Shared measurement for the well-being of young people – a report from our Well-being Measure drinks reception

Our venue - the Institution of Mechanical Engineers, overlooking HM Treasury

On Wednesday evening we held a drinks reception in Westminster attended by over 60 charities and funders passionate about improving young people’s well-being.

All these organisations had come together to hear about our Well-being Measure, and learn how it could help them. Over a glass (or two) of wine, we heard a series of short speeches: from NPC’s Dan Corry, Jane Steele, Head of Impact and Evaluation at the Paul Hamlyn Foundation, and Maria Stephens and Marcus Duran of Toynbee Hall, a customers of the Well-being Measure.

Dan Corry started by saying how excited NPC is by the Well-being Measure, and its potential to help thousands of organisations, and hundreds of thousands of young people. He noted how all organisations are feeling the increasing demand to demonstrate their impact, and as public finances continue to be strained, this is only going to get more pressing – particularly in youth services. He argued for shared approaches to measurement which are nuanced and flexible enough to account for individual circumstances – very much the philosophy of the Well-being Measure.

From a funders perspective, Jane Steele talked about how being able to quantify and demonstrate outcomes is vital to trusts and foundations. She explained how this makes organisations stand out and how PHF is encouraging grantees to take up the Measure.

As customers, Maria Stephens and Marcus Duran of Toynbee Hall said how pleased they had been to find a measure that combines quality, ease-of-use and credibility. Maria gave a short account of how they were able to show improvements in young people’s resilience and life satisfaction, and how helpful this was in reporting their impact to funders. Marcus explained how the Well-being Measure had given him a new language to communicate to schools and the confidence to be able to argue how their work improves well-being. You can read more about our customers experiences here.

‘The reports are great – we see results immediately and they’re perfect to present to our funders.’ Quote by customer Vincent McCart from Operation Youth Advantage +

We finished the evening by thanking our all those involved in the tool: our customers, including the Outward Bound Trust, Scottish Adoption Agency, Save the Children UK, Brighton Oasis Project, and BBC Children in Need; our funders, the Private Equity Foundation, Paul Hamlyn Foundation, and Esmée Fairbairn Foundation; and the excellent web developers at Public Zone.

Overall the evening was a great success. To everyone who came – thanks for making it a great event and we look forward to continuing the conversation!

Work with 11-16 year olds and need to prove your impact? Take a look at NPC’s Well-being Measure here and you can sign up to our monthly newsletter here. Costs start from £800 + VAT for a ‘before’ and ‘after’ measure of a programme.

You can get in touch with us by emailing wellbeing@philanthropycapital.org or calling 020 7620 4850.

What happens now the money has run out – the challenge for trusts and foundations in the new economy

It has almost become a cliche to say that we are living in “interesting” times – even though when I hear this said about the charity world it usually means something else.

But where it is a fitting description is when speaking about trusts and foundations. It can rarely, if ever, be a more interesting time to be giving grants.

Last week I heard NCVO’s Sir Stuart Etherington comment how during the last decade foundations seemed to lose their way, overshadowed by the glut of public money coming into the sector. Now, as government cash has dried up, their time as the primary agents of change seems to have come round again.

I’ve always believed that trusts and foundations are a vital part of the DNA of the charitable sector. Not least because they can use their resources to do things that no-one else can. To take an obvious example, NPC wouldn’t be where it is today without their support. I remember the day when we secured our first grant – it was an exciting moment, not least for the sense of validation for a fledgling research programme. Since then there have been times when we haven’t always seen eye-to-eye, but this is the tension that makes the sector such as lively and creative place to be.

As the axe falls on public spending, I think foundations are in position to become more important than ever before. But if this renaissance is to happen, there are formidable challenges ahead.

Most urgently, foundations will have to find new ways to sustain their impact. The dominant model in grant-making over the last decade has been to pay for start-up costs and then look to government to provide continuation funding. There’s a generation of professional grant-makers brought up to think that this is the way grants end. In a world of less generous government, it may no longer be a reliable exit strategy.

To find alternatives, grant-makers will have to be imaginative. I can think of four possible solutions to the problem of exit: (1) forging alliances between foundations that together can commit to long-term funding; (2) focusing on ‘voluntary’ organisations, where the future can be sustained through volunteering; (3) setting up surplus-generating businesses, that commit to having a social impact; and (4) investing in the emerging (and experimental) social impact bond market (which will be, in fact, backed up by the guarantee of government money).

The third and fourth possibility encompass the much-hyped new field of ‘social investment’ – which you can read more about our views on here. (I’ve omitted other forms of social financing – such as loans – because they are only an option if there’s a flow of cash to bank against. So in the context of an exit strategy they will buy you time but not solve the problem.)

I think that finding new exit strategies is the greatest challenge foundations face if they are to reassert themselves and continue to sustain their impact. It is no certainly no exaggeration to say that we live in interesting times.

An emphasis on preventative services leaves the rest of the UK behind – NPC’s comment on the Scottish budget

Earlier this week, the Scottish Government published its draft spending plans for the next three years. Faced with a 9.2% reduction in cash from Whitehall, it is an important moment for the future of Scotland and Scottish charities.

Comment on the plan has been subdued. Partly this is because there aren’t many surprises but also because the document is a whopping 262 pages (nearly 140 more than the UK’s equivalent this time last year). I’ve picked out three of the main points that affect charities:

1. The central Third Sector budget sees a real terms reduction from £27.0m to £22.7m over the period, that is nearly 16%. This is vital to some but the vast majority of spending on charities doesn’t come out of this pot, it comes direct from local authorities. According to analysis by COSLA, which represents Scottish local authorities, overall their budgets are hit by 7%.
2. OSCR the charity regulator, sees a fall in income from £3.3m to £3.0m. I think it already needs to do a lot more to make information about Scottish charities more accessible (try getting hold of a set of up-to-date charity accounts in Scotland) and this job is only made harder with less money. Quite a job for the new man at the helm.
3. The government states that it wants a ‘decisive shift towards preventative spending’, whereby it focus resources on preventing social problems rather than dealing with crisis – echoing the recommendations of the recent Christie review on the future of public services.

It is last of these announcements that is perhaps most significant and offers the greatest opportunity to charities. It embodies a refreshingly long-term view, which may genuinely break the mould of governments’ tendency to look only as far as the next election. Interestingly, our analysis of the UK budget back in October 2010 warned of reductions to preventative services. As money becomes tight, we know from experience that budget holders tend to focus on crisis not prevention.

The Scottish Government seems to be keen to avoid this pitfall and has made its intentions clear by earmarking money for new funds to tackle drugs problems, support early years and help older people.  These announcements were welcomed by the Scottish Council for Voluntary Organisations, with the caveat that they doesn’t just mean that money is hijacked from other budgets.

This firm commitment to investment in preventative services is one that leaves UK government lagging behind. We now wait to see what difference these announcements will really make. Should the reality match the rhetoric then charities are likely to play an increasingly important part in public services in Scotland.

Charities have a duty to use the data out there

We live in a world surrounded by an unprecedented amount and variety of information. Data is everywhere. I think every charity has a duty to ask themselves how they can make the most of this.

A quick trawl around the internet shows that data is freely available on issues as wide-ranging as homelessness, littering, child poverty and street crime. This offers  almost every charity the potential to find new ways of creating value for beneficiaries.

If this makes your mind boggle, let me give you a simple practical example. A couple of weeks ago on this blog we posted a guest blog by data enthusiast Matt Parker. Help the Hospices, the umbrella charity for the hospice movement in the UK, was looking for a way to better understand the overlap between the need of services and the location of existing hospices.

What Matt did is to combine postcode data from Help the Hospices on its members (freely available on its website) with existing data on poverty from the government’s index of multiple deprivation (also freely available). The result was a useful google map and a simple example of what can be done when you ask the right question. For other examples, you can see the stuff done by NCVO and the Guardian.

There were virtually no barriers to doing this – if you had come up with the idea, you could have done it too, from anywhere in the world. True, there’s some technical nouse required but I’d bet that more than a fair proportion of computer literate people could work up something similar given a free afternoon. (My point is that I think the limiting factor is imagination rather than IT expertise.)

This is a very simple example but simple is where we should start. Charities should wake up and embrace the data out there. Every charity should ask themselves: what questions do I have for which data can give the answer? I bet you will have lots. It’s a chance for savvy organisations to set themselves apart.

Data might seem abstract, but the benefits aren’t. If it can help you to spend money more wisely or reach a group that otherwise wouldn’t get support then that wins the argument.

Agree or disagree? Your thoughts are welcome.

Response to the public services white paper: will open public services lead to a future of private/third sector partnerships?

This afternoon saw the launch of the much-awaited (and much-delayed) government white paper, which announced plans for the future of public services. As expected, charities feature prominently.

The PM says that he wants to use private companies and charities to deliver better public services

The main thrust of the paper is to open up contracts for tax payer-funded services to a wider range of providers. This means more charities and private companies running public services. If you think this sounds familiar that’s because it is – this policy has a long history.

The major points in the paper to affect charities are:

• Commissioners will be forced to allow private companies, charities and community groups to bid to run services. The white paper says there is ‘no ideological presumption’ about who should deliver public services.
• Decision-making will be ‘decentralised to the lowest appropriate level’ – with the aim that parish councillors, mayors, or newly elected police commissioners, get more say over how money is spent.
• There is a renewed committment to the Community Right to Buy, social impact bonds, open data, and a number of other new initiatives to assist charities and mutuals wanting to deliver public services.
• Speaking at the launch, The Prime Minister described “ending the old big-government, top-down way of running public services, and putting power in people’s hands”. Sir Stephen Bubb said that Public Service reform will have succeeded when public servants “say that they work for the public not the state”.

So, what are we to make of these plans and what do they imply for charities?

Over the last decade, we’ve seen a clear shift in government’s relationship with the charitable sector, towards something more formal and prescribed. Even with its keenness on ‘putting power in people’s hands’ and ‘local control’, I can’t see the white paper doing anything but push us further in this direction (despite the Conservative party’s pre-election enthusiasm for grant funding).

No doubt this will mean more opportunities for charities to bid for government money, with all the issues that implies. Trustees and managers will have to make their decisions carefully.

Perhaps the most fascinating question is whether charities are ready to do the sort of public service delivery that government wants. Of course, some already do – and do so very well (think Barnardo’s or Leonard Cheshire). But many will not have the skills, experience or capital to do so at the scale being asked of them.

The white paper offers some recognition of this but underestimates the challenges ahead. Sure we’ve got a new social investment bank, but we’ve lost much of the sector’s capacity building initiatives and local support infrastructure is really feeling the pinch.

I know this concern is shared by public sector commissioners. Last week, a senior civil servant said to me that whilst most charities he works with have the ‘right ethos’ they are still ‘unprofessional’.

One possibility for charities intent on delivering public services is partnership with the private sector – to manage contracts, to finance and invest, and to add capacity. This is already happening and I expect to see more. See for example, Disability charity Contact a Family has teamed up with Serco, and Catch-22, Turning Point and Serco are working together at HMP Belmarsh in South East London.

Whether this a good thing depends on the relationships that develop. I understand that during the consultation there was much controversy from departments over the ‘any willing provider’ principle, with opponents arguing that there are good reasons to exclude for-profit providers in some public services. Charities too must be wary of the risks of partnering with companies that prioritse the interests of shareholders.

Overall, the white paper reflects the direction we’ve been heading and there are few surprises. As always, this sort of announcement doesn’t itself change very much: the rhetoric might be radical but it is about local authorities and what they decide to make of it. Wresting any degree of control from commissioners will be no easy task.

In the end, the public doesn’t care too much about who delivers public services – and the government now agrees. It’s quality we all want. Charities shouldn’t forget this.

Later in the year, NPC will be producing a guide for commissioners and charity managers on charities delivering public services – modelled on our popular Little blue book. Watch this space for more information.

MPs say that NPC’s Well-being Measure provides a ‘template’ for evaluation of youth services

The House of Commons Education Select Committee recently published its inquiry into services for young people. In its report, the Committee says that NPC’s Well-being Measure – our new tool designed for charities and schools to evaluate their impact on young people – provides a ‘template’ for the evaluation of youth services.

The cross-party committee of MPs was set up at the end of 2010 to investigate the state of youth services, including whether resources could be spent better and how their effectiveness should be assessed. As part of the inquiry, NPC was invited to submit oral and written evidence.

Overall, they recognise that outcomes are hard to quantify but that ‘it is essential that publicly funded services are able to demonstrate what difference they make’. However, the committee heard evidence that organisations often lack the tools to be able to do this.

In its recommendations, the MPs urge government to get better at measuring impact and cite NPC’s Well-being Measure as an example of good practice. The committee’s report states that providers of youth services should ‘take account of personal and social wellbeing measures, young people should be closely involved in [their] design and application and [they] should be simple and inexpensive to administer. New Philanthropy Capital’s wellbeing index presents a good template for initial consideration.’

NPC welcomes the recommendations of the report. Using our Well-being Measure, we look forward to working with front-line organisations to help improve services for young people.

If you are interested in using NPC’s Well-being Measure or want to sign up for our regular newsletter, you can email us at wellbeing@philanthropycapital.org. (Please note that NPC’s Well-being Measure is currently only available in the UK.)

Watch this space for further details – coming very soon!

The small things we could do to get more out of payroll giving

Payroll giving is something that us Brits are really bad at. With a rate of just 4% there is no doubt that we perform dismally, particularly when compared to other countries. (In the US it is 35%.)

Last week, HM Treasury Minister Justine Greening told the Institute of Fundraising conference that she is looking into improving this – one of the splurge of ideas from the recent Giving White Paper.

Undoubtedly the most urgent priority is to increase the measly rate of take-up among British employees but the Minister also says that they are keen to look at ‘not just in the big ticket items, but the smaller areas that can make a difference’. Such small ideas are in vogue following the fashion for ‘nudging’, a concept in behavioural economics made famous by Richard Thaler’s book.

Here’s a list of three small things that I think could make a difference in payroll giving:

1. Committing a percentage of income, rather than a fixed amount – I signed up to NPC’s payroll scheme back in 2004 but I’m ashamed to say that although my salary has risen, my contribution hasn’t because I have never bothered to change it. By making payroll giving a percentage of my income then I would automatically be giving more today.

2. Deferring payment – I recent read an (unpublished) research study that showed that if you ask donors to defer their payments then they have a tendency to give more. This is because we all have a tendency to value our future income much less than the money already in our pockets (to use the economic jargon, we heavily discount future costs). By asking donors to defer their initial donation by a couple of months, the overall amount given might be increased.

3. Tell us what our colleagues have contributed (anonymously) – there is some evidence that knowing what others have given leads to a ‘bidding up’ of donations. Additionally, if we know that others are contributing then we are more likely to do so ourselves.

It is difficult to say what these measures might be worth if implemented. But as the government begins its campaign to increase the take-up of payroll giving, it would be wise not to ignore the small things.

Why the Prime Minister’s support for measuring well-being is good for charities

If you are a regular follower of NPC’s work, you’ll have heard about the development of our Well-being Measure – a tool designed for charities and schools to evaluate their impact on young people.  So in a speech earlier this week, we were delighted to hear the Prime Minister David Cameron gave his strongest avowal yet of the importance of using measures of well-being as a yardstick for making decisions.

He stated how he wanted to lead a government that ‘actually think[s] about people’s well-being when we make decisions’. I couldn’t agree more.

As well as providing a richer measure, I think it’s also good for charities as it moves us closer to valuing the all-important ’soft-outcomes’ that matter most to people, such as increases in self-esteem or relationships. Too often it seems that if you can’t put a ‘£’ on it, it doesn’t seem to be valued.

It would seem that the Prime Minister’s warm words are beginning to be backed up by action. The concept of well-being may be approaching lift off. ‘Right across Whitehall we are today applying to the design of policy the best that science teaches us about how people behave – and what drives their well-being’, the Prime Minister argued.

To support this goal, last year the government tasked the Office for National Statistics (ONS) with developing a measure of overall well-being. We will see the fruits of this at the end of the year when, for the first time, we have a genuine measure of the UK’s well-being.

But while the ONS measure will give us a good overall sense of national well-being, it is unlikely to provide the necessary level of detail required to evaluate individual policies and investments. For this we need other measures.

That is where NPC’s Well-being Measure fits in. In contrast to the ONS’s measure, our tool works at the scale of a small group of ten or more. It can be used by charities, schools, primary care trusts or any organisation that works with young people to measure changes in well-being. And what’s different is that it is practical and developed with the goals and limitations of front-line organisations in mind so it accessible to almost everybody who wants to do measurement.

At NPC we support David Cameron’s wish to make the measurement of well-being central to policy-making. Through our Well-being Measure, NPC hopes to play its part.

Please note that the availability of NPC’s Well-being Measure is currently limited. It will become widely available later in 2011. To sign up for updates or if you want to enquire about using it please email us at wellbeing@philanthropycapital.org.

Taking action on happiness requires measuring what matters

I woke up this morning to a discussion on the radio about what makes us happy. The prompt for this is the launch of Action for Happiness, a new ‘movement for social change’ that aims to promote happiness as the ultimate goal of individuals, communities and government policy.

On its website (designed by our whizzy friends at Public Zone), the authors lament that ‘for fifty years we’ve aimed relentlessly at higher incomes. But despite being much wealthier, we’re no happier than we were five decades ago…it’s time for a positive change in what we mean by progress.’

This is a laudable goal, but of course it needs to mean something practically. Action for Happiness propose 10 Keys to Happier Living, including ‘do things for others’, ‘connect with people’ and ‘be part of something bigger’. Its examples of practical action make a lot of sense but it’s difficult not to feel confused about precisely what the end goal is.

Part of the success of using growth in income as our definition of ‘progress’ is that it is easy to measure. Unfortunately, up to now, the same cannot be said of happiness.

If you are a regular follower of NPC’s work, you’ll have heard about the development of our Well-being Measure – a tool designed for charities and schools to evaluate their impact on young people. At the moment it’s being used by a small number of diverse organisations – including Action for Children, BBC Children in Need and Wellington College. We look forward to welcoming more users when it becomes more widely available later in the year.

Our work joins the recent efforts of The Children’s Society, the Young Foundation and the New Economics Foundation to measure well-being in different contexts. But what’s different about NPC’s Well-being Measure is that it is practical and developed with the goals and limitations of front-line organisations in mind.

Working with Public Zone, we’ve created a tool to take the hassle out of measuring: it’s all online, you don’t need to be an expert in statistics, and the results are presented clearly and simply.

The success of Action for Happiness relies on finding a way of measuring what matters. In doing this NPC hopes to make an important and influential contribution.

Relatedly, you can read an article from this week-end’s FT on NPC’s Well-being Measure here.

The Big Society is a once-in-a-lifetime opportunity for charities

Today’s NCVO Annual Conference, the largest gathering of third sector leaders in the UK, asks ‘what does the Big Society mean for charities?’ One thing we do know is that, having weathered a blizzard of recent criticism, it is an idea that is here to stay. And whatever you think - whether it inspires action, confusion or derision - it has got everyone talking.

For the first time in my lifetime, charities find themselves centre-stage in a truly national debate. It’s an opportunity that doesn’t come along very often. But like Colin Firth in the Oscar-crowned King’s Speech, the spotlight is pointing at us and we are hesitating.

The Big Society is there for the taking. As politicians and Big Society gurus fluff their lines, and civil servants flap around trying to understand what charities are and how they’ve managed to ignore them for so long, now is the time for the sector to take the lead. It’s a golden chance to cement the place of charities in the national consciousness.

To do this we need to be more vocal. It is an odd quirk of the last few years that the names of bankers are more familiar than charity leaders, but it tells us something. We need more figures like Camilla Batmanghelidjh, Shami Chakrabarti, Martin Narey and Esther Rantzen – people that the public recognise and associate with charities. We’ve got no shortage of characters within the sector that could speak out more, and be successful at it.

Of course we also need to talk about the right things – what makes us different and what value we create in people’s lives, all of which can be framed in the Big Society rhetoric. What we mustn’t do is fall into the trap of just talking about cuts, or our audience will quickly lose interest.

Despite what the politicians promise, the Big Society won’t be around forever. Charities have an unique window of opportunity and we need to make the most of it now.

The Big Society: no cheque enclosed

The twentieth-century American author Dorothy Parker once said that ‘cheque enclosed’ are the two most beautiful words in the English language. Judging from recent events, you might have wondered whether ‘Big Society’ are the two most ugly.

Over the last few days, the government’s big idea has received another onslaught from sceptics. At the top of the list of accusations is that public spending cuts makes a mockery of it. This started last week with Liverpool Council’s ‘withdrawal’ from the Big Society and ended with Dame Elisabeth Hoodless’ broadside about the future of volunteering.

The fact is that the government have so far failed to directly address the question of what effects the cuts will have on the Big Society. Minister for the Cabinet Office, Francis Maude, is fond of trotting out the statistic that 90,000 charities don’t receive any state funding, which seems to suggest that Big Society can get on fine without any government support.

But we do have a problem. Whatever way you look at it, the charitable sector is going to get smaller. And it isn’t just about large charities losing out. Church halls, sports clubs and local playschemes, for example, all rely on public grants, and use volunteers that cost money to recruit, train and manage. Such organisations have already begun to disappear.

In view of the inevitable dip in financial resources, the most difficult question facing the charitable sector is about how it can continue to have impact. Resources have to be used smartly and charities have to get better at concentrating on what they do best. That is why in NPC’s pre-election Manifesto we argued for government to establish an impact fund to support charities. And it’s why we work with so many charities to help them learn from each other.

The Big Society has no cheque enclosed. Instead we’ve got to try to do more with what we have got, and that means a closer attention to where we are (and are not) having an impact.

Unfortunately we have no choice in the matter – resources simply have to stretch further.

A local perspective on the spending cuts

Of all the spending cuts announced back in October, by far the most significant for charities are those to local councils.

It’s easy to forget this from the vantage point of the capital, where everyone gets excited by when the Minister does this and when the Minister does that. But the front-line of voluntary action is in villages, towns and cities, well away from the centre of power.

My local council is Greenwich, south-east London. They’ve just unveiled proposals for the first tranche of budget cuts (£21m, as part of a total of £65m over the next three years).

Charities don’t come off particularly well. Proposals include savings in day care for older people, mother and toddler groups, and a cut of £162,000 in small grants for voluntary organisations. This doesn’t sound like a lot when many of us have got used to hearing about billions of pounds but it is a big chunk, and is likely to be repeated over the next three years.

An extract listing some of those who lose out is opposite. None of these charities are brand names, but their demise will be a blow to those who depend on them.

On the flipside, there will be opportunities. Greenwich proposes to transfer youth services out of the council, and will look to find a delivery partner. But the scale of the job means that it will only be the large charities, such as Barnardo’s and Action for Children whose ears will be twitching.

So on the face of it, small charities lose out and some big charities may actually be better off. Or perhaps there a happy medium? Instead of expanding their own order books, it could be a chance for the big charities to work more closely with local groups. Take the example of large homelessness charity Thames Reach and a tiny charity that works with Irish travellers in nearby Lewisham as a case in point. Then we could have the benefit of both.

Should we encourage donors to be less modest about their charitable giving?

Nobody likes a show-off. Most of us can’t help thinking that there is something vulgar about obvious displays of wealth and love turning our noses up at people dressed in clothes that are more expensive than ours or who drive cars that we can’t afford.

But when it comes to public displays of giving, where do we stand?

The past few years have seen a host of very public donations to charity. These range from the likes of Bill Gates, Warren Buffet and the members of the Giving Pledge in the US to celebrities such as Elton John or Coldplay. 

Although it is not as easy to criticise this sort of generosity, many of us still find a way.

In our defence, there are strong influences in our history that make us feel uncomfortable. For example, the Bible’s New Testament encourages us to give alms in secret. (I’m sure a biblical scholar could criticise me for a misreading of the bible but that is what I, and many others, learnt at school.)

Elton John is among the rich and famous to be public about their philanthropy

I think we need to get over our squeamishness about public displays of generosity. Giving to charity is known to encourage more giving to charity, and that is a very good thing. We should be pragmatic and applaud such acts.

Modesty is a very attractive quality in many aspects of life, but not in giving to charity. It is up to all of us, but particularly the wealthy and famous, to set a public example.

Warning to charities providing ‘discretionary’ services – NPC’s reaction to the Spending Review

The media gather for the Chancellor's speech on College Green outside the Houses of Parliament in Wesminster, 12 noon.

Today is the most important day for the UK charitable sector in 13 years. As I type, the Chancellor George Osborne has just finished his announcement to the House of Commons on cuts to the UK budget.

Like many, I’ve been glued to the TV set. Given that government funding makes up 38% of the UK charitable sector’s income, and 13% of charities get over half their income from government, it is difficult to underestimate the significance of the speech.

This is a summary of the main points for charities:

• Local councils will get a 7.1% a year reduction to their budgets every year for the next four years. The Chancellor pledged to remove ring-fences from council budgets from next year, with the exception of the schools and public health budget.
• The voluntary and community sector will benefit from a new £100m one-year transition fund to help cope with the changes
• Whitehall departments will lose £6bn, with the Home Office, Ministry of Justice, the welfare bill and capital spending on social housing and prisons hit hardest. Each department will publish a business plan next month identifying the source of cuts.
• Spending on the NHS and schools budget will both rise and there is an additional £2bn commitment for social care over four years.
• As anticipated, the Chancellor confirmed changes to structures of government services – GPs will take charge of health commissioning and personal budgets will be expanded for children with special educational needs and adults with long-term care needs.
• The ‘Big Society’ was mentioned only once at the start of the speech, although Osborne reiterated the point that we ‘are all in this together’ several times.
• Also… there will be an estimated 490,000 fewer public sector job in four years time, more quangos will be axed, there is money promised for mental health therapies and dementia, Train to Gain is to be axed, there will be more than 75,000 new adult apprenticeships, and programmes for pre-school children receive a cash boost.

So what does all this mean for charities? There are two things I want to pick out from between the announcements.

First, although the Chancellor pledged to support charities, the scale of cuts means that organisations that provide what could be labelled by government commissioners as ‘discretionary’ services should brace themselves. By that, I mean services that government is not, strictly-speaking, obliged to provide. Youth work, short breaks for the families of disabled children and crime prevention projects, for example, all potentially fall into this category.

Second, and related, are we going to see the end of many preventative services? A feature shared by many discretionary spending items is that they aim to act now to stop problems occurring in the future. An example of this is domestic violence advice for women that prevents a cycle of abuse from escalating, or work with young people on the verge of exclusion from school.

But as money becomes tight, we know from past experience that budget holders tend to focus on crisis not prevention. Perhaps the biggest challenge to policy makers is not to fall prey to the disease of short-termism which so often seems to be to a trait of our political system.

If government stops funding preventative work it won’t just be a shame, it will be a disaster. It’d be yet another burden to pass on to the next generation who already have enough problems not of their making. Remember the adage: if you think prevention is expensive, try paying for the cure.

After two years of fear and speculation, today we have had some real clues to the future shape of the charitable sector. It is clear that no stone will be unturned in the search for savings. We’ll learn more in the coming weeks and months, for example when the Scottish Budget is announced in March and when many public contracts are up for renewal in the spring. This is just the start.

For more commentary from NPC on the cuts and the impact of the economic downturn, read our cuts paper published on Monday or previous blog entries.

Should government step in to save charities that fail?

Recent economic history is a story of fallen giants. The financial crisis and subsequent recession saw a swathe of major corporations put to the sword. But despite the demise of once grand and proud companies, we haven’t (yet) seen a major UK charity fail.

There are lots of reasons why charities don’t collapse in the same dramatic fashion as major corporations, but it isn’t beyond the realms of possibility.

Worryingly, a number of the big charities depend on government for the majority of their income. And with government departments and local authorities facing up to 40% cuts, their business models are looking shaky. Privately, many of the top CEOs must be nervous.

If the worst happens and one of our big charities is in trouble, what happens next?

The starting point is to look for investment, like any business would. In practice this means either a rescue by a major donor, an appeal to the public for funds, or a take-over by another charity. We’ve seen lots of emergency appeals over the last few years to plug funding gaps, for example from Barnardo’s, which was reported on this blog.

But what if this strategy fails? In 2008 when banks were in difficulty and private investors could not be found, governments stepped in. Around the world, banks were nationalised or part-nationalised on the grounds that letting them fail would inflict too much harm on the economy and cause too much human suffering.

This poses an interesting question. Should government bail out a major charity?

It would be a real headache for policy-makers and I guess the answer is that it depends – depends on how important the charity’s work is, how wide its influence spreads, and whether it has a convincing business model to make sure problems don’t happen again. There is precedent of such government help – for example in the case of the ‘rescue packages’ for London-based Kids Company in 2005 and 2007.

We are already know that in a generation’s time we will still be paying for government’s decision to bail out the banks. As the public sector cuts begin to hit, I wonder if we might also end up paying for failed charities too?