Next government urged to end ‘effective charity subsidy’ of Whitehall contracts

Social impact charity NPC says Whitehall procurement reforms needed to improve effectiveness of public spending

Photo: PA

By Colin Marrs

27 Nov 2019

The next government should urgently review public procurement to prevent charities from having to spend money subsidising poorly costed Whitehall contracts, according to a social impact charity.

The recommendation was included in a “manifesto” for the next government produced by New Philanthropy Capital, which works with organisations to maximise their social impact.

It said that more than two-thirds of charities working with government told it that payments received from the government to carry out contracts was not enough to deliver the service requirements.


The manifesto said: “This creates a situation where charity donors are essentially subsidising the government, and it could be diverting funding from other charitable activities which could be more impactful.”

In addition, the manifesto called for social value to become a requirement in all contracts, so that short and long term outcomes are costed alongside more immediate and direct costs.

Charities should also draw up a formal action plan to encourage their greater involvement in delivering public contracts, the report said.

The sector should also be involved in the design and delivery of post-Brexit funding.

It said: “If, for instance, local economic partnerships are going to be key for distributing funding, then the government must ensure they include much more representation from charities to be able to maximise the social impact of this money.”

Elsewhere, the NPC manifesto called for the creation of a Civil Society Improvement Agency to encourage the social sector to take responsibility for its own improvement.

“The emphasis would be on good governance, better use of data, and promoting greater collaboration amongst charities and funders,” the document said.

Better use of government data on employment, education and health could also help charities measure and improve their social impact.

“Government departments should also go further and look at the case for adopting an ‘open impact’ approach, making the software, APIs, data and research they produce (or fund and support) open and available so that charities can assess the impact of their work, improve their interventions, and help more people,” the NPC said.

Central government should also commit to making all of its grant data available, to give funders a better idea over the impact their funding is having, the manifesto said.

NPC chief executive Dan Corry said: “Charities around the country are working hard for their causes, and whoever forms it, the next government is going to to need to work with them to meet the many unmet needs of our citizens and to heal the divisions that Brexit has exposed. 

“But, if charities and government are to work in the best interests of the nation, they need to be transparent with each other about what more they can each do to increase their impact.”

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