Where next for the voluntary sector?

The past few years have felt like a fairly radical upheaval for many working in the voluntary sector. Public spending cuts have hit some organisations directly, and other, smaller, community organisations have felt knock on effects, losing access to meeting space or in-kind support for example. Across the sector it seems as though many organisations have been struggling to find their place in a new political and economic environment.

This is not only about how to maintain their activities and services with less money, but to decide where they stand amidst the range of initiatives around Big Society, civic action, localism and open public services.

This week, the Third Sector Research Centre launched a series of dialogues to encourage debate about the future of the third sector. Our first debate asks whether this is ‘the worst of times’ for the voluntary sector. A look at the economic context that the sector is operating in certainly illustrates more challenging times – although it is perhaps inevitable that the sector will be affected by periods of austerity and recession.

Arguably though, change in the sector is not just about the amount of financial support available, but changing expectations of the role it should play and how it should operate. Initially, the Big Society and its promotion of civic action appeared to offer significant space for debate about the role the third sector could play in re-balancing relationships between government and citizens. But arguably, the voluntary sector has been as much a focus of this rebalancing of relationships with the state as it is a facilitator. Our research has argued that the sector’s relationship with the state is changing. Not only is there less public funding available, but the Government increasingly promotes a more ‘independent’ voluntary sector – talking about ending ‘dependency’ of the sector on the state, and ‘bureaucratic interference’ by the state in the sector. Within this, new relationships with the private sector are being encouraged and more competitive tendering for services is being promoted.

How will the changing financial climate and perspective of the sector affect voluntary organisations in reality? Our research shows that despite criticisms of the voluntary sector being dependant on the state, in a survey of third sector organisations only 13% stated that statutory sources were the most important component of their income. Trends toward increasing third sector involvement in service delivery and the promotion of new forms of social investment funding are not new and were already being encouraged under the previous Labour governments. But the question is how far they will go and where they will lead for different parts of the sector?

Evidence from the work programme already suggests that commissioned funding models may not work for many voluntary organisations, especially those serving particularly vulnerable groups. Similarly, reliance on public funding appears to be greatest in areas that are relatively deprived and have fewer third sector organisations to begin with. Organisations serving socially excluded or vulnerable people are also more likely to be in receipt of public funding, and therefore more likely to be affected by funding cuts. 

In fact, it may be important to remember that funding is still the greatest concern for many organisations. Worries about survival, decisions about which services to maintain and which to cut are the reality for many organisations. But this is perhaps where changing relationships with the state are most important. Less money for the sector may be inevitable – but which parts? Closer relationships with the private sector and investors might be a good thing - but can this market ensure that the most vulnerable people and areas are provided for? Will increased competition and changing models of funding affect how voluntary organisations operate?

Over the next 6 months our debates will focus on various questions that the sector is facing – over staff and volunteers, marketisation and public service contracting, and questions of distinctiveness and value. In the first dialogue, we are asking people to focus on the big question of change in the voluntary sector. How significant are political and economic changes for the sector? How will they affect different organisations, the people they work with and the services they provide? And what might this change mean for the shape of the sector in the future?

Click here to visit the third sector futures website and read the full discussion paper from TSRC