Cutting Dependency and The Big Society

13 February 2011 | By Cause4 staff

As each day goes by, we hear more and more about The Big Society. It’s fair to say, we sense, that the number of sceptics wondering exactly what the Big Society is and questioning exactly how its amorphous concept might translate into clear action led by the charitable and voluntary sector is growing apace.

Philip Booth, Professor of Insurance and Risk Management at Cass Business School has made an important – some would say controversial - contribution to the debate, although those who have responded to his thoughts have done so mostly in anger. Booth has urged Government to cut charities’ dependence on grants and to “unleash a tide of philanthropy”.

“The Big Society will only come into being when the government stops trying to create it and starts to roll back the state”, he writes. “.. The government should resist the calls to fund the Big Society by giving more grants to charities – this will just make charities clients of the state, but it should strip away the regulations that surround charities and encourage charitable giving”.
Philip Booth’s suggestions have caught Cause4’s attention and have prompted some comments and questions which we believe are fundamental to the future of The Big Society and to the future of charities:

1. What are the clear responsibilities of the state and what are not? In other words what do we really mean by the Welfare State? What are the clear responsibilities of charities and other voluntary organisations? And what responsibilities of the state and charities might be effectively shared in partnership? And how does Government most effectively deploy Treasury funding provided by tax-payers to support the work of charities?

It will only be in determining exactly the lines of demarcation and overlap between state responsibility and the responsibility of charities that The Big Society can move forward with clarity and purpose. It is only in knowing to what good causes philanthropists should be asked to give that clear strategies for developing philanthropy can be progressed. There is nothing of which Cause4 is aware that clarifies policy in these matters.

2. In cases where activities for which the state is exclusively responsible are sub-contracted to charities or to the private sector as service providers, Government should be the exclusive 100% funder – but it should consistently ensure that tax-payers’ money provides excellent value and the very best returns. It is difficult to be persuaded that this has always been the case.

3. In cases where activities are either the exclusive responsibility of charities or a shared responsibility with Government, in other words activities which might advance the Big Society, then charities need to be given Government support but only in ways that incentivise them rather than in creating dependency.

We think Peter Booth is in many respects right. Too many charities in coming to regard large dollops of government funding as an entitlement, have become flabby; they have lost the drive and hunger to generate their own income and compromised their independence. The principle of Government matching in agreed proportions the funding secured independently by charities is an excellent one, with the onus on charities to raise their fair share first. Ultimately this can lead to greater collaboration between charities and the best organisations - or consortia of organisations - receiving more, including those that to date have received not a penny. Over time, we suggest, it could lead to philanthropists giving more, the Government spending less – ensuring highest level of returns with best use of tax-payers’ money.

4. However, there are two immediate impediments. Firstly, immediate major cuts are not the immediate answer. Our message to Government is cut the dependency culture but don’t chop off the heads of charities in one fell stroke. The immediate risk - more an actuality than a risk? - is that excellent programmes are being ditched because previous statutory funding (regardless of its being provided over-generously or not) is now no longer available. The result will be good work undone, lack of morale and beneficiaries no longer helped. Changes in funding need to be staggered in manageable ways which give time for transition.

The second impediment concerns the current state of readiness within charities. If we are encouraging charities to generate more of their own income – and we should be – then they need time to change their thinking and culture, to develop their Boards and staff, to acquire more skills and know how.

But, most of all, it is about the Government’s readiness to create the circumstances for unleashing “a tide of philanthropy”. We add nothing to what almost everyone else has already said on the matter other than to re-affirm our view, one we share with Philip Booth, that philanthropy needs to be encouraged by providing greater levels of tax-incentive.

If we are to cut charities’ dependency on Government funding, we should also cut Government’s dependency on philanthropists. Government cannot have it both ways, expecting philanthropists to fund both the Treasury and the vital work of charities without providing circumstances under which they are able to give with additional generosity.

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