organisations (Acevo) - have launched a three-month consultation on what the sector should look like in 10 years. It is well-timed because further changes look inevitable.

It was the prime minister, in an address to the NCVO annual convention in 1999, who neatly divided the 20th century into two. In the first half, the country learned it could not achieve its aims without the help of government; in the second, that government could not achieve the nation's aims without the help of the voluntary movement.

So what does the 21st century offer? Ministers have made it plain they want to see a widening involvement of charities in service delivery. They already provide about 40 percent of personal social care - childcare, and support for elderly and disabled people - as well as widened responsibilities. The Royal National Institute for Deaf People negotiated the new NHS digital hearing aid contract with the suppliers, cutting the price from several thousand pounds to £60.

Indeed, in the last financial year the state became the biggest funder of charities, accounting for 37 percent of their income through its contracts for service delivery. This raises the question posed to the 1995 commission: are charities in danger of being devoured by the state by "swimming into the mouth of the leviathan".

Nicholas Deakin, chair of the commission, responds in an excellent new report from NCVO - Voluntary Action: Meeting the Challenge of the 21st Century - accompanying the consultation document. He rightly notes that the government is not "a single marine monster but a shoal of smaller beasts, some of whom have no ambitions to devour smaller voluntary organisations".

Even so, he warns of two other developments. First, are services by charities likely to become indistinguishable from the State's as the government becomes more involved in capacity building, setting minimum standards and targets? Or second, will they become more like private providers with whom they are competing for contracts?

In earlier reports, Acevo has made it clear there can be little expansion before the current faults in current contracts are corrected - unrealistic short-term funding, sudden death contracts, and unnecessary bureaucracy. Still forced to subsidise full contract costs from charitable funds, they want to compete with the private sector on equal terms.

But only a minority of charities provide services. The vast majority are too small and have no wish to bid. Statistics set out the stark differences: 1.6 percent of charities receive 68 percent of total income; 60 percent collectively get only 1.4 percent. While most big groups are flourishing, the medium-sized and small community groups are hurting. There are 19,000 community buildings providing urgently needed accommodation for small community groups, but where they are owned by local authorities, many groups are finding it difficult to meet rising rents. Councils are currently required to seek "best value" use of their assets, with many believing they cannot take into account group contributions to civic society.

An equally serious problem for many is dwindling volunteers. Traditionally, for every £1 in cash, there was £2 in voluntary effort. There are no precise figures, but the belief in dwindling numbers in a time-pressured society is widespread. Even sport, which claims to recruit 26 percent of volunteers, reports problems.

And then there is corporate stinginess. The annual Guardian survey found corporate donations accounted for only 4.3 percent of charitable income. Individuals give eight times as much. UK companies give just 0.2 percent of pre-tax profits. The top 34 FTSE companies are in the 1 percent club; the bottom 14 give only 0.1 percent or less. Here is a cause that could unite all charities: a joint campaign to embarrass business into being more generous.

Malcolm Dean is the Guardian's leader writer on social affairs.

© The Guardian 2005 www.guardian.co.uk