Finance Committee

June 2001


Responses are linked to the relevant paragraph numbers in the Executive's document 'Review of Funding for the Voluntary Sector' as follows:



The Finance Committee's response to the Review of Funding for the Voluntary Sector is based on an enquiry carried out by two of its members. They heard the concerns about funding issues from eight groups of voluntary organisations representing youth work, caring, the environment, arts, sports, advice and the sector as a whole. They also held local meetings and received a written response from over 50 voluntary organisations. These concerns covered a wide range of issues. Most of the groups did not receive funding directly from the Executive. They received funding from local authorities, Health authorities, Scottish Natural Heritage, the Scottish Arts Council, Sportscotland, UK ministries, or the Lottery.

The comments from the national organisations were that the Executive's Review is about managing better what exists and is focussed on process issues. There has been no real involvement of the voluntary sector. The paper demonstrates no strategic thinking. It was widely felt that joined-up government was still just a theoretical concept and there was little real inter-departmental co-operation. The Voluntary Issues Unit was seen as a good idea, but toothless or ineffectual in practice. One comment was that the document did not mention Social Investment Scotland, which the Executive supports.

Para 6

"The Scottish Executive is committed to modernising the strategic, legal and financial framework in which the voluntary and volunteering sectors operate. This review is part of that process."

The review covers only a very small part of the funding of the voluntary sector. All or most of the voluntary organisations in sport, the arts, the environmental sphere, advice-giving, youth work at local level, and caring receive their public sector funding from local authorities, the Health Service, the Scottish Arts Council, Sportscotland, Scottish Natural Heritage etc. The whole framework of funding voluntary organisations via these bodies or the Executive should be considered as a whole, in a joined-up way. Direct funding of a few voluntary organisations by the Executive should not be treated separately.

Para 10

First point:

Voluntary organisations have widespread concern that the value of their normal work to the community is ignored. The emphasis on meeting the Executive's priorities leads to voluntary organisations distorting their work and organisation in fact or appearance, to make it appear that they are meeting these priorities.

Fourth point:

The failure of funders to continue the funding of successful projects run by voluntary organisations is a major problem highlighted by the voluntary organisations in all sectors. The issue needs to be addressed urgently. The Executive should interpret "the development nationally of innovative projects, which have proven to be successful" as covering all projects, whoever may be the funder, and including the continuing funding of the original project.

Para 11

Voluntary Organisations welcome the proposals to standardise the Executive's processes in dealing with all aspects of financial support to voluntary organisations. This would be a step forward when applied to direct funding by the Executive.

It would be vastly more useful if the Executive got all funders together to agree on standardising applications forms, grant conditions and grant claiming and payment systems and on a national objective system for monitoring and evaluating the success or otherwise of each project. These two issues - of excessive paperwork and varied and confusing forms and of the lack of an acceptable monitoring and evaluation system - figured prominently in the representations made to the Committee's enquiry by the voluntary organisations. They believe the larger voluntary organisations provide good services in a thoroughly professional manner and the smaller local ones in a very cost-effective and community-enhancing way, and would welcome a dispassionate assessment of their work.

Para 12

The Committee is concerned about the almost universal view of the voluntary organisations that there is an excessive amount of auditing and monitoring by often overlapping funding bodies. The standardised conditions suggested in para 12 would be a step forward, but, to be really useful, must cover the whole range of funders. Similarly, in considering the way its own funding and monitoring arrangements should work, the Executive must look at and co-ordinate the whole range of systems used by funding organisations.

There would be merit in devolving the administration of smaller grants to some area organisations, but only if it covers grants from other sources as well.

Local voluntary sector organisations in areas outwith the central belt perceive that their particular circumstances are inadequately considered and understood when the allocation of grants is done centrally. This can be due to the lack of awareness of issues such as remoteness and rurality, or because they are not members of national voluntary sector organisations, and therefore feel under-represented.

Para 13

Core funding, Service Delivery Contract and Project Funding

The key point stressed to the Committee's Reporters by the voluntary organisations was that the aim of any funding arrangement must be sustainability. The core funding of voluntary organisations is often so inadequate that they have to rely on gaining project or contract funding and using part of it to maintain their minimum basic organisation. The short-term nature of the project and contract funding means that the very existence of the organisations and the jobs of any paid staff are in doubt from year to year.

Three-year core funding would be a big step forward, provided that it is adequate to sustain the organisation's basic team and their work. To provide the desired sustainability, the three-year funding should be continuously renewed, so long as the voluntary organisation is operating satisfactorily, so that it can continuously plan two or three years ahead.

If a voluntary organisation has a secure future through sustainable funding, it will provide much better value for money. Currently a big percentage of staff time is spent on fund-raising rather than promoting the voluntary organisation's work. It cannot plan ahead coherently and is limited to competing for projects and contracts in an incoherent way.

The Committee believes that, when properly structured, a service delivery contract or project funding can be a useful means of delivering services efficiently and effectively. However, it shares the views which many voluntary organisations put to it that the arrangements are often not satisfactory and lead to waste and inefficiency.

The competitive arrangements can and do lead to great waste of staff time and resources by voluntary organisations in putting together bids for service delivery contracts.

Covering the whole field of funders, voluntary organisations estimate that only one in six of their applications for contracts is successful. A lot of time and effort also go into evaluating the bids. As one example the Rural Challenge Fund had 188 applications from voluntary organisations, of which 22 were successful.

Many of the voluntary organisations' criticisms relate to the management of contracts and project funding by funders other than the Executive. Again, it would be helpful if the Executive discussed with other funders consistent, cost-efficient and fair arrangements for the management of all contracts and project funding for voluntary organisations.

One request from many voluntary organisations was that the conditions covering core funding, service delivery contract and project funding should include insisting on a level of pay and conditions comparable to those of similar local government staff. At present the pressures of competing for funding and keeping within an inadequate core funding budget lead to voluntary organisations often providing worse pay and conditions, particularly as regards pensions, than the public sector. The Committee endorses this request that fair treatment of the paid staff in voluntary organisations be a condition of Executive contracts and, if possible, of other funders' contracts as well. To have the right effect and not put voluntary organisations out of business it would be essential for the Executive and all other funders to increase their funding sufficiently to cover the improved pay and conditions of voluntary organisations' workers.

It is essential that there is good specification in contracts; the lack of it is a common complaint by voluntary organisations. If there could be agreed pricing levels of specific pieces of social care or other work, then competition for contracts could be on quality and not on price.

Para 14

It would be consistent with the Executive's proposals for a generic power of Community Initiative (or General Competence) for local authorities to include a generic power of funding voluntary organisations for central or local government and possibly for other funders as well. This power could sensibly be included in the Bill reforming local government.

Para 15

The wide-ranging response from voluntary organisations to our Committee's enquiry provides a lot of material relevant to the Wider Strategic Review. The Committee will be happy to share this and any information it gains from any future enquiry with the Executive.


When the Executive is considering these observations by the Finance Committee on its own behalf, and that of the voluntary organisations who gave evidence to it, we stress the importance of taking account of all aspects of activities of voluntary organisations, the benefit to the community of a voluntary organisation's activity, the benefit to the volunteers, the route for many people through voluntary activity to a paid job or Further Education, the contribution of membership fees to the funding of some voluntary organisations, the local networks they develop and the highly motivated staff and volunteers. Voluntary organisations are indeed the pillars of our communities, along with national and local government and agencies and the commercial sector. They do face serious cumulative problems. The attention by the Executive is welcome, but rapid and positive action to address these problems is essential.