Autumn leaf

Has the behaviour of large charities damaged the whole sector?

By Paul Streets 15 June 2016

At NPC’s morning #CharityTrust debate about the consequences of recent high-profile charity scandals, Paul Streets made a provocative case about the risk of smaller charities being squeezed out by larger. Here he outlines his main arguments.

Of the 180,000 charities in England and Wales, around 175,000 (97%) have an income under £1m. Just 621 have an income of over £10m. So for every large charity like Cancer Research or Oxfam, there are 28 smaller ones that are far more representative of the sector.

Many of these small charities are so focused on the frontline you probably haven’t heard of them. This is in contrast to their larger counterparts whose fundraising activities literally bring them to every high street and household—and which, rightly or wrongly, have generated a lot of newspaper headlines lately. Yet there’s a danger that these issues and concerns around big ‘charity’ have come to define and indeed tarnish the public perception of all charities.

Small charities are being squeezed

As a funder of smaller charities (under £1m), we know they’re different, and we know they’re up against it. Our day to day experience and recent research has shown:

  • demand is rising and getting more complex, while commissioning is failing them and those they serve;
  • they have been hardest hit by drops in central and local government income since 2008/2009, with a massive shift from grants to contracts. Government income to the largest charities has risen by almost half, for those under £1m it has fallen by almost half.

…but sometimes it’s larger charities doing the squeezing

No organisation has a right to exist. So would it matter if larger organisations took over? If they provided long-term support that thoroughly addressed multiple disadvantage, it wouldn’t. But too often, they don’t. Too often larger organisations see success less in purpose, mission and values but in size, volume and market share. And they can be ruthless in achieving it; including putting small specialist charities out of business or co-opting them as bid candy to entice commissioners, then passing only the hardest cases down the supply chain, without the funding to match.

Their input can be superficial and short-lived. Time and again we’ve heard of larger charities poaching contracts from established and expert smaller charities, and then when their contract ends and they move on, the now weakened smaller provider has to pick up the pieces.

Small charities have a lot to offer

By contrast, small and local charities are typically:

  1. Deeply embedded in communities, with local staff and volunteers developing trusted relationships, reaching those others can’t
  2. Cost effective, keeping overheads low and adapting staff to volunteer ratios as income fluctuates
  3. Responsive to the climate, identifying new needs and opportunities, raising and stretching resources and reducing costs (though not without impact on the services they offer)

…and larger charities can help

The question around small and large charities shouldn’t be either/or. We can be proud of the many fantastic large charities that help to shape a better UK and world. And when small and large organisations work together, like Catch 22 and Only Connect, they can strengthen each other. Similarly, where commissioners understand and address the issues facing smaller charities, they can ensure local needs are properly met, as Imkaan and Women’s Aid have supported London’s Tri-borough of councils to do.

We must stay focused and not turn against each other

But while the sector and those that represent it are focusing on the headline-grabbing issues that don’t actually affect the vast majority, it deflects from the real scandal; that Government, centrally and locally is withdrawing funds from smaller charities lock, stock and barrel.

If the voluntary sector is really about championing those most at risk to those with power and resources, it’s surely time to focus our efforts on the threats affecting the 97% of the sector. And that needs to include how larger charities themselves behave, compete and collaborate. If we don’t, the tab will be picked up by the poorest and most disadvantaged in our society. And the damage won’t be easily reversed.

What do you think about Paul’s argument? Let us know in the comments, or over on Twitter @NPCthinks