The age of austerity is affecting organisations in all sectors, but times appear to be particularly tough for local voluntary and community organisations delivering local public services. This is the sector’s ‘squeezed middle’: organisations that are too big to survive without funding, but too small to achieve the economies of scale needed to thrive in a more competitive environment. They are discovering is that it is hard to be a mission-driven organisation in a cuts-driven world.
Many of these organisations began life by challenging the way that public services were provided: identifying gaps and piloting new ways of delivering services to meet people’s needs more effectively. They were localism in action. That is why the sector has tended to be strongest in areas where the state has been weakest, for example in child protection and adult social care – for many years the ‘Cinderella services’ of the welfare state.
Opening up all public services to ‘any willing provider’ will create new opportunities for some, but not necessarily for this squeezed middle. I can only think of one or two national charities who may be interested in taking over some acute health services, for example. And in spite of all the talk of voluntary organisations running prisons in recent years, it is still just talk. Many, if not most want to continue doing what they do best: providing high quality specialist and niche services to local communities.
Yet this is more difficult to do when commissioners are going for fewer, larger contracts to help balance their budgets. And at a time when VCOs are competing for funding with organisations from all sectors, including major players in the business world – indeed, it could be argued that in this environment the very concept of ‘voluntary sector funding’ will soon be consigned to the history books.
VCOs are fighting back. We recently spoke to one CEO of a medium sized charity who has spent many months building and leading a consortium of local VCOs to bid for a large, single contract to provide services locally. Now waiting to hear if the bid will be successful, she highlighted the tensions and dilemmas for mission-driven organisations in the current financial climate:
‘I am perfectly comfortable being business-like, but that doesn’t mean I want to be more like business. I made a positive choice to come into this sector because I share its values and principles. Because it puts the user first, it’s not just about the bottom line.
‘I’ve put together the most competitive bid I can without compromising on quality or values; I would rather see my organisation go to the wall than do that.’
To some extent these concerns are shared by commissioners. As one senior local authority manager told us:
‘With the cuts we are in danger of losing real expertise, commissioners with specialist knowledge of services are being replaced by generic procurement officers who know a lot about process – EoIs and PQQs etc – but little about outcomes. I’m really worried that this will mean that contracts will go to those who can put in the best bid, not those who can deliver the best service.’
The Coalition Government is keen that, in spite of the cuts, the voluntary and community sector should play a key role in delivering public services – getting a larger slice of a smaller cake. Its best value guidance, for example, attempts to create a level playing field by emphasising the importance of social as well as economic value. But, as always, policy is made as much by the actions of those on the ground as by the intentions of Ministers. And the reality on the ground is that local VCOs are being squeezed hard.
Belinda’s blog first appeared in Civil Society.