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Performance Management

The value of small and medium-sized charities

Value of Small Charities ReportSheffield Hallam University and the Lloyds Bank Foundation have recently published a report on the value added by small and medium-sized charities.

Download the report here.

The report says:

Small and medium-sized charities (SMCs) − whose annual income falls between £10,000 and £1 million − are a vital part of everyday life in communities across England and Wales. Most SMCs are based and operate at a local level and include a wide range of voluntary, community, social enterprise and civil society organisations. SMCs constitute 52 percent (64,000) of all registered charities and 19 percent (£7.2 billion) of charitable income (2014−15). Previous research has provided evidence in favour of sustaining a vibrant and healthy population of small and local charities, but there is very little robust evidence about what is distinctive and valuable about them relative to larger charities and public sector bodies. Addressing that gap is important now, more than ever, as SMCs are more likely to be adversely affected by cuts to public sector budgets and approaches to commissioning and procurement that favour economies of scale over more tailored and responsive approaches.

It goes on to describe how and why SMCs are distinctive:

  • They have a distinct service offer in terms of what they provide and to whom they provide it
  • They adopt a distinctive approach, based on highly responsive, person-centric ways of working
  • They are in a unique position in the service ecosystem; often very local in their focus and able to advocate for their beneficiaries in a very targeted way

Inevitably, however, SMCs face a number of challenges. Being small often means they aren’t well-equipped to set up and implement systems to measure their impact. This has consequences for their ability to persuade commissioners and funders that their work truly makes a difference.

They have also been squeezed by local authority and other public sector funding cuts that have been implemented through the recent years of “austerity”. To some extent, the commissioning world has also moved towards funding larger suppliers through bigger and longer-term contracts. While this may look like a good idea to improve efficiency, it does run counter to the idea of localism and well-targeted interventions which SMCs often excel at.

The report’s recommendations for the need to reform the funding model seems, in my opinion, rather unlikely to happen. More SMCs will find themselves in financial trouble if they wait for this to happen. I think they need to grasp the nettle of measuring their impact and the social value they bring to their communities. That way, they will have a far better evidence base to “sell” to potential funders.

Read more about my work with Third Sector organisations, including impact measurement and process improvement.

Value of Small Charities Report

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