As council funding shrinks, there is a widely held presumption that the third sector will be able to plug the gaps.
In many cases, however, the voluntary sector is just as stretched and is struggling to deal with the demands of a rapid move to the type of outcome-based commissioning usually seen in the commercial sector.
There are a number of actions charities should take to survive in this new world. This starts with ensuring they are not throwing energy and effort into grant applications, cash collections or fundraising activity when their processes or poor accounting systems can mean much of the cash raised leaks out of the coffers and fails to reach its intended target.
Charities then need to make sure the customer is at the centre of what they do. As organisations grow and merge, the governance and controls they need to manage larger numbers of staff, volunteers and trustees can mean the corporate centre becomes increasingly inward-looking. Organisations must recognise when this is happening and address it. The Royal Voluntary Service has proactively re-designed its business and operating model to separate its revenue-generating business from its mission with volunteers. This has allowed it to deliver clear messages to staff, customers, clients and volunteers about how each aspect of the organisation supports the other.
Charities must draw on the knowledge of all the organisation’s people to help them succeed in the new world. A natural consequence of the RVS restructure has been to engage staff, volunteers, trustees and managers in a frank dialogue focused on improving the business reach.
Third sector organisations should also explore how they can use commercial operating practices to enhance what they do. MacMillan Cancer Support has done this by introducing customer service processes and call-handling techniques linked to commercial contact centre standards. While call handling remains focused on the callers’ needs, the new more commercial approach has improved MacMillan’s efficiency and impact.
At the same time, public sector commissioners must recognise that charities cannot currently cope with a stringent regime of smart and value-adding key performance indicators but this should not rule them out from playing a role in bridging some of the funding gaps councils face.
There is clear evidence that the third sector can provide more accessible and sustainable help to many vulnerable people but to do this effectively, organisations must ensure they are well run, customer-focused and offer value for money.
Karen Cherrett is a local government expert at PA Consulting Group