New Philanthropy Capital and Deloitte hosted an event recently, focusing on the question, ‘Should charities step in for public services in an era of austerity?’ It aimed to explore how the charity sector is changing in response to a shrinking state and filling gaps left by contracting public services. The event featured a panel discussion involving the chief executives of Catch22, Barnado’s and the Mayday Trust, and the Grants and Public Policy Manager from the John Lyons Charity. They shared how their organisations have dealt with austerity and their changing relationships with the public sector.  Here are some of the key takeaways:

  1. The current commissioning model is forcing charities to make hard choices

Javed Khan, Chief Executive of Barnardo’s, argued that in the face of austerity ‘doing more for less is the mantra we have to adopt’ in order to win contracts. Instead of wasting valuable resources and donors’ money in trying to win work from commissioners rather than focusing on the issues they want to address, Javed argued for a smarter approach. He exhorted the audience to ‘move away from the shackles and chains of the current commissioning model, because it just isn’t sustainable’. Audience members highlighted challenges in this approach and the effect it can have on charities both big and small. For example, smaller charities are struggling to win contracts in the face of competition from private contractors. However, this work is often subcontracted, sometimes back to the smaller charities, with larger organisations taking a 37% management fee. In response to this, Catch22’s Chief Executive Chris Wright argued for collective impact, with charities working more closely together to combine their strengths.

  1. Charities are already working to fill gaps in public services

Erik Mesel, Grants and Public Policy Manager at the John Lyons Charity described how his organisation responded to cuts in order to maintain local collaborative networks for the youth sector. To maintain support for charities supporting young people across North West London, they created ‘Young People’s Foundations’ which develop collaboration, fundraise and provide capacity building and networking. However, the audience raised concerns about the ethics of stepping in for the public sector where government policy has created a need, such as food banks and legal aid.

  1. Being bold in the face of austerity can pay off

Pat McArdle, Chief Executive of the Mayday Trust, explained how austerity had triggered a renewed focus on service users at her organisation. In 2011, the Mayday Trust was a state-funded, medium-sized organisation, supporting housing and the homeless population. The first step in the Trust’s response to austerity was a qualitative study of 100 services users to explore the impact of its services. According to Pat, this prompted wide cultural change, with the organisation withdrawing from existing funding sources to seek investment that would enable service users to be placed at the centre of the Trust’s work, from sources such as trusts, corporates, and donors. Urging others to take a similar approach, Pat concluded that ‘voluntary sector organisations need to step up, need to stop looking at how to survive and look at your mission’ and in doing so, ‘civil society needs to bring back control and listen to the people we serve’.

  1. Charities and the public sector must work together more closely and in new ways

Chris Wright argued for a ‘blended approach’ rather than ‘binary choice between the state and civil society’. He gave the example of Catch22, the vast majority of whose income is generated through public sector contracts. Javed Khan supporting this, arguing that it should not be a question about charities replacing the state, but rather on creating a ‘blended coproduction’, where charities and public services work together to tackle the toughest issues in society.

  1. There is no single answer – but partnerships are key

There is no consensus as to how charities should work with, for or alongside the public sector. Charities are taking a range of approaches in response to austerity. However, the discussion underlined the importance of developing increasingly wide, strong and diverse networks across the public and not-for-profit sectors. In the years ahead, this will be key in ensuring that vulnerable and disadvantaged communities are supported effectively.