Children's charities change tack as public funding dries up

Children’s and youth charities are facing unprecedented challenges, created by a perfect storm of funding cuts, rising need and public sector reforms.

The National Children’s Bureau’s Beyond the Cuts report in April estimated that 34,000 charities in the sector face combined public funding cuts of £405m between now and 2015/16.

It warned that children’s charities would lose out disproportionately more than the voluntary sector as a whole, since government money provides a greater chunk of their income.

So what are children’s charities doing to cope through the general slump in funding and how is it affecting services for children and families?

Sarah Hedley, analyst at New Philanthropy Capital, says charities are adopting a range of responses to the cuts to try to take advantage of the new commissioning climate created by the government drive to allow public services to be run by a wider range of providers outside of the state.

She says charities are working increasingly with other organisations to bid for contracts, while trying to build skills and capacity to run services in areas in which they have not worked before. Many organisations are also recruiting volunteers to replace redundant staff.

“Lots of commissioners are under pressure themselves, so we are seeing moves towards larger contracts to minimise the number of relationships they might have to deal with and to create economies of scale,” she says.

“Many charities are worried they are going to lose out on contracts because they are too small, so they are teaming up with other organisations.”

But the strategies being employed also carry considerable risks, she warns. Use of volunteers to replace paid staff and the expansion into new service areas raise question marks over the prospective quality of services that children and families receive.

“There is always uncertainty around trying new things,” Hedley says. “They won’t always work”.

Broader service offer
Youth charity Catch 22 is among those looking to widen the range of services they offer. It has traditionally worked in areas such as substance misuse, family support, and offender rehabilitation services.

It is now exploring the potential to take wholesale responsibility for running services that local authorities would have historically provided in-house.

Chief executive Chris Wright says this is part of a strategy that aims to increase revenue for the charity by 10 per cent over the coming year, from £50m in 2011/12 to £55m in 2012/13.

“Despite the narrative of austerity, we think there are government reforms which lend themselves to organisations like ours to deliver more services – specifically the open public services agenda,” he says.

“We are looking to develop partnerships with local authorities interested in looking imaginatively at how they can discharge their statutory responsibilities, by using organisations such as ours to do so.”

Wright admits that “some local authorities are further down the line than others”, in terms of the open public services agenda, which aims to diversify the range of providers and increase transparency by making data available to citizens.
He believes that “poor outcomes” in measures related to the care system, the youth justice system and children’s attainment in schools “raise questions about whether services can be delivered differently”.

“Government itself has bypassed local authorities in relation to schools with the academies movement and free schools,” he says.

Catch 22 is also looking into new ways of providing services, including payment-by-results and social finance, as it attempts to diversify its income stream.

“We are totally reliant on contracts from the public sector,” he says. “We have an order book that sees us through the next few years, but our ability to grow will be very much reliant on creating new opportunities.”

Wright’s ambition is to find better ways of providing early intervention services.

“One of the problems with that is funding is tied up in the acute side of activity and it is difficult to release that upstream to reduce demand,” he says. “That is why we are keen to have conversations with social investors and local authorities to try and bring social investment into play.”

Volunteering charity vInspired is facing an entirely different predicament. Created in 2006 to deliver the recommendations of the Russell Commission report, A National Framework for Youth Action and Engagement, it was until last year funded almost entirely by government grants.

Jayne Colquhoun, corporate affairs director at V, says the charity is now utilising other avenues of funding including ?the Social Action Fund and generating income from partnerships with private business.

Funding changes
The charity is also tapping into other sources of government funding and has won a contract to deliver the National Citizen Service.

“Last year was a transition year for us when the way we were funded changed,” Colquhoun says. “We were thinking about the direction we would take ourselves in and asking hard questions about what our future was and whether we had a future. But we have emerged from that very confident that there is a need for what we do, particularly with youth unemployment at the level it is.”

Key to the future success of the charity, she says, is keeping its work relevant to young people. To this end, it is constantly consulting young people to make sure it delivers the right sort of provision.

“We can’t rest on our laurels. We are keeping the workforce young and informed by what young people care about and what their wishes are,” she says. “We are looking to be quite innovative in what we do, the ways we work and the services we offer. If you take new directions there are some risks. Not everything is going to work, but you have to try things fast and if it’s not working, try something else.”