Press Release - Public funding of large national charities
8 August 2007
Evidence from 12 large national charities shows that their
delivery of public services could be undermined and limited by the
complexity of the arrangements by which they receive public
funding.
Today's report by the National Audit Office found that
charities' funding relationships with public bodies, including
central government departments, local authorities and health trusts
can often be highly fragmented, with many public bodies providing
several streams of small amounts of funding to a single charity.
And the variations between funders in the timing, payment terms and
monitoring requirements can impose unnecessary transaction costs on
charities, reducing their value for money for the taxpayer.
The report examined the experiences of 12 of the largest UK
charities, who together receive £742 million in public funding from
a range of public bodies including central government departments,
agencies, local authorities and NHS primary care trusts. They
operate across a range of activities including care for disabled
people, children’s services, advice and volunteering.
Joe Cavanagh, Director of Business Development at the
NAO, said today:
"Large charities are important providers of some public
services, but public bodies' funding arrangements are often
unnecessarily complex and costly. Public bodies need to work
together to bring coherence and consistency to their funding
practices, to ensure that charities' valuable work is not hampered
by bureaucracy."
The 12 case studies examined by the NAO, had between 95 and more
than 4,000 separate funding relationships with public bodies. On
average, the charities estimated that they spent around £400,000
annually on managing these relationships, although the total costs
may well be higher.
The report also found, from the experience of these charities,
that both central and local government bodies use poor funding
practices, but the problems are more visible at local level. This
is because large charities have many more separate funding
relationships with local authorities than they do with government
departments. The charities told the NAO that local government does
not know enough about central government commitments to better
funding practices.
The report concludes that complex funding structures sometimes
deter charities from bidding for public funds and prevent them from
influencing the design of services.
The Office of the Third Sector (OTS) and the Treasury have begun
work to address many of the issues highlighted in today's report.
The OTS is implementing a cross-government action plan on
partnership with the third sector and the Cabinet Office and
Treasury has jointly published a recent review of the sector's role
as part of the Comprehensive Spending Review 2007.
But more needs to be done, according to the NAO. The OTS and the
Treasury should bring the issues raised in this report to the
attention of departments and other bodies, to help them ensure that
their commissioning frameworks reflect the principles set out in
the cross-government action plan. Departments' actions should focus
particularly on local implementation, and plans should include an
assessment of the transaction costs borne by charities involved in
public funding processes.
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 43/07
All enquiries to Donna Watson NAO Press Office: Tel: 020 7798
7038
Mobile: 07917 555 388