In this Clinks guest blog Paul Streets OBE, Chief Executive of Lloyds Bank Foundation, provides an analysis of their recent reseach into the experiences of 800 small and medium sized charities.

Transforming Rehabilitation has been lauded by the new government as a model to replicate for other areas of social service reform. Does this spell trouble for small and medium sized charities and if it does, will they cope? At Lloyds Bank Foundation (LBF) we focus our support on these small and medium sized charities. Over thirty years, we’ve invested over £350 million in such organisations, many of which work with ex-offenders and people at risk of offending. In the last year alone this meant committing £1.747 million to organisations working with ex-offenders and people at risk of offending.  Our recent report from research among 800 small and medium sized charity grantees, Expert Yet Undervalued and on the Frontline, shows us that these charities are already having a tough time.

The report reveals that current commissioning practices are placing small and medium sized charities at a real disadvantage – and to fail them is to fail those they support. While the competitive environment it promotes might be lauded for driving down unit costs, it’s stacked against smaller organisations. They cannot compete on scale and they can struggle with the complex, secretive process. But when it comes to understanding communities’ and meeting their multiple needs, they often win hands down. Unfortunately, commissioning doesn’t put a high enough value on this and as a result, smaller charities are being forced out of the market place, often at a detriment to service quality. Budget pressures are seeing unit costs take precedence in the commissioning process. Yet cheapest cost doesn’t always mean best value over all, especially when working with people facing multiple disadvantage, as do the charities that LBF supports.

For many, the report findings are nothing new – most of us in the sector know that times are tough, demands are rising and funds are ever harder to come by. What is new is that through our report, charities are telling this story in their own words and are identifying what is needed to effect positive change. Their words are compelling so it’s imperative that we use them as a basis for change.

The TR does little to quell our fears as far as commissioning is concerned. Despite claims that it would provide a watermark for the delivery of public services by charities, small and medium sized charities are uncertain of their role and are overpowered by larger providers. This is of course concerning for those organisations who have been delivering effective services to offenders and ex-offenders for many years and who now face uncertain futures and funding gaps. But concerns run deeper than that as government wants to follow this model in other areas. This could mean not only that many more smaller organisations struggle to survive but that those they support are left with lower quality interventions. Analysis of the last budget indicated that some of the poorest families are going to be the hardest hit by the Chancellor’s announcements and it could be these same people who are also unable to access adequate services if commissioning practices continue in their quest for increased scale and decreased unit costs.

We want small and medium sized charities to survive – and not just survive, but thrive – because we believe that multiple disadvantage cannot be tackled without them. We want to use our new report to help make this happen. But we can’t do it alone. Our survey responses highlighted that smaller charities need support from a range of stakeholders if they are going to be able to deliver effective services to those most at risk. For independent funders like LBF, that means we need to continue to provide core, long term funding. It also means supporting these organisations to be able to navigate the complex commissioning process. But if these charities are going to be sustainable in the long term, it also means working with commissioners and government to introduce commissioning practices that do not place smaller organisations at an unfair disadvantage. Bringing about this change means we need to learn to better work with government so that, together, we can help to shape an environment that enables effective services to be delivered to those who need them most. This is new ground for LBF but we think it’s ground we need to cover. And we hope we don’t cover it alone.

Read the Expert Yet Undervalued and on the Frontline report