Over the weekend I listened to a very interesting programme on Radio 4 all about charities delivering public services. The issues it raised were familiar to anyone who has worked in the charity sector in the past few years. Can charities deliver public services and still remain true to their mission? How can charities fulfil government objectives and still be responsive to their grass-roots? Are charities professional enough to run public services? Are charities efficient?
Ah yes, efficiency. And how can we know whether or not charities are efficient? By looking at their overheads of course! Cue a researcher who had been looking through charities accounts and told of overheads up to 13% in charities delivering public services. Scandalous.
But there’s a problem here. As NPC has ranted time and again, looking at overheads does not tell you how efficient a charity is (see here and here). The important question is how much does a charity achieve? What is its impact? A volunteer helpline, for example, will have very low costs for delivering the service but may spend a lot looking after and training volunteers. If this counts as overheads then the charity will look inefficient even if it is delivering great results for the people it works with.
There is a classic story told to students of statistics about drunk man who is looking for his car keys under the street lights. When a passer by asks him if he dropped his keys by the street lights, the drunk answers ‘no, but the light is better here’. It is always tempting to look where we can see rather than where we know the answer is.
Perhaps the reason we care so much about overheads is because those are the only numbers we have to compare charities.
In the world of charities there are accepted truths which to many appear self-evident: ‘charities are more expensive because they deliver a better service’ and ‘charities have a better understanding of those they are trying to help’ to name the two I hear most often. I am sure that there are charities that deliver a better, more efficient service than public services but I am also sure that there are some that aren’t. Each organisation needs to be assessed on its own merits, based on what it is achieving.
Being compared with other charities is scary, there is a lot at stake. But if we don’t collect the right evidence then charities will be compared anyway—on the data that is there rather than the data that is important.
Making those comparisons also requires that the public services you’re comparing with are collecting the right data too. I’m not sure they are, and I’m not sure they are very willing to be compared? Others will know better on that…
And (flippantly), it’s actually for the best that the drunk man doesn’t find his keys, surely?!
my experience is that public services don’t understand or count their own costs – a delivery team in a local authority department, for example, might effectively treat insurance, legal, debt recovery and HR costs as “free” because they’re provided from the centre.
We work to support a range of organisations in commissioning and one of the major problems we face is when councils just use their existing deliver costs as the basis to set a price and don’t take into account their own central overheads (or even the direct line management costs of those managers outside the delivery team who provide support or strategic direction to the work) – they then demand that VCS bidders justify management costs without any nuance and just looking at them as a single block and seem to think they’re being taken for a ride when these costs effectively increase the cost of the work even though the reality is that they can sometimes be cheaper than the hidden “free” services the council will be funding.
As a result most sane organisations try not to get involved in processes where a public body is outsourcing an existing service (which is also why many public bodies are bemused when there’s little response to invitations to tender or when prices come in at surprising levels) but will get involved in bidding for new services – there will be precious little of that in the near future though.
Looking at overheads as a whole is at least a bit better than the usual “bash fundraising for sounding expensive without putting it in context” stuff.
The difficult truth is, that despite all the popular “we need charities to support charities rhetoric” and the good intentions and hard work of everybody in the sector, there is actually very little evidence that the voluntary sector provision does deliver better outcomes than other providers. I’m thinking for instance of the MOPSU project (http://bit.ly/mopsu) which look at care for older people and early years provision in the public, private and voluntary sectors.
Why do you think this is Lucy? Perhaps it would help if people listened to NPC and actually started measuring this.
And even if it is the case that there is no difference in outcomes is there some other reason why the voluntary sector might be preferable?
johnh: yes, although I was thinking of impact comparisons too…
Pete, I’ve only skimmed the MOPSU report just now, but from what I can see the Early Years side (which is something I know a little more about) doesn’t seem to control for inputs – financial or otherwise. Local Authority Early Years provision is in general much better (financially) resourced than voluntary/private sector – both directly and indirectly along the lines johnh outlines, so I’d have thought this is an important consideration.
So what is the ‘right evidence’? Hmmm….
i think that it is better if all the drunk people get their keys taken off them, that way there will be no accidents and injuries, i have experienced this before wathcing some one drive in to a wall and run sum one over. its not very pleasent!!!!!!!!!!!!!!!!