The Government and Opposition parties have recently gone to great lengths to court the third sector.
Over the summer months, we have witnessed a plethora of speeches and policy documents setting out their respective visions for the involvement of third sector organisations (TSOs) in the delivery of public services.
TSOs already provide vital services which improve the lives of people where the normal channels of support from statutory bodies have not been able to cope.
They are closer to the consumer and to communities they serve. They are able to take greater risk and are often more innovative in the solutions they provide. And most significantly, in general, they have the trust of their clients, many of whom feel let down by the bureaucracy of public bodies.
This perhaps explains why the Government is so keen to secure greater involvement for TSOs in public services.
Currently, the social and economic value of the contribution they bring is not well evidenced or understood. In too many cases, ideas that have worked well locally are not made available to others and rolled out on a national basis. The Government’s plan to establish a new centre to take forward this important third sector research agenda should therefore be welcomed.
However, despite this government support, recent research shows that TSOs are, in fact, delivering fewer services on behalf of the public sector. This indicates that funding cuts and increased bureaucracy have pushed many organisations out of local service delivery.
Of those surveyed, 68% had suffered reduced public funding in the previous 12 months and 51% saw services moved back in-house. A further 79% felt that the tender process was not fair or transparent when they bid against in-house providers.
Currently, there are some significant issues to resolve before expanding the role that TSOs play. These include a lack of commissioning skills for which the IDeA has been contracted by the Government to train 2,000 local commissioners.
Another is the procurement process and, in particular, the term of contracts. The Government has given a commitment for multi-year funding of at least three years to become the norm, rather than the case at present where two-thirds of all funding agreements are for only one year. This creates a culture of uncertainty and hinders long-term planning.
Furthermore, the recent NAO report, which examined the effectiveness of the funding of large national charities, highlighted the issue of full-cost recovery. At present, such TSOs do not always receive full-cost recovery in contracts awarded and this needs resolving if they are to play the role envisaged in public services.
Bidding for public sector contracts is costly. It forces TSOs to put sizable resources at risk that would have otherwise been directed towards obtaining grants and donations.
This means the market will inevitably polarise around the larger organisations that will become ever-more dominant as their smaller peers struggle to survive. At present, more than 70% of total income is generated by just 2% of the sector, stifling innovation and the development of the market. To resolve this, TSOs should explore how they could joint bid with the private sector outsourcers for public sector contracts.
One advantage of this would be to benefit from their partner’s back-office support services infrastructure, and also the procurement and delivery skills that more naturally reside in BPO organisations.
This leaves TSOs to focus resources on the important relationship with clients whose trust they have. This model offers scalability and brings increased capacity in the market together with the financial security needed to persuade public bodies to be bolder in transferring services. TSOs can then enter the door the Government has opened for them with greater confidence and certainty.
Rod Aldridge is chairman of the Aldridge Foundation a major sponsor of the forthcoming Centre for Public Sector Partnerships at Birmingham University. He is the founder and former chairman of Capita.
Over the summer months, we have witnessed a plethora of speeches and policy documents setting out their respective visions for the involvement of third sector organisations (TSOs) in the delivery of public services.
TSOs already provide vital services which improve the lives of people where the normal channels of support from statutory bodies have not been able to cope.
They are closer to the consumer and to communities they serve. They are able to take greater risk and are often more innovative in the solutions they provide. And most significantly, in general, they have the trust of their clients, many of whom feel let down by the bureaucracy of public bodies.
This perhaps explains why the Government is so keen to secure greater involvement for TSOs in public services.
Currently, the social and economic value of the contribution they bring is not well evidenced or understood. In too many cases, ideas that have worked well locally are not made available to others and rolled out on a national basis. The Government’s plan to establish a new centre to take forward this important third sector research agenda should therefore be welcomed.
However, despite this government support, recent research shows that TSOs are, in fact, delivering fewer services on behalf of the public sector. This indicates that funding cuts and increased bureaucracy have pushed many organisations out of local service delivery.
Of those surveyed, 68% had suffered reduced public funding in the previous 12 months and 51% saw services moved back in-house. A further 79% felt that the tender process was not fair or transparent when they bid against in-house providers.
Currently, there are some significant issues to resolve before expanding the role that TSOs play. These include a lack of commissioning skills for which the IDeA has been contracted by the Government to train 2,000 local commissioners.
Another is the procurement process and, in particular, the term of contracts. The Government has given a commitment for multi-year funding of at least three years to become the norm, rather than the case at present where two-thirds of all funding agreements are for only one year. This creates a culture of uncertainty and hinders long-term planning.
Furthermore, the recent NAO report, which examined the effectiveness of the funding of large national charities, highlighted the issue of full-cost recovery. At present, such TSOs do not always receive full-cost recovery in contracts awarded and this needs resolving if they are to play the role envisaged in public services.
Bidding for public sector contracts is costly. It forces TSOs to put sizable resources at risk that would have otherwise been directed towards obtaining grants and donations.
This means the market will inevitably polarise around the larger organisations that will become ever-more dominant as their smaller peers struggle to survive. At present, more than 70% of total income is generated by just 2% of the sector, stifling innovation and the development of the market. To resolve this, TSOs should explore how they could joint bid with the private sector outsourcers for public sector contracts.
One advantage of this would be to benefit from their partner’s back-office support services infrastructure, and also the procurement and delivery skills that more naturally reside in BPO organisations.
This leaves TSOs to focus resources on the important relationship with clients whose trust they have. This model offers scalability and brings increased capacity in the market together with the financial security needed to persuade public bodies to be bolder in transferring services. TSOs can then enter the door the Government has opened for them with greater confidence and certainty.
Rod Aldridge is chairman of the Aldridge Foundation a major sponsor of the forthcoming Centre for Public Sector Partnerships at Birmingham University. He is the founder and former chairman of Capita.
