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Competition is the essence of an innovative voluntary sector

John TizardI was somewhat surprised to read recently that the chief executive of the Charity Commission seemed to be arguing that the Commission should seriously consider withholding charitable status from an applicant if there was already a charity with similar aims.

Sam Younger’s argument is that in times of austerity in the sector, it is better not to have duplication. There is perhaps a marginal degree of logic and sense to such an argument, but it seems to me deeply flawed.

No one wants unnecessary duplication if this is going to be wasteful and potentially undermine the impact of the duplicating organisations. However, it is very likely that the newly established organisation has been created because those setting it up feel that an existing charity is not meeting a need that they perceive to be in need of addressing.

Yes, there may, sometimes, be petty personality issues behind such feelings. However, there may also be much more fundamental issues relating to the impact of the existing organisation; its governance and its probity and/or effectiveness; its reach and access; or its operational practices.

Those seeking to set up a new charity may feel that existing ones cannot be changed and the established ones may (and sadly, this is too often the case) not wish to change or even to listen to alternative voices. Consequently, needs and wants may be going unaddressed. Is this really what a progressive and responsible charity regulator would want to happen?

The very creation of a new charity can in some circumstances create healthy competition, which has the potential to result in change and improvement across similar and competing charities. And even if it does not do this, it could lead to better outcomes because the new organisation is creating or facilitating them.

Innovation and diversity are critical to meet the diverse needs and choices of communities, especially at a time of public expenditure cuts, increasing poverty and inequality, and consequential demands on the voluntary and community sector (VCS) and charities.

The vast majority of charities are local and small. They are created to meet local needs – most, of course, are not in receipt of public money and many offer voice for the voiceless and marginalised communities. In these circumstances it may not be appropriate only to have one service-providing charity in an area. And we know that many charities will have registered objectives and articles with the Charity Commission that include a much wider range of activities than they may actually be delivering so how can the Commission determine which to approve and which not too?

On another front government is encouraging greater diversity of supply and more contractual opportunities for charities and the VCS. This will require new entrants to those markets, not the same ones in perpetuity, or, worse, a consolidation into large monolithic suppliers – and probably business sector suppliers too.

Of course, I recognise that a new charity may potentially take away funding and support from an existing one. And those setting up a new body ought, if their prime concern is for their charitable purpose, to consider this possibility very carefully. The regulator might even ask them if they have done so but that is not the same as the regulator rejecting an application on the basis that another similar organisation with similar aims already exists.

Across the VCS and charities more widely, there is and always has been competition for fundraising, often for public contracts, for volunteers and for wider membership, support and recognition.

There is also a tradition of collaboration within the sector and this is likely to increase as resources become scarcer, as outcomes require more complex solutions and as public sector procurement seeks consortia bids.

As in the business sector, there is no reason why VCS and other charitable bodies cannot compete and collaborate at the same time. This is manageable and can, when well managed, lead to sustainable positive results.

Communities are stronger when they foster and enjoy strong, bold, and innovative VCS organisations nurturing social action. The Charity Commission should be in turn fostering and championing the conditions that ensure thriving local community social action and strong innovative charities.

In trying to understand Mr Younger’s case, I wonder why he is not more pro-actively promoting, encouraging and facilitating consortia, mergers and acquisitions where this is appropriate, and shared services and resources. He might also be expected to be encouraging competition where that adds value. As I said, the regulator could ask questions and offer advice on this.

It would be wrong and/or naive for anyone to set up a charity simply to undermine a successful existing one or without regard to the total resources – people and money – available in an area. And of course, some new organisations might sensibly be set up on the basis that they will use shared support services and collaborate with other charities and indeed with the public, social enterprise and business sectors.

I am not advocating ‘neo-liberalism’ for the voluntary sector. The sector rightly is not market-based, and should proudly protect itself from such notions. However, I am passionate about the need for local initiatives, user, member and community-led VCS organisations, and the most effective use of limited resources to secure social value and positive outcomes. Diversity is important.

Ultimately VCS organisations and charities that fail to secure social value and positive outcomes do not deserve to survive and should always be open to challenge – especially from within the sector, and most particularly from those for whom they work and for whom they were created.

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Mike Wild
Mike Wild
9 years ago

Interesting -as ever, John. I can’t think of any other sector where anyone is seriously advocating a managed monopoly. The ebb and flow of VCS organisations is part not only of the sector’s renewal but also civic renewal.

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