News

Levelling up – what Danny Kruger’s report on civil society means for foundations

Danny Kruger’s report into maximising the role of civil society in contributing to the Government’s levelling up agenda has now been published. So what might it mean for foundations?

This blog by ACF's Director of External Affais, Richard Hebditch (richard@acf.org.uk), describes out the main thrust of the argument that Danny Kruger makes, some of the most relevant aspects for foundations and what’s missing from the report (including some thoughts on process).

The need for change

Danny Kruger has been involved in Conservative thinking on charities and civil society for almost fifteen years, including helping found two charities and being an adviser at DCMS where he helped shape their civil society strategy in 2018. Despite, or maybe because of this, he uses the report to set out clearly the difficulties for the sector, and the reasons for this – as he describes it “the need for change” and “the crisis in communities”.

Rooted in a radical conservative tradition, he recognises that market adjustments have not and cannot solve the problem of deindustrialisation without condemning whole communities to becoming redundant. Non-market measures are needed – and for Danny Kruger this should be through partnership between the state and civil society (for instance through a “big offer” from faith communities to be matched by the state).

As Leader of the Opposition prior to 2010, David Cameron made a number of speeches on the Big Society (often written by Kruger) which set out the aim of putting communities in charge of their own destinies. In his new report, Kruger is clear on the limits of Cameron’s approach, particularly the fear from many that it was just a cover for spending cuts. When in power, the impact of those spending cuts on local councils and the voluntary sector then undermined the capacity and capability of communities to be agents of their own future.

And, unlike some other commentators, Danny Kruger is clear that the biggest immediate crisis facing both civil society and society itself is the economic and social impacts of Covid. To build back better, “a new economic and social model” is needed to replace the current one.

The report aims to build that new model through a new social covenant which would have four main articles:

  1. Public purpose (ie social and environmental purpose) should be at the heart of both public policy and business activity
  2. Subsidiarity and inclusion as guiding principles
  3. A switch to seeing people and places as assets rather than liabilities
  4. Building up social infrastructure

 

The report then sets out ideas (with varying degrees of detail) to deliver these.

Relevant recommendations for foundations

The report’s recommendations are grouped under four themes:

  • Power – focused on use of data, procurement and a new Community Power Act
  • People – focused on enabling more volunteering, opportunities for young people, a “new deal” with faith communities and a Neighbour Day bank holiday
  • Places – place-based policy, strengthening social infrastructure and encouraging more philanthropy and social investment

The last two pages of the report provide a summary of the 20 main recommendations. These are listed at the bottom of this blog post. The main text of the report however includes details and recommendations not in the summary. We’ve pulled out the recommendations below that are of most relevance to foundations, drawing on the main text rather than the summary.

Firstly, on data, the report says those “in receipt of public funding or tax relief should publish coherent and comparable data on their activities”. Although it doesn’t mention how this would be enforced, it could be in grant conditions for public funding or a new requirement in the SORP (though this would probably need support from the charity regulators for Scotland, Northern Ireland and Ireland).

First up for any data requirements would be charitable foundations – “we should now move to legislate to require all foundations benefitting from tax relief to do so”. Most foundation spending (though not most foundations) are already published to the 360 Giving Standard so the need for legislation specifically on foundations is not entirely clear. Defining foundations in law might also be difficult. Non-charitable grant funders (operating outside charity regulation and often funding party political causes such as partisan think tanks) would presumably be outside the scope of this, but the public interest in transparency of these grants might be stronger. Although the report does not mention to this, central government too could do more to be transparent about the grants it makes.

Of interest to some foundations is the call for big tech and government to work to reduce the number of digitally excluded and provide the wiring of our social infrastructure (though it’s unclear what the incentives for them to do so would be).

The report also calls for a new approach to put social value at the heart of commissioning, with greater accountability provided through “simpler, outcomes-based contracts” (though in practice, these remain challenging to design). The report endorses Social Impact Bonds as a route to do this.

The proposed Community Power Act would allow communities to bid to run public services and introduce Community Improvement Districts (CIDs) modelled on Business Improvement Districts. There is an expectation that foundations and other private funders would be part of CIDs and could experiment with “radically simplified application and grant management processes” and piloting of approaches like MatchTrade. Given the different levels of human, social and financial capital in richer and poorer areas, there is a risk this could favour better-off areas without additional support or funding for less advantaged areas (addressed to some degree by later recommendations on place-based funding).

The places section in the report includes stronger measures to hand over assets to the community sector and to protect these through the Covid crisis with ownership by a Community Ownership Fund (included in the 2019 manifesto), and for the Fund to be managed by Power to Change. Community organisers and community hubs would add to the places package, along with backing for a Government funded MatchTrade scheme.

As also recommended in the Civil Society Strategy, Kruger is keen for the UK to be a global hub for philanthropy, including developing diaspora philanthropy and using some of the UK international development budget to set up a match-fund scheme to encourage giving to tie philanthropy in to the UK’s development strategy under the newly merged Foreign, Commonwealth and Development Office.

At a local level, Kruger is interested in using a slice of local infrastructure levies to encourage community crowdfunding, and in the Government using new funds to support lending to social enterprises. As part of this, foundations would be nudged or challenged to use their endowments for social investment, for instance having to set out in their social investment strategy in their annual accounts.

Danny Kruger also proposes two new funds:

  • A £500m Community Recovery Fund to help with the recovery phase from Covid, which Kruger says could be managed by a consortium of foundations
  • A Levelling Up Communities Fund to provide a permanent source of income for communities, with Parliament setting five-year investment and distribution strategies. Community Foundations or other intermediaries could distribute the funds

Also suggested is to have a “significant change” to the National Lottery Community Fund to “focus on communities, not causes”.

What’s missing?

The report was only ever going to be focused on local community groups role in levelling-up, so it perhaps churlish to complain that it doesn’t cover some of the other big issues it touches on, like the decline in local government capacity and capability after a decade of cuts or the economic uncertainty caused by both Covid and new barriers to trading with the UK’s largest trading partner.

One major gap in the report is the lack of clarity about how the report itself will be taken forward. The original commission was from the PM but not from Government. There is no formal response beyond the Prime Minister’s letter included in the report itself and tweets from the DCMS Secretary of State and the Minister for Civil Society about considering it. The report presupposes (as we think it should) that civil society needs to be at the heart of the Government’s domestic agenda around levelling-up. But for those actually setting policy in Number 10 and the Treasury and who are focused on innovation, capital spending on infrastructure and big data, this is a harder sell.

Given the uncertainty about the next steps, there is an opportunity for foundations to make the case for the recommendations that will have most impact. We look forward to discussing more with our members on how to do so, including in combination with our work on the recovery from Covid through the Funders Collaborative Hub. The report and the levelling-up agenda will also be a big focus at our annual conference on 25 and 26 November, including in a keynote speech from the Minister for Civil Society. Foundations have stepped up to help deal with the impact of Covid-19 and many will also be thinking about the role that they can play in tackling the high levels of inequality between different towns and regions in the UK.

Summary of Levelling Up principal recommendations

Power

1. New official measures to understand and track the economic and social contribution of civil society

2. Comprehensive and comparable data from government and civil society about what funding goes where, and what outcomes are delivered

3. Negotiation with Big Tech firms to finance and co-design new, non-proprietary digital infrastructure for communities

4. A new commitment to ‘social value’ commissioning, considering the whole of government accounts rather than a single budget

5. A Community Power Act, creating the ‘Community Right to Serve’ by which community groups can challenge for a role in the design and delivery of public services

6. Community Improvement Districts or ‘pop-up parishes’ with time-limited freedoms and flexibilities to deliver community-led change

7. A new national institution to help local places and organisations improve performance and exercise greater responsibility; and to build an index of social infrastructure that can inform both national and local policy making

People

8. A Volunteer Passport system to match the supply of and demand for volunteers, with options to: join a new National Volunteer Reserve to help with future emergencies and with environmental projects; deliver ongoing mutual aid to people in crisis; fulfil formal public service roles such as magistrates or charity trustees

9. Service opportunities for young people, funded through the Kickstart programme, to work on a variety of social and environmental projects

10. A new deal with faith communities, by which government supports a greater role for faith groups in meeting social challenges

11. An annual ‘Neighbour Day’ bank holiday to celebrate communities’ work together; and greater use of the honours system to recognise the work of communities as well as individuals

Places

12. Planning rules to promote the creation of social capital through good design, the recognition of the need for gathering places, and community ownership of public assets

13. Policy to support independent social infrastructure, including professional ‘connectors’ charged with linking local services together, and physical hubs to co-locate services and enable gathering

14. A new focus on the modern local library, often community-managed, delivering business start-up support and digital inclusion for local communities

15. Policy to make it easier to start and run a charity, and create a modern version of the local Council for Voluntary Service (CVS)

16. A ‘match trade’ scheme to support social enterprises, which play a crucial role in economic and social development in disadvantaged communities

17. Options to boost philanthropy, including civic crowdfunding, and social investment

18. A new £500m Community Recovery Fund, financed by the allocation of the dormant National Fund, for charities and community groups supporting the transition from the ‘response’ to the ‘recovery’ phase

19. Consult on the use of the £2bn+ which will shortly be available from new dormant assets: options include a new endowment, the Levelling Up Communities (LUC) Fund, for perpetual investment in long-term, transformational, community-led local projects in left-behind areas

20. Review the National Lottery Community Fund, which is now 25 years old, with a view to a more local and community-led distribution model.

We support UK foundations and grant-making charities