Glossary of terms
A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|X|Y|Z
Accountability
The obligation of individuals and
organisations to report on their actions and be answerable to
others for what they have done.
Administrative law
The branch of law which governs public bodies
in the exercise of their public functions.
Advance payment
Payment made to a provider before that
provider has incurred expenditure (that is eligible for repayment
by the grant making or contracting public body) and before the
product or service – or an agreed part of it – has been
delivered.
Apportioned costs
The proportion of indirect costs that support
each of a TSO’s different activities, calculated to inform the
gross cost of each activity; a method used when applying Full Cost
Recovery.
Arrears payment
Payment made after the provider has incurred
the expenditure and after the product or service – or an agreed
part of it – has been delivered.
Capacity
Capacity is a measure of an organisation’s
capability and potential to apply appropriate skills and resources
to accomplish its goals and satisfy its stakeholders’
expectations.
High capacity organisations have:
-
strong leadership, professional expertise, and
good physical resources so as to deliver the range, volume and
quality of services consistent with their mission; and
-
the potential to extend the reach or variety
of their services.
Low capacity organisations may be limited
by:
-
weak management and governance structures;
-
a lack of management, financial or business
skills; and
-
a lack of physical assets needed to support
core activities.
Capacity building
Capacity building refers to activities that
help organisations to develop skills and resources so that they can
achieve their objectives and serve their stakeholders more
effectively. Public and private sector organisations fund
this development from their own resources (including debt and
equity financing in the private sector). Third sector
organisations, particularly smaller ones, are less able to do so
as:
-
many do not generate surpluses to invest in
this area;
-
there is limited access to investment
financing; and
-
donors generally prefer to pay for projects
which deliver visible results, rather than fund ‘behind-the-scenes’
activities.
Clawback
The concept that where an asset financed by
public money is sold, all or part of the proceeds of the sale
should be returned to the funder.
Commissioners
Those in public bodies responsible for,
primarily involved in, commissioning.
Although we refer to ‘commissioners’ in this
guide, the guidance is appropriate for anyone involved in assessing
needs, designing services, sourcing providers, monitoring and
evaluation and is applicable, among others, to those involved in
policy, service delivery, procurement and legal functions.
Commissioning
The cyclical process by which public bodies
assess the needs of people in an area, determine priorities, design
and source appropriate services, and monitor and evaluate their
performance.
Community interest company
Community Interest Companies (CICS) are
limited companies, with special additional features, created for
the use of people who want to conduct a business or other activity
for community benefit.
Compact
The voluntary and community sector’s written
agreement with the government (or local public bodies) which has
undertakings on both sides, shared principles and values such as
recognising the sector’s independence, and mechanisms for making it
work.
Contestability
The extent to which the provision of a good or
service is open to alternative suppliers. The threat of such
competition is a discipline on incumbent suppliers and tends to
prevent prices rising far above costs. Should this happen
then alternative suppliers will enter the market to benefit from
this and seek to ‘undercut’ existing suppliers.
Contract
Legally binding agreements between (in this
case) a public body and a third sector or private sector
organisations to provide services on behalf of the public
body. A contract will specify the services to be provided and
what the contractor is to be paid for providing them. It will also
include provisions, in greater or lesser detail, setting out the
legal obligations which each of the parties accepts in order to
fulfil the purposes of the contract.
Consortium
An association or combination of TSOs,
sometimes with private sector and / or public sector providers, for
the purpose of providing a service or services in one locality or
across a wider area.
Co-operative
A business whose profits are retained for the
benefit of it members and/or the community it serves.
Cost-effective
Economically
worthwhile in terms of what is achieved for the amount of money
spent;.iIf an activity
is cost-effective, it is good value for the amount of money it
consumes.
Judging cost-effectiveness
requires that all costs are taken into account when calculating the
‘money’ consumed i.e. all direct and indirect costs should be
included e.g. costs of people, buildings, equipment, licences,
consumables, and management etc.
Council of Voluntary
Service (CVS)
The co-ordinating and support body for
voluntary and community organisations in a geographic area.
Minimising the cost of resources used for an
activity, while having regard to appropriate quality.
Economical
Minimising the cost of resources used for an
activity, while having regard to appropriate quality.
Economies of scale
The reduction in unit cost achieved by
increasing the amount of production.
For example, re-routing enables a patient
transport service to pick up and deliver more patients between
their homes and treatment centres using the same number of drivers,
drivers’ time, and vehicles. The average cost of delivering a
patient is reduced.
Efficient
An efficient activity maximises output for a
given input, or minimises input for a given output and, in so
doing, pays due regard to appropriate quality.
Effective
Successfully achieving the intended outcomes
from an activity.
Enforceability
The extent to which a grant agreement or
contract allows the funder to impose legally binding conditions
between themselves and the service provider.
Evaluation
The assessment of the extent to which a
programme or service has met its objectives: Its main purpose is to
help an organisation reflect on what it is trying to achieve,
assessing how far it is succeeding, and identify required
changes.
There are two sorts of evaluation - formative
and summative:
-
Formative evaluation assesses a programme as
it is being put in place and delivered. This should feedback
into the delivery of that programme;
-
Summative evaluation assesses a programme when
it is complete. This should feedback into future or other
programmes.
Financial agreement
In the form of a grant agreement or
contract.
Formative evaluation
See ‘Evaluation’.
Full cost recovery (FCR)
The principle that when a third sector
organisation provides a service for a public body it should be able
to recover all the costs of delivering that service. This
includes not just the direct costs of the service but also the
relevant proportion of all overhead costs. These overhead
costs may include: premises and
related costs; central functions,
such as, human resources; governance and strategic development;
provision for inflation and depreciation; and regulatory
costs.
Funding channel
The means by which funds for a programme or
service are transferred from the commissioning public body to the
service provider. There are basically three types of funding
channel available to public bodies in funding third sector
organisations (TSOs): grant; grant-in-aid; and procurement.
Gift
Money given to a third sector organisation
(TSO) without significant conditions being applied.
Grant
A sum of money given to an organisation in
anticipation of it being applied for an agreed purpose. This
purpose may be very specific (e.g. to fit a smoke alarm in an old
person’s house) or less specific (e.g. to promote fire safety among
old people).
Grant-in-aid
A sum of money given to an organisation to be
applied in general support for the objectives of that
organisation.
A payment by a government department (normally
referred to as the “sponsor department”) to finance all or part of
the costs of the body in receipt of the grant in aid. Grant in aid
is paid where the government has decided, subject to Parliamentary
controls, that the recipient body should operate at arm's length.
The sponsor department does not therefore seek to impose the same
detailed controls over day-to-day expenditure as it would over a
grant.
Intellectual property
Property is simply a bundle of rights to own,
use and prevent others from using something, for example a plot of
land, a car or a house. Intellectual Property (IP) is a bundle of
rights that protects applications of ideas and information that
have commercial value. IP rights give creators certain
exclusive rights over the knowledge and information they create
(e.g. the text of a book) to prevent others using it without
permission.
Unlike physical property, knowledge, ideas and
creations are partial ‘public goods’. Knowledge is
inherently non-rivalrous. That means one person’s possession, use
and enjoyment of the good is not diminished by another’s
possession, use and enjoyment of the good. By contrast,
physical property is typically rivalrous, with one person’s
consumption preventing simultaneous consumption by another.
Privatising property gives rights over it to a legal individual,
creating a legal barrier which prevents others from accessing it.
IP confers a set of time-limited legal rights over the expression
and use of certain ideas. Although the knowledge protected by the
IP remains non-rivalrous, the legal force of IP rights prevents
others from using it.
From Gowers Review of Intellectual
Property, HM Treasury, 2006
Infrastructure TSO
Third Sector infrastructure organisations are organisatins that
‘work behind the scenes’ to support frontline TSOs that provide
services direct to users. They provide their members, or
organisations within their geographic area, with a range of
services and development support, and act as the voice of the third
sector. Infrastructure TSOs may be national, regional,
sub-regional or local in their coverage. They may be
generalist, providing support to any TSO in their area, or more
specialised, representing or supporting an element of the third
sector within their area e.g. BME or rural community
organisations.
See also ‘Council of Voluntary
Service’.
Local Area Agreement (LAA)
A Local Area Agreement is an agreement that
sets out the priorities for a local area in certain policy fields
as agreed between central government, the local authority and Local
Strategic Partnership (LSP). The agreement is made up of outcomes,
indicators and targets aimed at delivering a better quality of life
for people through improving performance on a range of national and
local priorities.
Local Strategic Partnership (LSP)
Cross-agency, umbrella partnerships, including
the public, private, and third sectors. The LSP remit is aimed at
working together to improve the quality of life in a particular
locality.
Management cost
See ‘Full Cost
Recovery’.
Monitoring
In this case, the ongoing collection of
information about the programme and assessment of the implications.
Such information may be needed for three purposes: effective
management of the programme; wider accountability for the
programme; and policy development.
Mutual
A privately held company owned by its
customers.
Objective
Something you need to achieve in order to meet
your goal. To be effective, objectives should ALWAYS be written so
that they are SMART (Specific, Measurable, Achievable/Agreed,
Relevant and Time-bound).
Office of Government Commerce (OGC)
An independent office of HM Treasury,
established to help Government deliver best value from its
spending.
Outcome
The term used to describe the totality of what
a programme or project is set up to deliver or achieve.
Output
The end result of carrying out an activity –
usually a product. It is important to distinguish what has been
produced (the output) from the effect that it may be designed to
help achieve (the outcome).
Payment formula
A financial model must include the appropriate
mix of bases and timings – this is called the payment formula. The
payment formula must follow from the objectives of the programme,
and the agreed approach to risk management.
Procurement
Acquisition of goods and services from third
party suppliers under legally binding contractual terms. Such
acquisitions are for the direct benefit of the contracting
authority, necessary for the delivery of the services it provides
or the running of its own business. Procurement is normally
achieved through competition, and will be conducted in line with
the government’s policy of value for money and in line with the
Public Contracts Regulations 2006.
Programme
A portfolio of projects selected, planned and
managed in a co-ordinated way.
Project
A temporary organisation formed to produce a
unique and pre-defined outcome, or result, to a pre-specified
timescale, using predetermined resources. It is important to
understand that a project is something that can be planned and is
something with a specific end in sight and which is managed to
deliver as a single coherent whole.
Proportionality
The principle of not burdening funded
organisations out of proportion to the amount of funding, which
applies especially to monitoring. Guidance states that monitoring
arrangements etc. should be proportionate to the level of, and risk
to, the amount of funds involved.
Propriety
Linked to regularity, it is the further
requirement that funds must be handled in accordance with
Parliament’s intentions and Parliamentary control. Decisions must
be taken fairly and be free from undue influence.
Public Service Agreement
An agreement negotiated between central
government and a local authority to deliver improved outcomes in
return for greater freedom in the means of delivery, and financial
incentives. It specifies how public funds will be used to ensure
value for money.
Regularity
Linked to propriety, it is the requirement for
funds to only be used for the purposes for which they were
awarded.
Risk register
A document used to record the risks facing a
project or programme, usually produced as a table. It should, as a
minimum, record a description of each risk, an assessment of its
likelihood and impact and the management actions to be taken to
minimise the risk, though it can be more sophisticated.
Senior Responsible Owner (SRO)
The single individual with overall
responsibility for ensuring that a project or programme meets its
objectives and delivers the projected benefits.
Social Enterprise
A business with primarily social objectives
whose surpluses are principally reinvested for that purpose in the
business or community, rather than being driven by the need to
maximise profit for shareholders and owners.
Spending review
A statement of the government’s spending plans
for a particular period.
Standards in Public Life
Expressed in seven principles which the
Committee on Standards in Public Life believes all public servants
must adhere to:
-
Selflessness
-
Integrity
-
Objectivity
-
Accountability
-
Openness
-
Honesty
-
Leadership
State aid
EU law on state aid aims to prevent member
states from unfairly distorting competition within the EU, except
in certain permitted circumstances. A prohibited state aid exists
if all of the following four criteria apply to the proposed
programme:
-
It is granted by the state or through state
resources
-
It favours certain undertakings or the
production of certain goods
-
It distorts or threatens to distort
competition
-
It has the potential to affect trade within
the EU
Strategic grant
Used by local funders to support the ongoing
core activities of an organisation. Those activities are
recognised to be of strategic importance in that they facilitate
the achievement of other, more specific objectives of the funding
organisation.
Strategic spending cycle
The period (usually 3 years) over which public
funds are committed to address strategic goals.
Summative evaluation
See ‘Evaluation’.
Sustainable Communities Plan
Launched in 2003 by the Office of the Deputy
Prime Minister (now Communities and Local Government) to guide its
regeneration and departmental objectives at the regional level.
Sustainable financing
Paying an organisation the full cost of the
activity which you are funding so as not to threaten their
financial wellbeing. See also ‘Full Cost
Recovery’.
Third Sector
The Government defines the third sector as
non-governmental organisations that are value-driven and which
principally reinvest their surpluses to further social,
environmental or cultural objectives. It includes voluntary
and community organisations, charities, social enterprises,
cooperatives and mutuals.
Third sector organisation (TSO)
An organisation within the Third Sector (see
above).
Transparent costing
Means by which management costs are able to be
apportioned to an organisation’s activities. See also ‘Apportioned costs’ and
‘Full Cost Recovery’.
Value for money (VfM)
The optimum combination of whole-life cost and
quality (or fitness for purpose) to meet the user’s requirement.
Assessed by the National Audit Office using the criteria of
economy, efficiency and effectiveness.
Vires
The power in legislation for the funder to
carry out the activity envisaged in the policy intent for a
programme. This may be a power that is specific to the programme;
or it may be a more general power that may be used to fund a range
of programmes, including the one at hand.
Voluntary and community sector (VCS)
Umbrella term used to refer to registered
charities, non-charitable non-profit organisations, associations,
self-help group and community groups.
Whole-life cost
The full cost to an organisation of a solution
to a requirement over the full period that the requirement will
exist. Whole life costs will take into account running costs such
as energy usage, maintenance requirements, staff training needs,
and disposal costs such as recycling, as well as the initial
purchase price. The life span of the product will also need to be
considered.