Commissioning, cuts and charities: What’s really going on

By Sarah Hedley 29 May 2012

Today we launch our new report, When the going gets tough, a comprehensive picture of how charities are getting on since the changes to public service commissioning. Earlier this year, in partnership with Zurich, we carried out a survey of the top 750 charities in England and Wales, receiving a response rate of 13.5%.

We asked charities about everything from the types of contracts they’re bidding for, to their relationships with commissioners, working in partnership or consortia, experiences of subcontracting, cuts to their government income, and how they feel about the future. We’ve talked a lot about why we did the survey, and why we think it’s important to know these things: today I want to focus on what we found out.

Charities are finding things tough.
Not perhaps a groundbreaking conclusion—charities are facing a drop in income at a time when the demand for their services is increasing. A third of our respondents have had their government income cut, and face some tough decisions in response. 65% are cutting frontline services, and 73% are making staff redundant. 9% are at risk of closing completely in the next year. Worryingly, 62% are using, or planning to use, their reserves to supplement their income—a move which harms charities’ sustainability and sets alarm bells ringing for the future of the sector.

Charities believe they face a much riskier future.
90% of our respondents believe they face a riskier future now than this time last year. New types of contracts, like payment by results, are exposing them to much higher levels of risk, and they are worried about the impact this will have both on their own financial security, and sceptical about whether these new funding mechanisms will benefit the people they help. 55% think payment by results contracts will have a negative impact on their financial security.

46% of our respondents are subcontracted by another organisation to deliver services—but again, they worry about the risks involved, and how this will impact on financial security. Just 10% feel that being a tier three provider in a supply chain has a positive impact on their financial security. One of our case studies, mental health charity Restore, didn’t receive any referrals from one organisation it was subcontracted to. Charities generally prefer being subcontracted by other charities over working with private organisations—only 41% of respondents say they have a good relationship with private lead providers, compared to 80% with charities.

Charities have changed the way they work in response to changes in commissioning.
Nearly 80% of our respondents plan to work more collaboratively with other organisations—which can help small charities get a look in on big government contracts. 75% hope to harness the power of volunteers to minimise the impact of cuts. And charities are positive about their own abilities, with 70% confident they have the right skills and capacity to successfully bid for contracts in future. 80% of those already subcontracting work believe they have the skills and capacity to manage the process effectively.

You can read more about these findings, along with five detailed case studies of charities across the UK, in When the going gets tough, available to download for free on NPC’s website—and we’ll be writing about our research all this week on our blog.