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IPPR - Small charities face double whammy of cash cuts and rising demand

Public bodies must do more to help small and medium-sized charities and prevent a wave of charity closures, a new IPPR North report published yesterday urges.

The report argues local authorities and the NHS should be better held to account for the ‘social value’ of the services they commission and that Whitehall should help this sector succeed by extending its policy of buying-in services from small and medium firms, with a similar pledge to cover small and medium-sized charities.

This would help these charities address a double whammy of rising demand and a sharp reduction in government income.

IPPR looked at charities with incomes between £25,000 and £1m and found that they play an invaluable role in bringing communities together. However, they are losing out to bigger charities that are monopolising government contracts, and smaller charities are also less able to access gifts and endowments.

Separate research published yesterday by the NCVO shows that charities with an annual income of under £1 million have lost between 34% and 38% of their government income, with smaller charities particularly hard hit.

People in deprived areas and the most vulnerable would lose the most from charity closures, IPPR North warns.

The report also calls for:

  • Umbrella bodies and funding organisations representing charities to do more to help small and medium charities demonstrate the impact of their work.
  • Councils to develop a locally determined framework for commissioning small charities, including, where appropriate, long-term grant funding for small local organisations.​

Jack Hunter, researcher at IPPR North, said:

“Small and medium sized charities too often provide the ultimate “you don’t know what you’ve got ‘til it’s gone” services. Their care, compassion and local knowledge is difficult to measure but very valuable – and if these groups close down their absence can be keenly felt by communities. In the current climate, that’s a real worry.

We’ve seen a revolution in government attitudes to contracting with smaller businesses over recent years - and now is the time to extend this to the smaller charities essential for communities.

Public bodies are of course under their own pressures, but that doesn’t mean their hands are tied. And while smaller charities shouldn’t become overly dependent on government funding, councils, Whitehall, the NHS and charities’ umbrella bodies all have a crucial role to play in considering them properly when commissioning services. This will help the small charity sector not only survive but thrive.”

Contact

Ash Singleton on a.singleton@ippr.org or 0161 457 0536

Notes to editors

The full report ‘Too small to fail: How small and medium-sized charities are adapting to change and challenges’ is available at: http://www.ippr.org/files/publications/pdf/too-small-to-fail_Feb-2015.pdf?noredirect=1

  1. The Coalition government prioritised diversity of scale in its general procurement agenda by introducing a goal for 25 per cent of central government spending to go to small and medium-sized enterprises by 2015. The government announced that this target was met in 2014/15, and the 2015 Conservative party manifesto included a pledge to increase the percentage of spending going to small and medium-sized businesses to one-third.

  2. This report is being funded by Lloyds Bank Foundation for England and Wales. The report is being published alongside a companion report by NCVO: Navigating Change: An Analysis of Financial Trends to Small and Medium Sized Charities, which is also funded by Lloyds Bank Foundation for England and Wales and will be available at ncvo.org.uk/research.

  3. This report is part of the Future of Civil Society in the North (FSCN) - a three-year programme of work by IPPR North on the state of civil society and the voluntary sector in the north of England.

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