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• Full guidance - Intelligent Monitoring 

New practical guidance published yesterday by the National Audit Office will save charities and other voluntary and community organisations time and money by reducing the paperwork they are currently required to collect when providing public sector-commissioned services.

The guidance, published by the NAO along with the Office of the Third Sector (OTS) in the Cabinet Office and HM Treasury, will help government cut paperwork while still enabling it to monitor the £12 billion it gives to charities and other voluntary and community organisations each year.  OTS has also unveiled principles for the monitoring of funding for the third sector.

Charities that receive public funding have to account to government funders for how they have spent this money and should show the impact they have achieved with it. The cost of producing this information, however, must be proportionate to the risks and benefits involved. Cutting unnecessary red tape can free up time and money that would be better spent focusing on the key services charities and others provide. The term for achieving this balance and avoiding poor practice is ‘intelligent monitoring’.

The NAO guidance, Intelligent Monitoring, provides practical, step-by-step help for government funders. Alongside this, the OTS has launched its Principles of proportionate monitoring and reporting. The aim of the principles and guidance is to lessen the unnecessary burden of monitoring on charities, social enterprises and voluntary organisations and help them and departments gain better value from it.  The OTS’ principles commit Government departments to understanding the cost of reporting for third sector organisations and to working closely with them when establishing monitoring requirements.  The principles will apply to all new funding streams.

Rob Prideaux, director of Third Sector Value for Money studies at the NAO, said today:

"Government departments have a responsibility to make sure that public money is being spent properly. However, when monitoring goes from being a safeguard to a hindrance to those delivering services, often to the most disadvantaged in our society, it no longer provides value for money.  The aim of this practical guidance, which supports OTS’s new principles on monitoring, is to help Government, taxpayers, the third sector and service users to benefit from better and more reasonable monitoring of expenditure.

Angela Smith, Minister for the Third Sector, said:

"Across public services, we are sweeping aside the barriers that hold back the third sector’s potential to play a central role in modern public services that respond to the needs of individuals. The new monitoring principles and guidance will save charities, voluntary groups and social enterprises time and money that can be spent on doing more good for those who need support. 

"Charities, voluntary groups and social enterprises have particular strengths like reaching out to the most disadvantaged people, taking risks and finding new innovative ways of doing things. This announcement is one step in a programme of reform to bring the third sector’s strengths into public services."

Notes for Editors

1. Intelligent Monitoring – an element of Financial relationships with third sector organisations – a decision support tool for public bodies in England is available on the NAO website, at www.nao.org.uk/intelligentmonitoring.  The Principles of proportionate monitoring and reporting are also available on the NAO website or at http://www.cabinetoffice.gov.uk/third_sector.aspx
   

2. The Office of the Third Sector (OTS) Principles of proportionate monitoring and reporting were produced as a response to a report by New Philanthropy Capital (NPC), funded by OTS, called Turning the Tables: Putting Charities in Control of Reporting in September 2008.  Based on information provided by 16 charities, NPC found that the average monitoring burden by all types of funder, over and above what the charities would do for their own purposes, was six pence in every pound of funding received.  But this hid considerable variation.  In particular, central government funding imposed a higher burden – on average costing 12 pence in every pound of funding.
   

3. The Comptroller and Auditor General is the head of the National Audit Office which employs some 900 staff.  He and the NAO are totally independent of Government.  He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.