Charities have a long history of innovation and of leading the way when it comes to new ideas. Barnardo’s, for example, established the first fostering scheme in the UK after Thomas Barnardo boarded out destitute children to respectable families in the country. And in the present day, The Brandon Centre, a charity that helps young people with mental and sexual health issues, has seen its pioneering new approaches to reducing criminal and aggressive behaviour picked up by the Department of Health and the DCSF.
This innovation does not have to stop because of the cuts. In a speech Martin, NPC’s chief exec, gave yesterday at NCVYS he called on charities to become more innovative, and think about different, more cost-effective approaches to tackling social problems as well as seeking out new sources of revenue.
You can read some of NPC’s suggestions as to how charities can innovate and adapt in our recent paper, Preparing for cuts. One idea is that charities may have to change tactics and shift attention away from Whitehall, focusing instead on local policy-makers. In the education sector, for example, the drive towards turning more schools into academies will take money away from local education authorities (LEAs) and put it straight in the pockets of headmasters. They will then be responsible for buying in services, such as support for pupils with special educational needs, which traditionally may have been funded by the LEA. Charities will need to remap the agents of changes that buy in their services.
Charities may also need to think about potential mergers or partnerships, both with other charities but also with private companies. One charity NPC knows, Contact a Family successfully partnered with Serco, a £4bn turnover company, to help local authorities develop schemes to provide short breaks for families with disabled children. By consulting with families, the schemes delivered better outcomes for families and in many cases reduced costs for the local authority. This is a model that other charities could emulate.
And the new sources of revenue? As Martin said in his speech, ‘There is a growing range of non-grant finance available to charities,’ – the size of the social investment marketplace is estimated at £1bn. But to take advantage of these new models, such as the Social Impact Bond, charities will need to get better at measuring their outcomes. With the new focus on ‘payment by results’ comes opportunities for charities, but also challenges.