Companies and the second term: the voluntary sector

In the third of a series on policy options in the run-up to the General Election, John Griffiths examines how business involvement in the charity and voluntary sectors will be affected should Labour win a second term.

In issues 55 and 56, we looked at how the Labour government has begun to transform the relationship between business and the state. Basing an anti-poverty strategy on the premise that work is the route to a more inclusive society, ministers have given business unprecedented responsibility for raising education and skill levels, redesigning parts of the welfare system and delivering new employment services.

Should the Labour government, as anticipated, win a second term, what would this trend mean for charitable and voluntary organisations, traditionally government’s partner of choice for delivering social policy? And for relations between business and the voluntary sector?

Seeing things differently

In spite of the increased opportunities for companies to work on the government’s agenda, the perception outside Whitehall is that business is still not pulling its weight in CSR terms. Influential bodies ranging from the National Council for Voluntary Organisations (NCVO) and the New Economics Foundation, to the Industrial Society and the think-tank DEMOS have all argued that government needs to adopt tougher tactics, including legislation, to create a socially and environmentally-responsible business culture. (See ‘Business Giving and Corporate Social Responsibility’, NCVO, 2001 http://www.ncvo-vol.org.uk; http://www.neweconomics.org; ‘Putting back the P in PLC’, Industrial Society 2001 http://www.indsoc.co.uk; ‘Working Together, creating a better environment for cross-sector partnerships’, DEMOS, 2000 http://www.demos.co.uk).

The NCVO’s call on government to adopt a ten-point plan to make businesses give more to charities is based on the now familiar contrast between levels of corporate largesse in the United States and UK.

DEMOS argues for a more radical approach, including gearing rates of corporation tax to the degree to which companies already pay environmental and social costs ie. tackling environmental pollution; developing employees’ skills; providing staff benefits and supporting community projects.

This concerted lobbying is intended to influence the party election manifestos. The Minister for Corporate Social Responsibility, Dr. Kim Howells, has suggested that there is a danger that compulsion will create a “tick box attitude” to CCI, rather than the expansion of imaginative programmes. The recently launched website http://www.societyandbusiness.gov.uk and the DTI’s publication of Business and Society, a guide to the subject, suggest the government currently prefers a voluntary code of conduct, supported by examples to make the “business case” for CSR.

It remains to be seen whether, in the long run, new information tools and web-based resources to encourage responsibility in companies (see: http://www.business-impact.org), coupled with Business in the Community’s annual awards and the development of an Investors in Society kitemark will be sufficient to head off calls for business to be compelled to practise social responsibility. Patience in some quarters is wearing thin. The Local Futures Group, working with the DTI on its Innovation through Partnership project, bemoans the continuing lack of a solid business case for CCI, despite efforts to demonstrate it over 20 years (see: http://www.innovation-partnership.org)

Bridging the gap

The paradox that attacks on the perennially low levels of CCI should be unleashed towards the end of a government which has done more than any other to involve the private sector in social programmes needs some explanation.

As markets which were traditionally the preserve of the state are opened to private enterprise, companies have begun to turn social responsibility to their competitive advantage, finding commercial reasons to work with government on its pragmatic social-inclusion agenda, rather than with charities on a philanthropic one. (Examples include: Manpower and Reed on welfare to work; ICL and Cisco on the digital divide – see http://www.comm.unity.uk.net; Lloyds TSB and Royal Bank of Scotland on financial exclusion).

BT for example is spending considerable resources on its community partnerships. The company’s One World Community and Community Connections schemes aim to develop a UK-wide IT infrastructure for the voluntary sector, but also to secure long-term market entry for the company. (http://www.btcommunityconnections.com) In the US, the phrase “venture philanthropy” encapsulates this combining of disciplines and risks of commercial investment with the values and ethos of good works.

The voluntary sector lobby appears unable, or unwilling, to see this distinction. This is possibly because it prefers charitable gifts with no strings attached – public-private partnerships can relegate voluntary/community organisations to bit players.

Reaching an Accommodation

Four years on, however, the key lesson from companies working on New Labour’s social-policy agenda has been that most public-private partnerships are incomplete without the third sector. Reed and Manpower were keen to bring commercial disciplines to welfare to work contracts, but without voluntary sector advice and support agencies, they lacked credibility with clients and access to essential front-line services.

Large companies which signed up to the New Deal found that their most effective contribution could be made through supporting community-based organisations to deliver the voluntary sector and environmental task force options. Examples include BG and Groundwork UK; Unilever and the Prince’s Trust and Diageo and New Leaf. Large companies with New Deal vacancies to fill have resorted to specialist voluntary-sector intermediaries to help them. Unipart in Oxford engaged Tomorrow’s People Trust to design an industry-specific New Deal called Corporate Workroute. Abbey National in Milton Keynes teamed up with Women at Work to train recruits under the New Deal for Lone Parents.

The government has learnt from these first-term experiences. Welfare to work mark 2 promises to support specialist sector-focused intermediaries (in IT, construction, retail, hospitality, health and finance). The Treasury will use a second term to implement the recommendations of the Social Investment Taskforce to encourage businesses to invest in disadvantaged areas. These include setting up intermediaries known as Community Finance Initiatives to make use of companies’ tax-efficient investments, micro-loan funds, development banks and social venture capital (see http://www.dfee.gov.uk/pns and http://www.enterprising-communities.org.uk)

The sheer ambition of government (eradicating child poverty by 2010; restoring full employment; revitalising the most run-down housing estates), but also its realisation that the state alone cannot achieve these goals, accounts for the emergence of this new tier of brokerage and intermediary bodies. Nationally they include Timebank, UK Cares, and the Common Purpose-inspired http://www.citizensconnection.net. The government will continue to encourage such initiatives through its Home Office-based Active Communities Unit (http://www.homeoffice.gov.uk/acu). It has also explicitly linked employee volunteering with its public-policy goals by allowing programmes funded under the Single Regeneration Budget and the Neighbourhood Renewal Fund to count such in-kind resources as “private sector leverage”.

The past four years have already seen considerable change in companies’ relations with other sectors. Scope for CCI has increased dramatically, but companies must move from reactive, piecemeal philanthropy to grabbing new business opportunities in alliance with their entrepreneurial voluntary sector partners.

Corporate Citizenship Briefing, issue no: 57 – April, 2001