Autumn Budget 2017: Letter from ACF

ACF has written to Chancellor Philip Hammond ahead of the Autumn Budget 2017. Below is the letter from our Chief Executive Carol Mack.

Budget representation from the Association of Charitable Foundations

Ahead of the Budget, I’m writing on behalf of charitable foundations to underscore our support for two policy proposals that have been put forward by the National Council for Voluntary Organisations and Charity Finance Group:

  • Ensuring that EU funding currently accessed by charities and social enterprises is replaced from 2019 onwards, including their support for individuals that experience significant disadvantage and barriers to work
  • Utilising £1bn dormant assets identified by the Dormant Assets Commission, to endow community foundations or other local bodies to provide a lasting source of support for community development and social action in their local areas.

We would also ask that there is adequate consultation on any other fiscal or policy measures arising from the Budget that affect the voluntary sector, of which charitable foundations are a vital part.

Replacing EU funding

The government has announced its plans for a Shared Prosperity Fund to replace EU funding streams when the UK leaves the EU. In discussion with Whitehall departments, it is clear that there are a number of different priorities for this funding, which may require different delivery approaches if they are to be most effective. Currently, UK charities alone receive around £300m per annum from the EU.[ii] It will be important that in any successor programmes, funding is made accessible to charities and social enterprises, so that they can make an even stronger contribution to the UK’s future prosperity and social cohesion.

Among the priorities, we would particularly like to highlight the need to replace the European Social Fund with a new source of funding that supports people experiencing significant disadvantage and barriers to work. We appreciate that employment has risen in recent years and that the Work Programme achieved outcomes for many people closest to the labour market. However, it has not reached or achieved as strong results for those furthest from the labour market, and its successor, the Work and Health programme, is considerably smaller in scale.

People experiencing more complex disadvantage or barriers to work would often benefit from more in-depth and personalised support of the type provided by charities and social enterprises. Many charitable foundations support these frontline organisations’ important work. Based on research [iii], NAO guidance [iv] and consultation with other expert bodies [v], we believe grant funding should be considered the default approach for government funding in this space. Voluntary sector organisations overwhelmingly prefer grant funding and believe it provides increased scope for personalisation and innovation.[vi] Additionally, it is likely to be significantly better value-for-money for government to design and deliver than a payment-by-results approach.[vii] Grant funding could be delivered via an external body, such as Big Lottery Fund or other funding distributors, to ensure appropriate accountability.

Charitable foundations have already made representations to DCLG, DWP and the Office for Civil Society at DCMS on this issue. We have also made clear that if EU funding was not replaced or was not made sufficiently accessible to charities and social enterprises, charitable foundations would unfortunately not be able to fill the emerging funding gap, due to the scale of their giving, existing pressures and commitments on their funds, and often restricted geographies or charitable objects. Already, government grant funding for the charity sector has fallen from £6.2bn to £2.9bn over the last decade, with concurrent increases in contract funding accruing mainly to very large charities.[viii] The risk is that further reductions in grant funding would result in a loss of capacity within the voluntary sector to support their local communities, with likely increased costs for the public sector.[ix] We believe it is in all our interests to avoid such an outcome.

We therefore urge the government to commit to ensuring that successor funds maintain a focus on promoting social inclusion and reducing inequalities, use grant funding mechanisms wherever possible, and include greater involvement of charities and social enterprises in the design and delivery of future programmes. Several ACF members have also offered to provide support for government in designing successor funds, to maximise their effectiveness and where possible, alignment with philanthropic funding.

Dormant assets

The Dormant Assets Commission earlier this year identified £1bn that could be utilised for good causes. We are supportive of proposals put forward by NCVO and others to use this money to endow community foundations or other local bodies to provide a lasting source of support for community development and social action in their areas. This approach would help to reach and sustain those local grassroots organisations that are so important in building community cohesion and resilience.

Learning from previous programmes – such as the Community First Endowment Match Challenge – has shown that community foundations are experienced in successfully using government investment to attract other philanthropic donations. In that programme, £50m of government funding was matched by £100m of philanthropic funding. Alongside community foundations, we would be glad to offer any expertise we could in the design of such a programme.

Finally, we would urge government to consult appropriately on any other fiscal measures or policy developments arising from the Budget that may affect the voluntary sector.

Yours sincerely

Carol Mack
Chief Executive

We support UK foundations and grant-making charities