Hearts & Minds - Commissioning from the Voluntary Sector (Summary)

Central government aspires to develop the voluntary sector’s role in delivering public services…

• A diverse supply base is more competitive and more likely to meet service users’ requirements.
• A thriving voluntary sector can contribute to community engagement.
• Many voluntary organisations share the government’s aspirations for public service delivery.

… and the voluntary sector’s involvement is steadily expanding.

• The public sector
  has become the voluntary sector’s largest single source of income, a
  position that government can expect to see maintained.
• Councils currently spend over £3 billion with voluntary organisations.
• There are voluntary
  organisations of all sizes that receive most of their income from
  public bodies, although larger voluntary organisations are more likely
  to deliver public services than smaller ones.
• Many smaller
  voluntary organisations are keen to act as advocates, or to deliver
  some public services, but are unwilling or unable to compete for
  contracts.

Government initiatives to strengthen the voluntary sector’s ability to deliver public services have had limited success.

• Capacity-building programmes do not show substantial local impact, to date.
• Smaller voluntary organisations are sceptical of the potential of these programmes to improve their position.
• Other necessary improvements include appropriate funding mechanisms and sound partnership working.
• Capacity building should complement good commissioning practice.

A few, highly effective
commissioners adopt intelligent commissioning, rather than offer
special treatment, to get the best from the voluntary sector.

• They maintain a
  detailed understanding of what services their users need, and involve
  voluntary organisations in identifying them.
• They develop a good understanding of the market, knowing who can supply these particular services at an affordable price.
• They run an
  effective procurement process, balancing the need for short-term
  efficiency gains with longer-term market development objectives.

In commissioning intelligently, councils need to ensure that their chosen funding mechanisms help to achieve their objectives…

• Councils need to align the funding mechanisms that they choose to use, with the objectives of the funding.
• Some voluntary organisations believe that service contracts are replacing grants, and that this is harming the voluntary sector.
• In fact, councils
  are not reducing total expenditure on grants, but are aligning their
  grant giving better with their strategic priorities.
• Councils are also using more service contracts and contract-like mechanisms for sound, value for money reasons.
• When contracting, competition generally determines a suitable price for the service.
• When grant funding
  voluntary organisations to deliver services, commissioners and bidders
  should ensure that the amount paid in grant makes the provision
  sustainable. In the absence of competition, councils need to work with
  the voluntary sector to develop a pragmatic approach to full-cost
  recovery, within budgetary constraints.

… and commissioners need to develop a better evidence base to demonstrate value for money.

• There is very
  little evidence, at either a national or a local level, on the
  performance and value for money secured from voluntary sector providers.
• Local public bodies
  should collect and analyse financial and performance data in a form
  that enables them to make robust judgements about the value for money
  delivered by service providers from all sectors.
• Commissioners
  should consider wider community or market development objectives as
  well as the costs and benefits of specific services when measuring
  value for money.

Download the full report at www.audit-commission.gov.uk