Small charities face big changes

15 March 2012

The Hampton Fuel Allotment Charity (HFAC) was founded in 1811 by Act of Parliament as a way of compensating the poor for the loss of grazing and wood-gathering rights when the local common land was enclosed. David Parish has been Chair of HFAC for two years following retirement and prior to that worked in various management roles for a large transport company. Here he writes about how recent changes to commissioning have affected the small charities HFAC funds.

HFAC has an interesting history. The charity was given land as part of the Enclosure Act and the poor allowed initially to gather fallen wood. Later the land was leased for farming and the income used to buy coal. The land allocated to the charity was sold in 1988 and the amount received converted into an endowed fund with half the income to be used for the relief of individuals in poverty and half to make grants to local organisations which contribute to community life. The annual income from the endowment last year was £1.8m.

The local authority, the London Borough of Richmond upon Thames, following a trend among  LAs has decided to end its practice of making annual grants to charities and move to commissioning for the services it needs.

As a local funder we are close to the organisations we support and they have been telling us of the strain this change is placing upon them. They are having to allocate significant staff time for the commissioning training courses run by the excellent local CVS. Costs are also being incurred in obtaining legal advice on the contract documentation and in drawing up partnership agreements so that smaller charities can bid together.

Some local groups are affiliated to national organisations and they have been able to draw on the advice of national level staff. However, for local community support groups it is not possible to obtain this type of advice unless they pay for it and some of them fear that they may not be able to put in as good a bid as the commercial service providers or the national organisations. Thankfully, with changes to legislation these contracts will not be subject to ECOJ European Union bidding rules, but nonetheless the borough procurement department is using its standard documentation for service contracts. Completing this document is a formidable process for trustees who may not have much business experience. The Invitation to Tender document runs to sixty pages. And the contracts, when awarded, will contain penalty clauses if the outcomes are not achieved; heavyweight stuff for small local organisations which are already facing pressures of increased work as more responsibility for care transfers from the state to the community. It is hard to see how the hoped-for improvements to services will be achieved if valued local organisations, with detailed local knowledge, lose out to large national charities or commercial service providers.

For grant-making charities like ours there is the dilemma of how we budget our grant-making for the next two years. Some organisations may be awarded contracts worth over £100,000 and need less support from us. Those who lose out, but still do worthwhile local work, will need more funding. In my view the whole process seems unduly complicated and may result in some very good and well-run charities having to close or reduce their work. As trustees we are considering holding back some of our budget until later in the year to be able to help organisations that could suddenly lose 20% of their income.

NPC recently carried out a survey of how changes to government commissioning are affecting charities, supported by Zurich. We’ll be publishing the results of the survey later this year. This is the second in a series of blogs looking at commissioning from the perspective of those working on the front line.