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There might be 'a new era of public sector grants' for charities...

Charities may soon see the return of grant funding as the government wants civil society to develop a more sustainable operating model and recover its confidence so that it can play a key role in reshaping divisions in society, according to Matt Hancock, the Secretary of State for Digital, Culture, Media and Sport.

Hancock, who was speaking at an event related to the Department for Digital Culture Media and Sport’s consultation on Civil Society Strategy last month, said:

“We need a strong independent civil society because without it, we’ll have no economic growth”, said Hancock. He went on to say that the government is looking at various ways of making charities more sustainable, including a return to grant funding, reform of commissioning processes and social impact bonds.

Last year the Minister for Civil Society, Tracey Crouch, announced that she was working on a new civil society strategy and opened a consultation early in 2018. Hancock said she is looking at ways of “supporting charities and community groups to become better capitalised and more resilient”.

He went onto say that “I don’t think we spend nearly enough on the small or local organisations,” and the government is “investing in a great expansion of social impact bonds, and also exploring how to ensure the Social Value Act delivers on its revolutionary promise, which has not nearly been met yet”. He added that he believes in payment-by-results and commissioning models but that they are not the answer to everything. “Tracey and her team are looking closely at whether we can deliver a new era of public sector grants - Grants 2.0, let us call them - without sacrificing the efficiency and focus on outcomes that contracts are designed to achieve,” he said.

Commenting on Hancock’s speech, Philip Griffiths, charity partner at Mitchell Charlesworth said: “Since the financial collapse, manycharities and social enterprises have had to adapt their models. Many grants have been replaced by service commissioning and loans, but often payment is after services have been delivered making cashflow difficult and putting charities into precarious positions. Charities more often than not, are not in a position to borrow. Some small element of grant funding would make charities more resilient and less likely to failure, and so this is welcome news for the sector”.

The civil society strategy consultation closed on 22 May 2018. Shortly afterwards published the responses of various charities, which included repeated calls for the government to fund charities with grants.

The umbrella body for children’s charities, Children England said that “grant funding from government is essential for communities to thrive, putting people at the heart of everything.”

ACEVO called for new investment models, and said that “civil society organisations should be supported to use a mixed model of income sources and there is need for more flexible forms of funding, such as grants, alongside newer forms of investment.”

The Association for Charitable Foundations called on the government to “move away from contracts, and towards grants as the most enabling, flexible and efficient form of financial support.” The government will shortly report on the outcome of this public feedback.


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Charity Newsletter

Summer 2018

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