What to consider when facing funding cuts

In a speech he made at the recent NCVO annual conference Eric Pickles, the Secretary of State for Communities and Local Government, made an announcement that he expects local authorities to behave reasonably in the way they manage their relationship with voluntary and community groups.

The Secretary of State set out three tests of reasonableness:

•           First that councils should not pass on disproportionate cuts to local and voluntary groups
•          Secondly that they should talk to voluntary and community groups at a very early stage about how services need to change.
•     Thirdly that they will have at least three months notice about the need to end or alter a grant or other support.

The Secretary of State defined disproportionate cuts to the vital services that the voluntary and community sector provides, as bigger reductions to budgets than local authorities take on themselves.  He gave a commitment to consider giving statutory force to these expectations should local authorities fail to meet them and made it clear that he expects those local authorities that have made disproportionate cuts, to reconsider.

There are a number of organisations available to help you to navigate this minefield so we do not aim to re-invent the wheel and give you all the information again, but we have included here direction to articles and websites that you may find helpful.

The following is an extract from a really useful factsheet they have produced about what you need to know about challenging funding cuts:

“The decision to challenge funding cuts, what to challenge and how, depends on the individual circumstances. Before you decide next steps you should consider the following:

Consultation: If the public body has not conducted a consultation and taken time to consider the responses, there may be grounds for challenge.

Impact assessment: Public bodies have specific duties towards people with protected characteristics, such as BME groups, the disabled and women. If no impact assessment has been done, this might be grounds for a challenge.

Notice: The Compact states a minimum of three months’ notice, but your funding agreement may say more. Even if you don’t retrieve all your funding, you may succeed in getting an extended notice period.

Services: Will the services you provide be provided by anyone else, for example by the public body itself, or will service users be left without? If the latter, and there is an identifiable legal error in the process, then service users themselves may be able to bring a challenge

Funding agreement: Do you have a grant or a contract? If it is a contract this is harder for a public body to end it early. Look at the clauses around terminating the agreement.

History: If you have been funded for a long time and the public body has a history of consulting you on important changes, you are in a better position to argue that you should have been involved in decisions around cuts.

Click on the following link to see the full document: http://bit.ly/gCdUCG 

You can also see the bulletin about how to manage cuts through the following link http://bit.ly/e6Pbyy 

“Staying positive as the cuts deepen” is the copy of an address given by NAVCA Chief Executive Kevin Curley's address to the RAISE Conference on 20th January 2011 in London.

You need to know if your funding is a grant or a contract.  Listed below are the technical differences between grants and contracts

·         A public sector grant involves the provision of subsidy (capital or revenue) funding, by the relevant public sector body, in support of a charitable, or other public benefit, service, which the public body wishes to support, as part of fulfilling its own public benefit remit. A grant is provided on conditions aimed at ensuring the proper application of the grant funds, but not in return for anything.

·         A public sector contract involves the provision of goods or services, to the relevant public sector body, directly in return for payment representing the price of the relevant goods or services. Terms and conditions of a contract regulate the exchange of services for payment.

·         There is often confusion in distinguishing between grants and contracts. For example, a public sector contractual service may be purchased by a public sector body for actual delivery to a beneficiary group, giving the appearance of a grant funding relationship.

·         In addition, there is often misunderstanding around the term “service level agreement”. Such an agreement should clearly function either as a contract, or as a grant, yet is commonly regarded as some third type of relationship. Properly analysed, a “service level agreement” is often a contract specification document.

This information is taken from a longer document about procurement or “commissioning” which you can see by following this link  http://bit.ly/eew2sr       

“Pathways through the maze: a guide to procurement law” - 2nd edition (Oct 2010) can be accessed through the following link http://www.navca.org.uk/publications/maze/Home.htm

ARX has also written a guide to procurement “Tips on tendering” that you can access here. http://www.advocacyresource.org.uk/Resources 

We know that these are challenging times for all voluntary sector organisations and everyone is concerned about the future of advocacy.  We owe it to the people we are here to serve through advocacy, to stay positive in the months ahead and to address the significant changes that there will inevitably be and we hope that this information helps you to do just that.

 As Kevin Curley (NAVCA Chief Executive) said in his address at a conference “we have a responsibility to adapt to a radically different political environment and to use whatever resources are available from the state, the private sector, philanthropists and from communities themselves to achieve our missions”.