Donor dilemmas: the overlap between charity and public services

The overlap between the charity and public sectors in the UK is both broad and somewhat complex. Cecilie Hestbaek at NPC explores the conundrums of some philanthropists wondering where to put their money.

Recently, the Guardian newspaper published a list of public services run by charities. The range of things now overseen not by the state but by the voluntary sector is long and surprising, including (among others) whole chunks of the housing market, social care and probation services.

All of which raises some tricky questions for people who choose to fund the charities involved.

At NPC, we sometimes hear from philanthropists who are nervous about funding which might ‘subsidise the state’. For some donors, the idea of putting their private money towards problems once addressed using public funds is an uncomfortable one.

Philanthropists come in all shapes and sizes, and these big givers see their role as akin almost to angel investors in the business world. These donors would rather not get involved with the ‘bread and butter’ services of the charity world, and prefer to fund charities to experiment with new services (the underlying assumption being that state funding is not innovation-friendly).

This brings with it significant challenges. For one thing, funders are taking on a political role here, implicitly at least. And for another, it opens up questions about how money can address urgent problems most effectively if large givers decide not to fund solutions directly.

Take the politics first. One of today’s great political battles is over the size and scope of the welfare state, and the responsibility for delivering health and social services. The government has committed to £12bn in new welfare cuts by 2020, and a philanthropist may well decide that this has gone too far. Stepping in to help fund this gap will just provide cover for austerity.

But how far is too far? Was welfare support set at the ‘right’ level in 2010? Or before 1997, and Tony Blair’s commitment to bring welfare spending down (even if this aim was rather poorly-defined)? In this case, private funders have long subsidised the state. Or what if the ‘right’ level is a much smaller state, as advocated by others? In this case the government should never have funded specialist, non-statutory services in the first place, and it has in fact always been the responsibility of private funders to support this work.

As funders negotiate these questions, early intervention funding may provide one answer. In the mental health sector, for example, large national charities have been forced to cut local, preventative services as commissioners and councils have prioritised ‘emergency’ mental health services. Help is hard to come by for those trying to cope with the earliest signs of mental health issues—but these are the very patients who, uncared for now, will need emergency help down the line.

This is one way out of the bind in which some funders find themselves. At its very best, early intervention work will reduce the demand on frontline services in years to come. Philanthropists can fund innovation and effective new projects earlier in the lives of beneficiaries, staying true to their concerns about state funding while making it less likely that the state will need to get involved later.

We need to be careful not to over-promise on early intervention work. But while that Guardian list may be an accurate reflection of how much charity can overlap the public sector, but it also exposes the difficult choices ahead for the people whose cash keeps charities afloat.