£100m transition fund for charities: tight deadline!

By Iona Joy 11 January 2011

I didn’t mean to start 2011 with a moan, but I will.

When the Government’s Transition fund for charities was announced in November, I thought that this could soften the blow for many smaller charities facing statutory funding cuts. I saw it helping them onto a new path. The original Cabinet Office press release talked about the fund being available over the ‘next 13 months’. Ah good, I thought, that gives charities plenty of time to find out where they stand with commissioners, do some strategic planning, run scenarios, and come up with decent funding propositions. I imagined the fund being open well into 2011, to accommodate the vagaries of commissioning decisions, with applications being processed as they came in. I wondered whether the fund would be run on a ‘first come first served basis’ or whether there might be some rationing process over time to allow latecomers a chance. In my Preparing for cuts paper, I talked about how it will be hard for charities to finalise their business plans in the short term: they may need to be quite fluid as the implications of the government cuts packages filter through, and funders will need to accommodate charities’ facing moving goal posts over the coming months.

So I was very disappointed to see that the closing date for the fund is 21st January 2011. Under any scenario, a 7 ½ week application window is tight, let alone the fact that it runs over a busy family holiday period. Few charities will be able to meet this deadline, as they have only the haziest notion of which local statutory funders are going to cut them and how badly. As one charity said to me ‘we expect to be opening post from funders telling us they are cutting back until at least April. We get more news each day, but we won’t have a complete picture for months.’ For many charities their conversations with commissioners remain frustratingly vague: a clear picture by the deadline a mirage. So they can only work up the sketchiest of business plans. And the conditions state: ‘You must have evidence, or have substantial reason to believe, that between April 2011 and March 2012, your organisation will experience a reduction of at least 30% of the taxpayer-funded income you receive for the delivery of front line public services in England.’ Most charities will be in the ‘substantial reason to believe’ category and may struggle to compute the >30% figure.

I’m trying to unpick the reason for this funding scramble. If the fund is available for 13 months since November 2010, what is the timetable until December 2011? Funding decisions will apparently take until March for most, some for May, with all disbursements made by July 2011. Surely decisions could have be phased over a longer period? But all funds have to be spent by grantees by March 2012. It seems the dreaded ‘annuality’ challenge is haunting this fund as it now haunts Communitybuilders. Annuality is where the Treasury says you can’t sit on any cash beyond the fiscal year end. (I could whine about this too – this policy is a great way to waste money). As transition funding is typically needed over a period of months, even years, this could lead to poor spending practice.

£100m is a drop in the ocean as compared to the >£3bn cuts to statutorily funded charities predicted by NPC. So there will no doubt be plenty of early birds to mop up the £100m. But that’s not the point. I don’t see how some of the most deserving charities will get a fair crack of the whip. And I can’t help thinking of all those ruined Christmases endured by chief executives trying to write their papers on time.