Can charities delivering public sector contracts really change the world for the better?

For 20 years NPC has been helping philanthropists and charities to maximise social impact in the lives of the people they serve. To mark our 20th birthday, we’ve been talking to leading figures and people doing things differently to ask: Where next for social impact? In this essay, Chris Wright asks: Can charities delivering public sector contracts really change the world for the better? Opinions are the author’s own.

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The creation of the Welfare State for the first time gave us an integrated way to ward off Beveridge’s giants of want, disease, ignorance, squalor, and idleness. Over the last 80 years, the default producer for most of these services has been the state. The boundary between the state and private provision has been drawn and redrawn over a much longer period than Beveridge, so it’s right that we periodically review where the boundary sits and why. 

For example, many of the services that are now statutory requirements have evolved from what was previously provided by non-state agents such as voluntary organisations, private institutions, and the Church. Indeed, by organisations such as Catch22. Catch22 traces its roots back to the late eighteenth century and lays claim to the initiation of a range of public services from education to probation. 

As we emerge out of a pandemic and into challenging economic times, now is a good time to review where we are at in the provision of public services. We need to reframe who is best placed to provide and deliver services within our post-industrial, digitally driven and socially networked communities. Modernity has brought metamorphosis and complexity. For example, look at the role of social media in facilitating drug dealing, violence and child abuse, while we get collectively traumatised watching war atrocities or crimes on tiny screens. Or how the deregulated growth of the Amazons of this world has worsened labour quality and security. 21st century problems need contemporary approaches.  

The state as default producer leads to a mindset which is risk averse, compliance led, process driven, and transactional; measured through outputs rather than outcomes; and too often serves the producer not the user. #20yearsofNPC Click To Tweet

My contention is that the state as the default producer is out of time because it inevitably operates through a 20th century bureaucratic mindset. It’s a mindset that leads to service delivery which is risk averse, compliance led, process driven, and transactional. It is measured through outputs rather than outcomes. Services too often serve the producer and not the user, leading to inefficiencies and a failure to deliver value for money. A system which is stymied by a compliance culture and a fear of failure, a system which denies individual agency and is more concerned about itself than the end user. It’s a prevailing mindset which results in statements such as this from Eileen Munro on her enquiry into the child protection system in 2010: “social workers spend their time doing things right as opposed to doing the right thing”. Fundamentally it’s a model unfit for the 21st century. 

So, what is the answer? A response to the above set of assertions was for the state over the last 20 years to “outsource” public services, particularly in the justice system, employability services, and in parts of the health system. These outsourced services have performed with varying degrees of success, with some evidence of excellence but also some cases of serious failure. Much of this outsourcing has followed a procurement and contracting model which lends itself to awarding contracts to large, often publicly listed organisations with large balance sheets and access to capital. It has also resulted in many cases in a mirror image of publicly delivered services – that is services that are driven by a compliance culture, are top down, bureaucratic, transactional, and contract-managed to within an inch of their lives. The other outcome has been the extraction of value in distributed profit.  

The mindset of those commissioning services is like the mindset of the public service default producer, it is a bureaucratic, risk averse, transactional, lowest common denominator model. #20yearsofNPC Click To Tweet

Much of this has come about because the mindset of those commissioning and procuring such services is like the mindset of the public service default producer, it is a bureaucratic, risk averse, transactional, lowest common denominator model of doing things which ultimately fails to unlock the capability and capacity of different models. This leads to sclerotic delivery as opposed to the agile, relational, and highly engaging service provision we need. But it can be different. 

Public services can be delivered in more agile, relational, and engaging ways. And they can and should be competed for. It is just that the competition needs to be driven through a new lens, a lens that recognises that there are business models available that lend themselves to democratic, efficient, and effective service delivery where value is not extracted to be distributed but is recycled into public good.  

To achieve this there needs to be a new covenant between the state and the public about the role the state plays, a covenant forged in the notion that the state’s role retreats from producer to enabler in the provision of ‘welfare’. This sets up the ground rules for reimagining our approach to procuring and contract-managing services in favour of an approach that is reliant on trust and reciprocity. An approach where success is measured in terms of outcomes achieved and impact delivered, an approach which enables the co-design and, where possible, the co-production of services. An approach informed by evidence and insight and an approach that lends itself to the business models deployed by mature social enterprises and voluntary sector organisations. To support this development we would look to the likes of New Philanthropy Capital to provide their years of collective insights and knowledge about impact to provide the intellectual underpinning which helps to demonstrate the efficacy of the approach being outlined. 

There needs to be a new covenant between the state and the public about the role the state plays, a covenant forged in the notion that the state’s role retreats from producer to enabler. #20yearsofNPC Click To Tweet

The maturation of the social enterprise sector alongside the evolution of social investment has created the conditions whereby business and commercial acumen can be aligned with mission and impact led delivery. 

To achieve the above we need to reinvigorate the focus on public service reform. The Green Paper on procurement presents an opportunity to reset the dial, as does the current debate on social value. The truth is that the business models I am advocating provide intrinsic social value – no boxes need to be ticked, just a recognition that the reason for being is social, it is built into the articles of association or the charitable objectives. This social obligation coupled with entrepreneurial and business acumen can provide a 21st century solution to contemporary problems. 

What should NPC be doing? 

We would look to the likes of New Philanthropy Capital to provide their years of collective insights and knowledge about impact to provide the intellectual underpinning which helps to demonstrate the efficacy of this approach. 

 

We hope you find these essays and interviews engaging and thought provoking. We’d love to hear what you think the future holds, and what you believe NPC should be focusing on. You can join the conversation using the hashtag #20yearsofNPC or through our events. As a charity ourselves we rely on the generosity of those who value our work to help us to continue to produce research and guidance to support the sector in maximising social impact. Visit the 20 years of NPC page to find out more. 

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