The vital role of small charities

Small charities are distinctive

Smaller charities have a distinctive offer. They:

• Are ‘first responders’ to newly emerging needs at a ‘hyper-local’ level.
• Create spaces where people feel safe, respected and useful and can access services without fear of being stigmatised.
• Promote inclusion and belonging by connecting new and established communities to wider opportunities and support.

Smaller charities take a distinctive approach:

• Person-centred and responsive approaches that create the conditions for long-term engagement.
• An embedded, trusted and long-term presence.
• Reaching people early and staying longer in their support.
• Having an open door approach that means people are not turned away.
• Quick decision-making based on flat and responsive organisational structures.
• Diversity achieved through recruiting volunteers from the local community.

Smaller charities can occupy a distinctive position within the wider ecosystem of providers, due to: 

• The extent and nature of their local networks and relationships, which facilitate an extended reach within and between communities.
• Their stabilising role at a local level, for which they are frequently described as the ‘glue’ that holds services and communities together.
• Their advocacy work, in particular at an individual level for people in need of practical help to navigate their way through a crisis or to address specific and pressing issues.

Small charities offer social value

There are three aspects of social value created by small charities that should be accounted for through commissioning processes:

• Individual value: The support they provide for people facing disadvantage leads to ‘soft’ personal, social and emotional outcomes – such as wellbeing – as well as hard and more tangible outcomes – such as employment.
• Economic value: Their work creates value directly for the economy, as well as value for public services through the individual outcomes achieved.
• Added value

Individual value. Person-centred and holistic support, based on:

• Meeting needs, including averting and responding to crisis.
• Helping people to achieve ‘small wins’, such as building confidence and self-esteem, which provide the necessary basis for longer-term outcomes.
• Committed staff and volunteers, who create safe spaces with a family feel that encourage long-term engagement.
• Creating the conditions for longer-term engagement which can lead to more tangible outcomes in the longer term.

Economic value: 

• Their economic footprint was £7.2 billion in 2014-15, much of which was reinvested locally through services and activities that employ local people and utilise local supply chains.
• The outcomes they achieve provide direct value for the economy, for example, by supporting people into employment. They also provide value to the public sector, by helping to reduce the demand for, or cost of, services in areas such as health and homelessness.

Added value:

• Volunteering, as they provide many more volunteers per £1 of funding than larger charities; and volunteering is also a source of individual and economic value in its own right.
• Funding leverage, as they are able to utilise multiple sources of funding and other resources when delivering a service, which means they are often able to more than double the income received from the public sector with income from elsewhere.
• Embeddedness in local organisational and social networks, which gives them an enhanced understanding of local needs and, crucially, enables people to navigate services and know which providers within the wider ecosystem are able to meet or respond to their needs.

Funding challenges

We identified two sets of challenges that are preventing small charities realise and maximise their value on a consistent basis:

• Measuring and articulating social value
• The funding environment

They respond to these challenges in groups and as individual organisations.

Challenge: Measuring and articulating social value

• Lack of capacity to implement the formal and sophisticated approaches to monitoring and evaluation that many commissioners require.
• The evidence that they are effective at capturing (case studies and compelling accounts of support to individual service users) is not afforded the same weight as formal quantitative output and outcome measures.
• Small charities are increasingly struggling to convince commissioners and funders of the need for, and value of, their work.

Challenge: The funding environment

• A direct effect of central government austerity measures – cuts have been dramatic.
• The public sector has responded by searching for efficiency and/or economies of scale through streamlining and scaling up contracts.
• The funding environment has not favoured small charities. They receive a much smaller proportion of local government funding (16%) than larger charities (84%), with large, non-local charities receiving the biggest share (55%).

The public sector is responding by:

• Streamlining and scaling up contracts. Public sector commissioning is increasingly occurring at scale – contracts are larger, and more tightly defined, which favours large charities.
• Promoting collaboration between providers. There are some examples of effective collaboration, but this takes hard work and is dependent on considerable levels of trust between key actors.

Charities are responding: 

• Collectively, at an area level. They feel it is critical to continue to invest time and financial resources in collaborating with other local providers to bridge a gap between communities and the public sector – even when there is no funding to do so.
• Individually, at an organisational level. Some were focusing on development and capacity building to ensure their long-term sustainability; some on income diversification; and others on how to meet the requirements of commissioning frameworks and larger contracts in the future.