n many ways this is a golden age
for the third sector. It is hard to think of any
other modern Government has given so much commitment
both implicitly and explicitly to the voluntary
and community sector. Secondments from the sector
into Government have helped policy development,
while there have been a range of Government reviews
and initiatives together with a welcome increase
of funding to help build infrastructure within
the sector. And a review of charity law led to
the introduction of a Charities Bill, which fell
with the dissolution of the last Parliament, but
has now been reintroduced.
Government support for mutual and community alternatives
to the private sector has been also shown in the
thought given to alternative structures, such as
the new Community Interest Company, designed to
produce a legal structure that will meet the needs
of the growing social enterprise sector.
The voluntary and community sector is undoubtedly
growing, but in an environment of hybrid structures,
cross-sectoral overlaps and blurred boundaries.
In rural areas, as the old privately owned village
shop closes this is increasingly being replaced
by a new community store, often established in
the form of a local cooperative. In purely commercial
terms village shops are often unviable, but the
community store usually relies in large part on
voluntary workers, with perhaps a paid manager
to ensure that the shop stocks what people want
to buy and makes a profit. This hybrid (over 200
currently exist in England) reduces social exclusion,
especially for the car-less older citizen, and
encourages social cohesion as a place for communal
interaction and the encouragement of volunteer
labour is also a proven route to paid employment.
And all this is achieved without public subsidy.
Here in Hackney, the council direct labour team
takes away my ordinary household waste, while Ealing
Community Transport, one of the largest and most
successful social enterprises, collects my green
recycling box and compost.
Voluntary and private sector organisations engage
in a range of ways, ranging from the purely philanthropic,
through staff volunteering and secondment (often
as part of management development) into fully commercial
collaborations. Branded credit cards and affinity-based
marketing, such as insurance products, are valuable
income generators for some charities. And who can
argue with deals that are money-spinners, that
also open possibilities for groups formerly excluded
from access to, for example, affordable insurance?
There is a moving away from the old philanthropic
method of funding through gifts of money into one
based on financing, whether through contracts for
services delivered, or loans through collaborative
bidding. This puts pressure on organisations to
become more businesslike in their approach.
The grant making trusts and charitable foundations
too are increasingly looking for charities to measure
the outcomes of the work they do for the money
they receive. The furthest end of the spectrum
is the venture philanthropist: a person who invests
in a cause or charity using methodologies allied
to the venture capital industry: the independence
of the organisation must thereafter be questioned.
Of course it’s easy to be cynical about
motivations. Some of the political momentum is
undoubtedly led by the Blairite agenda to widen
diversity in public sector delivery. The social
inclusion agenda is also undoubtedly part of this.
And the potential market for the delivery of public
services is huge: one recent report estimated that
private and voluntary bodies could deliver some £60
billion of public services by 2006/07. (Report
by Kable Ltd, quoted in FT 18 April 2005).
I have watched the changes over the past few years
with great interest. I am passionate about the
possibilities, through the growth of social enterprise,
in recreating some of the richness of the mutual
organisations driven out by Thatcherism. I am broadly
supportive of the Government agenda here, but see
the huge risks and also worry about the governance
and accountability of the structures being created.
And, I am worried about whether third sector organisations
have the professional skills and capital in order
to fulfil their mission in an increasingly complex
set of demands.
Yet the major practical question that arises is
whether the third sector is able to deliver in
this bright future world that beckons alluringly?
Would the sector be robust enough to compete with
the assault from the private sector if the political
landscape changes and wafts the Conservative party
into office in 2009 or even 2013?
The third sector is subject to increasing pressures
to behave in a more businesslike way, yet there
are acknowledged widespread skills shortage within
the sector, driven both by the buoyant labour market
and also the requirement for new skills. And the
third sector’s lack of professionalism can
lead to costly outcomes. For example, it was recently
reported that while voluntary sector staff account
for 2% of the national workforce, they are responsible
for 6% of employment tribunal cases.
Clearly, there is increasing legal demand upon
trustees, who bear the legal liability for the
conduct of a charity. Again, there is a huge shortage
of those with both the time and talents to undertake
this weighty supervisory role. To what extent is
the concept of trusteeship anachronistic in an
era when some charities are large complex organisations
delivering a range of services under contract?
And there is the role of the Charity Commission.
The last Charities Bill, a major overhaul, fell
when Parliament was dissolved prior to the last
General Election. It has been reintroduced during
the current session and is slowly moving through
its Parliamentary stages. The goal for the Commission
is to move towards a modern regulatory role, yet
I am far from sure that the sector is in any position
to cope with the weight of regulation to which
banks and other sectors are accustomed. Will the
reformed Charity Commission have the resources
to effect change in a long established charity
that does not seem to do very much yet survives
because of its large endowments?
Where current trustees select and appoint new
trustees, what mechanisms exist to ensure that
the tax breaks for these organisations result in
any true public benefit?
The growth in the number of organisations registered
as charities can on one level be regarded as a
flourishing of the voluntary spirit. Yet, as the
Charity Commission itself acknowledges, this is
a fragmented market. At one end there is the small
intensely local charity founded around the vision
of a particular individual, kept afloat by the
commitment of a small group of dedicated volunteers,
and raising money through a never ending treadmill
of bring and buy sales, raffles and sponsored walks.
In this future world is it realistic for the small
community charity or social enterprise to compete
effectively with a large private sector company
or indeed a major national charity? Such tensions
already exist within Housing Associations, with
the drive by the Housing Corporation encouraging
the growth of behemoths. The trend to merger can
lead to dominance in a marketplace, and several
smaller cancer charities have expressed disquiet
about the dominant role now held by Cancer Research
UK, the result of a merger in 2002 between the
Imperial Cancer Research Fund and the Cancer Research
These days the largest funder of the voluntary
sector is the statutory sector at 37%. To what
extent does this growing trend affect the independence
of the sector? Most commentators deny that this
negatively affects the independence of the sector.
But, at last year’s Labour Party Conference,
Polly Toynbee at a fringe meeting said that her
colleagues were aware of charities which now prefer
to keep their heads below the parapet rather than
risk the cut off of Government funding streams.
A third major issue is that of stakeholder engagement.
To whom are community organisations in reality
accountable? If a development trust acquires land
or property from a council do any real mechanisms
exist to ensure that they act in the interest of
their community? How do they know what their community
is? How many organisations elect trustees in a
way that ensures representation? At least my local
council knows that there is a robust re-election
mechanism every four years.
These are real risks that lie ahead.
Mary Chadwick is a former banker who now works
in the third sector. Her website is: www.primetimers.org.uk