Four Hundred Years On: time for a new voluntary settlement
June 01, 1996
This third article in a series on policy options in the run up to the general election examines the voluntary sector, its historical development and current concerns, asking how companies will be affected by the plans of the political parties.
Corporate community involvement operates on the boundary between the three sectors, public, private and voluntary. Recent rolling back of the frontiers of the state has fuelled the growth of CCI, with companies urged not only to widen their responsibilities but also to support the voluntary sector as it takes on a bigger role.
Changing roles
In the last century, charities and ‘voluntary’ organisations were a mixture of philanthropy and collective self-help. The great reforming governments of 1906 and 1945 both gave the state responsibility for functions in health, education and the relief of poverty previously carried out ad hoc by charities. By the 1950s and 60s growth of the state and profound social change led some to question even the need for the third sector at all. But government had not miraculously solved all problems and if some charities were in decline, others were growing rapidly. As the think-tank, Demos, has reported, between 1971 and 1992 membership of the St Johns Ambulance Brigade fell by nearly half and of the Women’s Institute by a third, while over the last decade the memberships of Friends of the Earth and Greenpeace have risen ten fold and income of organisations like Save the Children, Oxfam and the RSPCA has trebled.
The present government has also made profound changes. First, some major functions have passed into the third sector. Virtually all new social housing is constructed not by local authorities but by housing associations. Schools governors have more powers and some schools have opted for grant maintained status. Arguably TECs have transferred massive public spending in the third sector too, as they are controlled by voluntary private sector-led boards. Second, funding has switched from grants to contracts, partly to achieve efficiencies and partly to remove ‘dependency’.
After all the enormous changes this century, community groups have a vital role, including:
direct service provision, often filling gaps left by the state’s mainstream provision;
operating on the cutting edge of practice, taking risks and innovating;
collective self-help and mutual support;
representational and advocacy, giving a voice to marginalised communities.
Yet despite all, the legal basis for English charities dates back little changed to 1601. Nearly four hundred years later, modern governments have proved reluctant to do more than reform a few abuses and tighten up regulation. This is not through lack of ideas or proposals for more radical change.
Reform proposals
In 1993, a report by the Centre for Research and Innovation in Social Policy and Practice (CENTRIS) suggested splitting charities’ campaigning work from their direct service provision. Voluntary Action argued that state subsidies through tax relief should be given on merit, not by virtue of legal status. The report, the most comprehensive look at the voluntary sector for half a century, threatened too many sacred cows, and was roundly condemned by voluntary sector and ministers alike.
Undaunted, in 1995 Demos returned to the theme in The Other Hand: remaking charity for the 21st century. It argued for a new legal and fiscal framework for voluntary action, a new settlement for the new millennium. Like CENTRIS, it said tax breaks should be given for activities recognised as public goods, not for organisational forms. It noted, however, that even with tax relief charities are still net contributors to the public purse mainly through VAT.
Among recommendations made by Demos were:
an ‘investors in community’ kitemark for CCI, promoting and recognising responsible business involvement;
individuals able to earmark from their personal taxes money for charitable activity;
new forms of tax relief, extending VAT exemptions;
new forms of charity financing, applying commercial banking principles, with loans to community enterprises, and a charity expansion scheme, allowing loan guarantees to be set against tax if called upon, on the model of the Business Expansion Scheme;
a community volunteer service for unemployed people and others.
Also in 1995 the National Council for Voluntary Organisations established a Commission on the Future of the Voluntary Sector, under Professor Nicholas Deakin’s chairmanship. Due to report in summer 1996, its main objective is to set out a clear vision of the sector for the next decade, looking at its contribution and place in society, its relationships with the other sectors, how to enhance its operational performance, and whether there is a case for fiscal, legal and regulatory changes.
Current concerns
The issues of current concern in society relevant to the third sector are many and various, but include:
social and economic cohesion, particularly affecting minority groups and with the threat that the information revolution will exclude some even more;
decline in active citizenship, with low participation in traditional democratic processes, especially among young ‘drop-outs’;
a gold rush of projects to the lottery, while traditional public sector ‘core’ funding contracts into contracts; little sign that increased personal wealth, fuelled by tax cuts, has trickled down into higher charitable giving by individuals;
a lot of talk about more volunteering and a national voluntary service scheme, but doubts whether the infrastructure exists to support it;
an emaciated local government sector, trying to give a lead without adequate resources;
adding to the traditional quandary “what is a charity and who should have tax relief” questions about the boundaries of the sector itself, with hospital trusts, TECs and housing associations.
Faced with these challenges, what are the politicians proposing?
Conservatives
The Conservative manifesto in 1992 contained two substantive proposals, a boost to volunteering and a national lottery. The former has become the Make a Difference initiatives while the success of the latter in financial terms arguably makes it the most significant development in the third sector since the 1945-51 government. Its impact, while still being assessed, is enormous, not least on the policies of other donors, driven by demands for matching funds.
Whatever else lay behind the decision, the transfer in May of responsibility in Whitehall for charities from the Home Office to the Department of National Heritage confirms the central role now assumed by the Lottery.
The best recent formal statement of Conservative thinking on the voluntary sector is set out in a little noticed government paper, The Individual and the Community, published in February 1992. Expressing satisfaction with current arrangements, it highlighted traditional Tory themes of individual responsibility, involvement, partnership, private sector virtues and value for money.
Labour
References to the voluntary sector in Labour’s rewritten constitutional Clause IV confirm that the new elements in the leadership harbour few of the suspicions and rivalries that bedevilled the relationship between Labour in government and the voluntary sector, still present today in some local authorities. Given the party’s belief in a mixed economy of service providers and its concerns for employment, economic regeneration, education and urban renewal, Labour in government should mean big changes in the priorities of voluntary grant aid.
So it is all the more disappointing that the consultation paper published in April contains little that is specific beyond promises to work in partnership and repeat of existing pledges. These include establishing a national voluntary community service scheme for young people and an environmental task force, reviewing the operation of the Lottery, finding ways to get money to grass roots without bureaucracy, perhaps through community chests. There was no reference to changes in fiscal, legal or regulatory arrangements and nor to an enhanced role for the corporate sector.
By contrast, David Blunket’s 1992 paper in the run up to the last election proposed a minister for the voluntary sector, excluded fundamental change to charity law, promised greater guidance to company giving, perhaps through local tripartite panels with community trusts, and pledged to continue core funding, not just contracts for specific services.
Lib Dems
Instinctively the Liberal Democrats are more comfortable with an active voluntary sector, but they have not developed a ‘big idea’ for an enhanced role in society. Specific policy pledges include help for the local infrastructure of councils for voluntary service, training course in voluntary sector management and more flexibility in contracts.
Setting the agenda
Most governments do not lead, rather they follow trends in informed opinion (or worse). So is it not time that companies with thorough community involvement programmes set out how they see their role in the trio of relationships and in particular what they want government to bring to the party? Here are some topical suggestions:
a matched funding incentive scheme for first time charity donors, along the lines of the successful Pairing Scheme (old BSIS) for the arts and Sportsmatch for community sports;
an enhanced tax deduction, say at 1.5 times cost, for companies providing gifts in-kind, whether surplus stock or redundant equipment, as an incentive for disposal to beneficial use;
changes to the lottery rules to allow block grants to local community chests, matched by locally raised funds, for distribution by local tripartite committees;
government endorsement of a community investor ‘kitemark’, certifying the quality and generosity of the CCI programme;
revisions to the banking laws to encourage new forms of funding for community enterprises, as Demos has recommended;
major public investment in the volunteering ‘infrastructure’ providing the back-up and publicising opportunities for staff involvement, using the new technology;
a modest extension of existing mandatory annual reporting of charitable donations and staff policies, covering total community activity and relations with all stakeholders; business should recommend the framework with a voluntary code of practice before someone in government is tempted to impose more onerous and unworkable methods.
The politicians are always calling on companies to do more for charities. Now is the time to set the agenda and ask for a quid pro quo.
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