Funding Public Service Delivery By The Voluntary Sector Briefing for Voluntary Sector Excellence: A joint UK/Finland/Estonia project November 2004

THE NATIONAL AUDIT OFFICE ROLE n To provide independent information, assurance and advice to Parliament on the use of public resources n To help promote better financial management and value for money

UK PUBLIC FUNDING OF VCS n 1998 Compact between government and VCS n 2002 HM Treasury review ‘The Role of the VCS in Service Delivery’ n Since 2002: -HMT – Guidance to Funders, VCS Review Home Office – procurement guidance -Compact funding code -Other government departments – VCS strategies and champions -NAO study of progress -OPM - Balance of Risk -ACEVO – full cost recovery, Sure(r) Funding

HM TREASURY REVIEW, 2002 n Funding recommendations (by April 2006) -Full cost recovery – price to reflect full cost, inc overheads -Streamlining access – common access point and application process, ‘passporting’ -End loading of payments – advance payments, balance of risk and profile funding -Stability in the funding relationship

NAO STUDY FINDINGS n Volume of VCS funding up n Progress on funding practices is patchy -Some ‘green shoots’ n Some issues cause more difficulty -Full cost recovery -Grants vs contracts n Top-level commitment, but ‘trickle-down’ varies -To other funding bodies -Within departments

OTHER WORK n HM Treasury Guidance to Funders -timing of payments -stability in funding relationship n ACEVO -full cost recovery templates -Sure(r) Funding n Charity SORP revision -current consultation, including reporting of achievements against objectives and allocation of costs n CFDG -positive response to SORP revision -‘Inputs Matter’ – disclosure of full cost -Review of EU funding end-loading payments

OUR STUDY n Focus on funding issues n Cross-departmental, Home Office lead n Coverage – spending chain, inc local govt n Takes SR2002 as its starting point – focus on implementation n A progress report -Increasing volume of work for the VCS -Streamlining application and monitoring -Moving to better funding mechanisms n Output – report to Parliament in spring 2005

FIELDWORK n Track many current initiatives and data n Contacts through G3 Champions and VCSLOs n Survey of departments, with follow-up n Case examples and drill down n NCVO -Consultation with the sector -Literature review -International comparisons n Key challenges n Draft report – end 2004 n Other outputs

PROGRESS TO DATE n Survey of departments completed -All major funders -NDPBs and agencies -Initial analysis, inc best-practice examples n Workshops -Expert groups – full cost recovery, grants vs contracts -Operational issues Oct -Local government funding issues n NCVO -Focus groups -Interviews -On-line members’ consultation -Literature review

FINDINGS continued n Building funders’ capacity to work with VCS -Variety of measures -Little evidence of dept-wide approaches -Early days -Clear VCS relationship facilitates capacity-building n Streamlining application processes -Several examples (2-stage, online forms, joint portal) -Direct-to-VCS and larger funders more proactive -Frequency of new awards encourages reform -Funding complexity resists standardised applications n Payment in advance -Widespread examples -Payment in advance of expenditure (not need) -Challenges – risk, “technology”, “EU rules”

FINDINGS continued (ii) n Longer-term funding -Moves to 3-year funding (away from 1 year or less) -Notable successes -Challenges – programmes which run across Spending Reviews, resources to set up, risk, excluding new suppliers n Lighter-touch monitoring and evaluation -Most departments have at least some examples -Extent varies -Approaches vary -Perceived barriers – central guidance, risk n Full-cost recovery -Responsibility often delegated -Variety of approaches -Challenges – VCOs’ ability to evaluate costs effectively, under-bidding, public perception of charity overhead levels