Date 1 November 2006
The long process of overhauling the relationship between government and the voluntary sector is beginning to bear fruit.
The “Compact between the Government and the Voluntary and Community Sector” was the Labour Government’s response to the widely praised Deakin Report, sponsored by NCVO in 1996.
The Compact had many welcome things to say about the importance of the sector not only as service provider but also as a contributor to policy, and it set out a full framework for relations between the two. But it didn’t get everything right, and many in the sector felt that when it came to bidding for public funds and accounting for their use, Government made excessive, bureaucratic demands which stifled initiative and blunted effectiveness.
Compact Plus
After a major Treasury review, the Government came up with “Compact Plus”, a standard set out in the form of a short, clear and simple set of commitments, which went out for consultation.
The idea is that charities that spend public money will be subject to an altogether lighter touch provided that they opt into the Compact Plus scheme and obtain its associated “kitemark”. Funding departments will be expected to sign up, too. A Compact Commissioner will be appointed to oversee the operation of the standard, encourage its adoption and deal with any appeals.
So what will you have to do to obtain the kitemark? It is almost inevitable that some form of external assessment will be required, though it is being left to the new Commissioner, when appointed, to agree just how this will work.
A new funding code
Revision of the codes of practice established under the Compact is proceeding at a faster pace. The most important is the revised “Funding and Procurement Code” which was published last year. Probably the two most significant features of the new code are:
- A clear focus on outcomes. Funding should be specified in terms of services to be delivered rather than staff and resources to be provided. As a result, everyone should be clearer about the expectations of the funding body, and the charity should be freer to innovate and try out new methods of service delivery.
- A commitment to full cost recovery. Most welcome is the explicit commitment to fund the full costs of service delivery, including indirect overheads, through the procurement process. No longer will charities have to negotiate separately – sometimes with two completely different parts of government – to agree a contract for its services on the one hand, and a grant for the funding of its core costs on the other.
Grant funding will still be available for some, in the form of strategic funds for capacity building or other such purposes, but the number of organisations benefiting from grants, and the circumstances in which they will do so, is likely to become increasingly restricted as core costs are met through contracts that pay for the full costs of services.
Transparency and Accountability
Behind the welcome changes is an intent that more transparency over the real costs of service provision, and more accountability for results, should lead to more efficiency, more effectiveness, and ultimately better value for money from the sector.
Even the most professionally run charities will benefit from an early review of how Compact Plus and its new Funding Code may affect them. The few who have been living almost exclusively off grant funding and enjoying a virtual monopoly for their services might well be in for a shock.
If you would like further information please contact David Goodridge at Kingston Smith LLP on 01727 896000.
© SA Law 2006
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