Cut and dried? What’s the real impact of the government cuts to the UK voluntary and community sector?

We hear constantly that the double knock of the continuing recession plus government cuts have hit many charities hard, but it’s very difficult to get an accurate picture of exactly what is going on across the sector as a whole.

Last month (August), the trade union-backed website ‘False Economy’ published a report 'False Economy: Why cuts are the wrong cure' [external website] based on Freedom of Information requests which estimated that the voluntary sector will lose at least £110m in local authority funding this year.

NCVO’s ‘Counting the Cuts’ report [external website] suggests that this is a massive understatement and that if one includes central government department cuts this total is probably nearer £2.8 billion over the next five years.

Two regional studies recently published studies of the charities in their areas. LVSC, London Voluntary Service Council’s, Big Squeeze campaign [external website] reports over half (51%) of the voluntary organisations they surveyed have had to close services over the last year and 54% expected further service closures over the next year, while 81% had experienced higher than usual demand for their services

Voluntary Organisations’ Network North East's (VONNE) 6-monthly results of their ‘Surviving or Thriving’ survey [external website] revealed that, with 81% of respondents sourcing some, or all, of their income from public sector grants, 73% have seen a decrease in funding, 40% have lost staff, and 59%  have experienced an increase in demand for their service, leading 64% to dip into their reserves to cover costs.

Of course self-selected, smallscale (both the VONNE and LVSC surveys consisted of 120 organisations) survey responses  should be treated with some care, but they can be seen as at least indicative of what’s happening to some in the sector.

As always in the sector, getting meaningful evidence is very difficult, and as we noted in last month’s e-news piece on open data, the current Government’s decision to axe a number of surveys of the voluntary sector may mean that piecing together and prising apart the effects of the cuts and the recession will probably be further hampered.

The deepest cuts

What is becoming evident is that, as NCVO point out: “There is considerable evidence that cuts are not being applied consistently, proportionately or strategically.”  And certainly NCVO’s analysis of the local government spending settlement shows that local authority areas with higher deprivation scores are facing bigger cuts. This is also borne out by LVSC’s survey.

Since new research [pdf document] from the University of Southampton shows that charities in deprived areas are less numerous and more likely to receive statutory funding, it seems apparent that already less-well-served areas will be disproportionately hit by cuts.

Furthermore, according to LVSC: “preventative services are being disproportionately cut especially in advice, children & young people and health services”.

Since employment and training charities are reliant on statutory sources for 70% of their income; and educational, housing and social services charities receive around 50% of their income from statutory sources (NCVO Almanac 2010); such cuts are likely to be storing up problems for the future.

The wider impact may have a silver lining

Charities are reporting that the global recession has increased demand for their services and many say they are struggling to survive a decrease in their income. However, it is hard to establish, from the evidence provided, how much of the sector this is actually affecting.

Is this the end of the voluntary and community sector as some commentators are warning?

In our view, definitely not. The formalised voluntary sector has been around for hundreds of years and we’ve survived recessions, world wars and governments before.  But will it spell change?  Possibly; and there are those within and without the voluntary sector, DSC included, who have said that losing government money may turn out to be a good thing for the sector in some ways.

Commentators as disparate as Harry Cole, Editor of the rightwing Guido Fawkes Blog [external website], and Rob Dyson (Whizz-Kidz & Guardian blogger)  have both concluded that if a charity can’t survive such modest cuts they’re probably unsustainable anyway and that we need to diversity our income streams. In hard times, survival of the fittest makes the whole species stronger, and the reality is that a cause is unlikely to die with the closure of a charity.  

But, while some are worrying about shearing the sheep so close to the skin that they sometimes get nicked, what they forget are the plain facts about the make-up of the voluntary sector: Nearly eight out of ten charities have no financial relationship with the state whatsoever. 

Only 36% of the UK voluntary sector’s total income comes from the state and even that only equates to about 2% of total government spending. Some 4000 larger charities out of 180,000 are really the only ones directly affected by statutory cuts.  For the rest of us, it’s pretty much business as usual.  

Where next for the voluntary sector?

So what does all this mean in practice? Well, for starters, we need to stop being so fearful of the future.  The majority of voluntary sector organisations will survive any statutory cuts – either because we don’t get state funding in the first place or because we are not solely reliant on it. 

Secondly, many charities can and should use this as an opportunity to really seriously think about diversifying income sources. I am oddly reminded of a poem by Robert Cecil Day-Lewis which ends with the lines: “How selfhood begins with a walking away, and love is proved in the letting go.”

Perhaps the Government’s tough love for the voluntary sector will be the making of our independence?

This post was originally published by DSC e-news in 2011.

The pursuit of happiness

With the spending cuts biting, a stagnant housing market, rising unemployment, and an Austerity Britain struggling to get back on its feet in a hard winter of snow and swine flu, you might think it’s not the best time to be asking people how happy they are. Yet this is exactly what David Cameron proposes to do. Starting in April 2011 the Office for National Statistics will be rolling out a new measure of well-being for the nation (http://www.ons.gov.uk/about/consultations/measuring-national-well-being/)[external website].

Why does the Government want to know how happy we all are?

 "The contention is that just as we can create the climate for business to thrive - by cutting taxes, slashing red tape and so on - so we can create a climate in this country that is more family-friendly and more conducive to the good life." (my emphasis)
Create a climate, David?

"Of course you can't legislate for fulfilment or satisfaction, but I do believe government has the power to help improve wellbeing."
(David Cameron talks to Channel 4 news, 25th November 2010).

As an economic psychologist (the European version of a behavioural economist) I have to declare an interest here. A brief look at the news and internet coverage of these ideas throws up a whole world of conspiracy theories about the Government trying to brainwash us. People don’t like to feel manipulated or they’ll dig their heels in and rebel – it’s our natural state. So we have to ask hard questions about Government’s motivation in relation to this concept, how they will implement it and more importantly, what might be the undesired, unintended consequences.

However, putting my natural scepticism to one side for the moment what I think we should concentrate on and celebrate is the fact that the Government has finally cottoned on to an idea which psychologists have been trying to tell the prevailing economists for decades, and which wise people have known for centuries: that happiness is based not just on money but on living a more engaged and giving life. At last, we have a government in touch with the Dalai Lama’s own sentiments:

“It’s my fundamental conviction that compassion constitutes a basic aspect of our nature as well as being the foundation of our happiness”
(Dalai Lama tweeting, yes tweeting at 09:50 on 11th January 2011)

This is amazing. As a policy stance, increasing happiness is a good place to start, and should create a virtuous circle of increased giving, compassion and engagement which increases happiness, etc. The Charities Aid Foundation’s groundbreaking recent report The World Giving Index found that:

“Happy nations are more likely to give than wealthy nations: The link between the giving of money and happiness is stronger (a coefficient of 0.69) than the link between the giving of money and the GDP of a nation (0.58).”
(http://www.cafonline.org/pdf/WorldGivingIndex28092010Print.pdf)

So how will the government go about making Britain a happier place? Well, firstly they have employed a behavioural economist, Dr David Halpern, to head up the Cabinet Office’s ‘Behavioural Insight Unit’. Halpern, a colleague of Robert Putnam (of previous social capital ideas) bases much of his current thought on Richard Thaler & Cass Sunstein’s ‘Nudge Theory’, which literally proposes that people respond best when nudged in the right direction.

See one summary of these “psychological tricks” to get an idea of how they’re playing out in the press so far: http://www.independent.co.uk/news/uk/politics/nudge-nudge-wink-wink-how-the-government-wants-to-change-the-way-we-think-2174655.html [external website].

As a scientist I have to make the point that basing an entire approach to changing a nation’s outlook on one self-help book may well prove a recipe for disaster! While nudge theory and others like it are useful they are no silver bullet and need to be implemented alongside other policies and practices. However, credit to them for taking what I believe is a brave and clever step.

When Colonial America rejected British rule, it affirmed that every man, woman and child deserves equal opportunity and the freedom to pursue happiness. Now and again it’s good to remind ourselves of this, and perhaps we also need a nudge in the right direction?

This post was originally published by DSC e-news in 2011.

Selling altruism by the pound

It might seem a little old-fashioned to defend notions of altruism and charity – a little bit church-pulpit sermonising: “Ye cannot serve both the charity sector and Mammon!”  But sometimes you have to make a stand!

Sometimes we have to re-examine and re-assert our core values, especially when faced with a perceived shift in thinking about how the voluntary sector should work and about how people should go about doing good in society. In this case it is the increasing tendency towards treating the sector as a business market and giving as a reciprocal transaction.

The Minister for Civil Society, Nick Hurd, set the tone of this Government’s agenda for the voluntary sector when he said recently: "The sector has to open its mind to absorbing skills from the private sector because it clearly needs more business skills” and this mindset crops up all over recent policy thinking towards the sector.

DSC has countered this argument vehemently in public before, with Debra Allcock Tyler saying that the Minister has things the wrong way round, and considering business’ current reputation and responsibility for the state of the economy they make poor role models. The bigger picture is, however, one where the market (and open market competition) appears to be the model du jour, seen as the panacea for everything from our public services, to the charity sector, to philanthropy itself.

It is the latter of these 3 parts of ‘Big Society’ which has most recently come under the spotlight in the Giving White Paper. This clearly sets out a model of giving (and volunteering) largely based on the principles of “exchange and reciprocity” rather than any altruistic theory of why people give. The underlying assumption in the Giving White Paper is that givers must be rewarded and ‘nudged’ as if they are incapable of making the correct moral decisions for themselves, while businesses are exonerated of all but the smallest moral responsibilities towards society.

As the Giving Green Paper put it: ‘We also want to emphasise the role of reciprocity – to move away from a caricature of giving as a one-way street.’

What happened to giving and not counting the cost? Let’s just look at the concept of charity for one second – sometimes defined as “love of one's fellow men”; or altruism: “unselfish concern for the welfare of others; selflessness.” Are we saying we shouldn’t encourage this view anymore?  I hope not!

The 18th century German philosopher Immanuel Kant once said that incentivising people to act in morally correct ways takes away one’s moral sense of duty.  I agree, and the irony is that this is the very thing I thought the Government was meant to be encouraging in Big Society.  

Giving is not a one-way street. Giving researchers agree that people do get something out of giving – some intangible benefits (joy, satisfaction, a warm glow) and some tangible (giving may provide some future benefit to one’s family, friends or oneself). Yet the Government tells us in the Giving green paper that:

the prospect of feeling good about ourselves, making new friends or gaining experience, are not enough on their own to encourage us to give in new ways, to new causes or for non-givers to start. This is where exchange and reciprocity become particularly important. ... it is helpful for people to see and feel the benefits they can derive from contributing ...not just to blindly help anyone and everyone, regardless of how they treat us.

By the White Paper, this position has become embedded in the policy approach: the new Social Action Fund will “support new models that incentivise people to give time, such as ‘complementary currencies’ that give people credit for volunteering”.

The examples of projects supported by the Government include ‘Spice’, a time credit scheme for volunteers, and ‘ProDono’, a scheme whereby donors give money to meet a celebrity of their choice.

Language is a powerful giveaway of our true motivations. So when the Government talks in the Giving White Paper about: “making it more compelling to give” I am struck by the ambiguity of their words (‘persuading’, ‘coercing’ and ‘binding’ are all synonyms).

We in the voluntary sector are told that we need ‘more business skills’, ‘more social investment’ and ‘more incentives’ for people to give, in order to be ‘more successful’. Nick Hurd tells us that the Coalition is: “actively shaping a different world for charities” and this brave new world is clearly going to be based on a market model.

We in the sector need to figure out how we want to respond to this. DSC’s position is clear:  altruism does not require incentives and this is the kind of charity we should be encouraging in order to build a healthy, happy society. Emphasising exchange and reciprocity over pure altruism denigrates and erodes that motive and makes charity, and society, a poorer experience of mere bartering. But we don’t have to buy into the Government’s way of thinking. Giving should remain a personal choice.  Long live altruism!

This post was originally published by DSC e-news in 2011.

Burning the evidence

"

Openness is at the heart of this Government’s approach" says Francis Maude, the Cabinet Office Minister, in the Foreword to Making Open Data Real: A Public Consultation [external website].

As a researcher, my heart leaps when I read this kind of statement. Woohoo! Show me the data! I cry. I fantasise about robust data and research leading to enlightened policymaking.  Let us see the figures which will make the case for and measure the results of pivotal Government agendas like Big Society and public services reform.

But increasingly it looks like the reality behind the Government’s open data policy is quite different from the rhetoric. Take the black box out of the pretty wrapping paper and open it up, and instead of lovely spreadsheets full of informative data we find.......only moths and myths.

“We are seeing a withdrawal of information-gathering across a range of sectors” says Roberta Blackman-Woods, shadow civil society minister, in Third Sector [external website].

Take the Citizenship Survey [external website] which, since 2001, has measured a wide range of social issues, including race equality, faith, feelings about community, volunteering and participation. The perfect vehicle for measuring civic participation in Big Society both historically and for new policies currently being introduced – you’d think. But this has now been scrapped as it is deemed too 'complex and expensive'.  

We are told that a ‘Measuring Big Society’ research team, comprising Portsmouth and Liverpool Universities, plus the Centre for Research on Environment, Society and Health (CRESH) are creating a ‘blueprint’ for measuring Big Society (although not actually creating a new measure). However this will not be up and running until at least 2012, meaning there will be little or no baseline level to measure any effects against. Why not continue to fund the citizenship survey instead – at least in the interim?

Then there is The National Survey of Charities and Social Enterprises (NSCSE, formerly the NSTSO) – believed to be the largest survey of charities ever conducted in its two waves in 2008 and 2010. It had a particular emphasis on examining the relationship between charities and local authorities; in particular the quality of service provision relationships – another stalwart of the Big Society agenda. This survey is far from perfect – for one thing it made no attempt to involve unregistered groups – but it was arguably better than nothing. Still, the Office of Civil Society (OCS) is currently considering whether to also scrap this potential barometer of Big Society.

In the meantime, much is being made of Government policy to force local authorities and departments to publish details of their spending, with Communities Minister Eric Pickles hailing the ‘citizen armchair auditors’ whom he expects to hold government to account with this information. 

However, to date this has not lived up to its promise – mainly because it is accounting information which has not been collected with a public audience in mind, and so it is very difficult to analyse.  Dumping data into the public domain is pointless unless it is organised in a consistent and accessible way that can be interpreted and used. Again, the UK government ceased publishing holistic annual estimates of its spending on the voluntary sector in 2006, putting an end to an informative trail of data stretching back to 1979, in another cost-cutting exercise.  

The irony is that all of this is against the backdrop of the Government openly admitting the difficulty of measuring the success of their Big Society policies. Francis Maude himself recently commented in the Guardian [external website] that the Cabinet has ‘wracked their brains’ to come up with suitable measures for Big Society. He said, “We thought about measuring the number of community groups launched or public service mutuals set up, but mostly it's about the stories, the anecdotes about what people are doing."

I actually agree, in part, and charities which receive government money should definitely keep that quote to hand, the next time their funder asks for externally-verified statistical evidence of need/impact, progress against Key Performance Indicator (KPIs), metrics of x,y,z etc.  

So the evidence is getting burned, but why?  What’s the underlying motivation? Ministers will say it’s about efficiency savings and rooting out Labour’s target culture, but the cynic in me says that they actually don’t want evidence which might turn out to be inconvenient or damaging.  They don’t want to measure their success because then they can be called to account when things fail and public money is, again, wasted. In this Government, ideology drives policy more than evidence.

Perhaps I have high expectations – in reality government is a messy business, rather like juggling plates whilst somebody is constantly adding or taking plates randomly. But in this case, I fear that even if my cynical side is proved wrong, Government may wind up eventually having to reinvent the very same wheels it has already chucked on the bonfire, leaving agendas such as Big Society if not rudderless then at least wheelless.

This post was originally published by DSC e-news in 2011.

To add nonsult to injury – a diatribe on Government nonsultation with the voluntary sector

 love being asked what I think about things.  I’ll happily spend hours crafting a response to questions I think are important.  Which is handy for everyone given that a big part of DSC’s policy and research work is responding to government consultations.

We believe consultation is an incredibly important way of engaging in the politicies which may affect not just us but the whole of the voluntary sector. And because of our particular stance we feel very strongly that our duty to respond extends to speaking up for the myriad of smaller charitable organisations who may not have that capacity. So we take it all very seriously. Which is why it is particularly galling when government appears to then ignore our responses.  

Actually, not just ours but others’ too! We keep a very close eye on what people say and whether or not anything changes as a result.  So recently we’ve begun to seriously question whether the Government genuinely amends it’s thinking on the basis of its consultations.

Our Director of Policy, Publications and Research - Ben Wittenberg - wrote in e-news recently that the timetables for feedback and action from recent consultations have come and gone without a hint of anything happening. And we’re not the only ones who’ve noticed. Richard Caulfield, Chief Executive of Voluntary Sector North West (VSNW) has also ‘had a go’ (external website) about what we call ‘nonsultation’ on issues ranging from The Compact, and Modernising Commissioning to the most recent Charities Act Review to which we have just put together our considered response [pdf document].

There are two main things which concern us about this blatant waste of our time & energy: (1) the poor ‘ask’, and (2) what happens to our answers. 

As a researcher of course, my first concern is with the poor ask. Let’s take the Charities Act Review as an example. Two online questionnaires were constructed, one for the general public and one for charities.

They both asked a range of questions many of which screamed at me of poor construction and bias, suggesting that any responses they received would likely feed into an already-decided agenda for the Review, rather than it being the open-minded enquiry one might hope for.

Take question 1 as a (bad) example. We are presented with a random definition of charity and asked whether we agree with it.  Presumably someone must have made this definition up prior to the questionnaire with a view to having it ratified, which is rather strange given that there are legally-accepted versions already in existence.

Or let’s look at Q7 (below) and think about the inherent bias in starting a question by letting the reader know that “some people think X” when there are oodles of behavioural studies telling us that people tend to see this kind of statement as ‘normalising’ or ‘social proof’ of what others think and therefore tend to agree with it more, almost regardless of what it says.

Q7. Some people think that there are too many charities, and that this results in duplication and inefficiency. Is this a problem, and if so what could be done to address it?

Who are some people?  Informed people?  Uninformed people?  Existing charities fighting for funds?  Jo Taxpayer?  This is a nonsense statement made worse by the fact that it implicitly implies there is a problem – which hasn’t been evidenced.  And this effect is only reinforced when the follow-up question (Q8 below) addresses the apparent ‘problem’ – so there must be a problem, thinks the respondent!

Q8. Do you think that any of the following measures could address duplication and inefficiency?

There is further bias when, later on (Q23 below), we are asked about paying of charity trustees. Charity trustees are great, states the intro, “but” research has found that X,Y,Z are the negative consequences of not paying them. So, there we’ve already established, ‘scientifically’ (via research), the case for paying trustees without offering the other side of the story - the case against paying trustees. Do you want to hazard a guess at whether respondents will be more likely to answer for or against payment when subsequently asked?!

Q23. “Charity trustees are a vital element of both individual charities and the sector as a whole. There are thought to be over 800,000 charity trustee positions. But Charity Commission research found that 39% of charities at least sometimes experience difficulties in filling trustee vacancies. It also found that trustees tended to be from a relatively small group of people, and that word of mouth was by far the most common means of recruiting new trustees. We want to understand what the barriers to recruitment and retention are.”

Q23. Most charities are not allowed to pay trustees for their time (though can refund expenses). Do you think that charities should be allowed to pay their trustees?

  •   Yes
  •   No
  • Don't have a view

Then there’s our personal favourite, Q33, which asks whether you have ever heard of the FRSB (then goes on to explain what the FRSB is, after which you answer whether you have heard of them or not). Well, given that you’ve just explained to the respondent who the FRSB is, they would have to be an idiot to have not heard of them!

As for the second concern about what happens once we’ve responded to these poorly-worded questions: well, in the case of the above example I think I’d rather they were ignored since they will clearly produce answers in line with their bias. But not all consultations are like this, a good many are more openly worded or merely ask for a considered response, and in these cases you really don’t want your responses to be ignored. But that’s what seems to be happening more and more.

As previously referred to, Ben Wittenberg has spoken of dragging timetables, while Richard Caulfield’s eventual Freedom of Information (FOI) request alarmingly seemed to indicate that the relevant Government departments do not have the capacity to collate all of our responses and therefore neither are they likely to have been fed into subsequent policy decision-making processes.

So what’s the answer?  Well, we all as individuals have to chase up the government departments who have led on the nonsultation – in order to ensure they are consultations.  Once you’ve submitted your response keep an eye on whether or not they’ve paid attention to it.  Because with the best will in the world, we can plead with government to really pay attention, but without the pressure from us to make sure they do, it’s too easy to nonsult us on these important issues.

This post was originally published by DSC e-news in 2012.

Soapbox: Making the cut

There seems to be some confusion over who will be funding the future of the UK voluntary sector and, by extension, Big Society. While Sam Younger of the Charity Commission recently told charities that they need to: “move from a grants mentality to a contract mentality” in order to attract greater funding, Education Minister Michael Gove recently said: "If an organisation is a charity or a voluntary body, almost by definition the spirit that should defuse it is not dependency on the state but the capacity to do more by harnessing the enthusiasm of civil society and the generosity of individuals."

This gives strong ammunition to those who worry that the whole Big Society idea is government’s way of devolving any responsibility for anything and letting people just get on with it. Little Britain’s sketch of Dennis Waterman’s refrain: “write the theme tune, sing the theme tune” comes to mind: a totally DIY Big Society with voluntary and community groups being asked to provide more services with no government funding and expecting the general public to foot the bill. That is not so much an independent voluntary sector as one hung out to dry.

With the potential for up to £5 billion losses to the voluntary sector estimated by Dame Suzi Leather of the Charity Commission this is a big hole, and all we’re currently being offered is a £100 million Transition Fund.  This is “likely to be available to organisations with income of between £50,000 and £10m” as a bridge in the short-term, while voluntary service-delivery organisations find their feet in the brave new world. How many will sink in the meantime? With some predicting that even some local authorities will go bust in the wake of the CSR how will the much less resilient voluntary sector fare?

Among all the shock reactions, “I told you so’s” and recriminations with which the Blogosphere and social networking sites are currently awash I was amused to see the latest example of collective social action on Facebook: a simple message board which reads “FOR EVERY CUT ANNOUNCED THINK: COULD A TAX ON BANKS HAVE PAID FOR THAT?” promoted by a group calling for a ‘Robin Hood Tax’ (http://www.robinhoodtax.org.uk). Look behind this group and you find a coalition of NGOs, politicians, celebrities, religious leaders, world leaders including FSA Chairman Lord Turner, philanthropist George Soros, entrepreneur extraordinaire Warren Buffet and Nobel Prize winner Joseph Stiglitz, and over 216,000 Facebook ‘friends’.

This is clearly not a viral internet joke but a growing movement calling for progressive economic and social change in the wake of the banking crisis and the recent return to obscene banking bonuses and particularly in response to the CSR cuts which are widely held to be just more taxes on the poor. A similar idea is currently being promulgated in the States where they are experiencing a similar economic crisis, and where even Barack Obama has warned on his Facebook page about the dangers of repealing the Wall Street Reform of July 2010 which sought to bring tighter regulation to the US financial system.

All this bubbling on the surface points to the wider and deeper ill afflicting the world’s current economic situation – that of the widening gap between rich and poor – a guarantor of dissatisfaction. E.F. Schumacher, author of ‘Small is Beautiful: Economics as if people mattered’  talked about the theory of ‘enoughness’ – a state where everyone has enough to make them pretty happy. A tax on the rich and on the banks - a redistribution of wealth in our society and across the world - could achieve this. That DFID’s International Development budget was one of only 4 departments to avoid cuts, and indeed actually gained the most from the CSR, is an indication that someone has their head screwed on right, but what of the domestic economy? Social and civil unrest is not a good basis for the Big Society. Perhaps ‘Small and Beautiful Society’ would have been a better goal?

This post was originally published by DSC e-news in 2012

What’s all the fuss about tax reliefs anyway?

Blimey, when the PM gets hounded “from Derby to Indonesia” (as one newspaper put it) an issue really has struck a nerve.  In this case the cap on tax reliefs for charitable donations announced in the Budget.

Tax has always been an unexciting and unsexy business, charity tax even more so (and way more obscure). So it’s somewhat surprising to see the subject adorning the cover of Private Eye, the subject of Newsnight specials, and Radio 4 debates with Polly Toynbee.  I have had to stop clipping articles on the issue to avoid a newspaper mountain in my recycling and to get my life back.

And why? Because of a throwaway line in the Budget about capping the amount of income tax relief claimable by higher rate tax payers, including reliefs on charitable giving. And it’s that last adjunct which is causing all the furore. It’s the equivalent of whopping a tax on charitable giving for the rich. Which makes it almost as bonkers as the pasty tax.

Against a backdrop of Big Society and policies and rhetoric designed to encourage charitable giving and a strong and healthy voluntary sector in the UK, this is an odd move by the Treasury.  It seems to have come out of the blue, catching almost everyone offguard. The Office for Civil Society (OCS) and the Minister, Nick Hurd, certainly did not know about it in advance; neither did the Culture Secretary, Jeremy Hunt.

So what was the purpose of this announcement? What motivated this apparently counter-message move? Well, this seems quite unequivocal: HMRC and the Treasury’s abhorration of tax avoidance. The clue is firstly in the name of the so-called “clarification” document issued by HMRC after the fact: “Cap on unlimited income tax reliefs” [pdf document]; which begins with the indignant statement:

“Currently individuals can offset their entire income against income tax reliefs, and as a result pay no income tax at all.” And there’s nothing the tax man detests more than people not paying tax!"

So has charitable giving just been caught in the crossfire as so much collateral damage in a bigger war HMRC and the Treasury are fighting against tax-avoidance? Yes, quite possibly. We were told, off the record, after the Budget that HMRC didn’t anticipate that charitable giving would be much affected as it makes up only a small portion of this whole income tax avoidance issue – about 20% it has been estimated (by Faisal Islam).

So is it all a storm in a teacup, as Nick Hurd has tried to reassure us in Third Sector, saying that:“For the vast majority of the sector....it doesn’t have much impact.”?

Or should we rather believe the surveys by the Charities Aid Foundation which found that 55% of the general public thought the Government should rethink the cap, and that 93% of backbenchers agreed that the Government should do all it can to use the tax system to encourage charitable donations from the wealthy, while 65% thought charitable donations should be exempt?

The problem, very clearly, is a lack of real evidence one way or the other. Just as the state of knowledge about giving by higher net worth givers is parlous, so is the state of knowledge about the effect of tax incentives on charitable giving. As with many economic issues, a lot of theory abounds, but relatively little proof; and there are those who argue that tax reliefs don’t really make that much difference.

As the battle rumbles on and on it has opened up some very heated debate about ‘public benefit’ and the value of the voluntary sector versus the value we get out of our taxes paid to government; and the principles behind tax incentives.

The issue has become a political one which pitches economic theory against notions of the state. These are complex and nuanced arguments, as respondents to last month’s DSC e-news survey voiced very cogently, while, when forced to choose, they voted by a two-thirds majority that it is more important for society that wealthy people pay a fair share of tax rather than give to charity. It’s important to recognise, as many pointed out, the two aren’t polar opposites or mutually exclusive.

While this may be a stimulating debate to have, it has taken years of lobbying and testing to get the current tax incentives in place, and whatever your particular bent, the sheer depth of conversation this has created should persuade you of one thing: ill-thought-through last-minute policies which have unintended and largely unforeseeable consequences should not be accepted without a body of evidence as large as that which got us to this point in the first place.

That is why DSC supports the Give It Back George campaign – not as a knee-jerk reaction, or because we automatically think that tax incentives work or because we hold to one particular economic or political model - but because we want to see evidence-based and thoughtful policy-making when it comes to the voluntary sector (and society as a whole).

If you would like to read DSC’s further in-depth commentary on the tax relief cap please click here [pdf document] 

This post was originally published by DSC e-news in 2012

A White Paper White Out?

“Has the government's giving agenda run out of steam?” asked the Guardian in a recent readers’ poll following the publication of the ‘Giving White Paper One Year On’ (or GWPONO for short – and it is short on substance and wow factor).

Perhaps unsurprisingly, given that the content of the paper was mainly rehashed projects, many of which were nothing to do with the Government’s agenda and which were already happening regardless, 75% of readers answered “Yes, it’s all too low key and ‘incremental’”.

The irony of launching this updated White Paper in HM Treasury a couple of weeks ago was not lost on either the Minister for Civil Society, Nick Hurd, or his audience; given the recent crossed swords between the sector and Mr Osborne over the income tax relief cap. And perhaps a few of the invited audience will have wondered, as I did, whether this was just the latest damp squib in the Government’s waterlogged Big Society fireworks display.

The plethora of ideas mooted in the original White Paper have now coalesced into three main themes: social action (with the announcement of an additional £40 million for the Social Action Fund for campaigns to ‘inspire and help millions’; establishing giving as a social norm – with an added emphasis on businesses; and supporting ‘the providers of opportunities’ – whatever that means (it sounds like some alien confederation Captain Janeway might come across in Star Trek!).

Rhodri Davies (Policy Officer at CAF) gives a good summary of the GWPONO  in his blog and acknowledges that it’s all pretty yawn-making stuff. So the original question of whether the agenda has run out of steam is a valid one, and an important one. Exhausted though many of us are after fighting the good fight on Give it Back George we should not give up on the giving agenda altogether, especially when there is new money available.

What we should be doing is badgering the Government on its commitments and suggesting new ways of working together to actually achieve some of the outcomes which we know that we really need in the sector.

One of these outcomes is around corporate giving. DSC is this year launching a campaign around getting businesses to give more, and we will be keeping you updated with regular news on this as it develops. So we applaud the focus renewed focus on business giving, but with just a few caveats:

  1. Connecting business with charity. Business in the Community (BitC)’s Business Connectors scheme has been championed by Office for Civil Society (OCS) as a shining example of cross-sectoral success. With nearly £5 million of funding from BIG the scheme has trained 22 Business Connectors so far, whose role is to support and develop local partnerships between businesses and charities. It’s a promising idea, but ONLY if the charity’s needs come first, NOT the business skills. Those of you familiar with our position on what the voluntary sector has to learn from big business, will not be surprised to hear this refrain.

  2. Better corporate citizenship. Corporate giving to UK charities is currently worth around £1.6bn annually although it may have fallen faster in the recession than giving overall, as we pointed out in our UK Corporate Citizenship paper [download pdf], which got a mention in the run up to the GWPONO in a Guardian blog wishlist for the update. Still, company giving represents less than 5% of UK charities’ total income, and around 3% of private cash giving in the UK. We believe that companies can and should give much more – cold hard cash preferably.

  3. Payroll giving. In the original White Paper a major campaign was mooted to boost take up of payroll giving, now downgraded to no more than an informal consultation on the structure of payroll giving.  Figures show that payroll giving in the UK brought in £118 million in 2011/12 – a mere 2.4% of the amount brought in through Gift Aid.  Even though the gross amount donated has grown by around 160% in the last ten years, the number of donors has grown by less than 150% in ten years. Compare this to Gift Aid which has grown by over two and half times in the last ten years to over £5 billion in 2011/12. There are many who feel that this is one battle which it is barely worth fighting.

To sum up – we’re kind of on the right road, but it’s foggy, raining and the SatNav is playing up.  The starting point has to be charities’ needs, which should be based on the needs of their beneficiaries.  Our destination: better partnerships between business and charities.

The journey should along these lines: Companies need to ask what’s needed and then look at how they can best help. Recognise that charities aren’t there to help companies hire new recruits, gain access to new markets, or to make companies look sensitive and caring.

Charity of the year projects are all very well but usually only benefit the well-known, national charities. Look out of the window for the small charity round the corner from the office that you’ve never heard of before; the charity that can’t afford national publicity and as a consequence seems obscure and niche, but in reality serves a wide spread of beneficiaries.

So many people look to the US for their inspiration in so many regards. We’d like to stay closer to home. But if you prefer to look Stateside then our motto for the business community is: ask not what your charity can do for you, but what you can do for your charity.

This blog first appeared in a 2012 edition on e-news from Directory of Social Change

Keep calm and carry on giving!

It’s traditional to do a story about giving at Christmas. After all, that’s what the season is meant to be all about. So I suppose it’s rather fortuitous that the sector press has been abuzz recently with stories about whether individual giving to charities is going down, up or staying stable while all around are losing their heads in the continued uncertainty of the economic deficit.

Last month saw the release of CAF/NCVO’s ‘UK Giving 2012’ saying that donations by the public have fallen by 20% in real terms this year (that’s £2.3 billion!) You may have caught my recent rant about the generation gap not being what it might seem at first glance. But now we have a totally separate, long-running survey of more than 3,000 individuals, asked in 3 tranches in 3 different months, showing a marked fall in giving to charity. Now is it time to panic? Well, I have my doubts – not about the survey (I worked on this particular survey myself when I was at CAF and I know the rigours of the Office for National Statistics who actually run it) – but about whether we should panic yet. 

In an excellent blog on the debate (including a really cool research cartoon - yes, they do exist!), Karl Wilding, Head of Policy, Research, and Foresight  at NCVO, reviews the evidence and ends on this note:

“it is possible we are wrong: these are, after all, estimates…This is one set of estimates, a point on a line. And just as one swallow doesn’t make a summer, so one data point doesn’t make a trend…”

Personally, I’d like to see further data before pushing the panic button, however, this should rightly start us discussing and thinking about how we can and should react if this does turn into a downwards trend. Would any of us really be that surprised? OK, the scale of this fall raises eyebrows, but anyone in any doubt that our economic situation is gloomy right now clearly has their head stuck in the sand.

Let’s briefly examine the additional evidence:

Giving is falling

The UK Giving report highlights a fall in the proportion of donors using the Gift Aid scheme to top up their donations – the first reported fall since the beginning of the survey in 2005/06. This coincides with the reported fall in the average gift size, since it is usually the largest gifts which are Gift Aided (there’s been a 5% fall in the share of total donations made up of gifts of £100 and over, over the last year according to UK Giving 2012). Our own recent Gift Aid Report shows that net donations through Gift Aid fell, in real-terms, for the first time since 1995/96 when individual giving also fell significantly, following the recession of the early 1990s. It has been suggested that charitable giving is a lag indicator, as it tends to be one of the last items of personal expenditure which people reduce in hard times, meaning that reductions in giving now, reflect reductions in income two or three years ago.

Giving is rising

Published in Third Sector as I wrote this article, an analysis of charity accounts drawn from quarterly Charity Commission statistics shows that total income rose by £3.2bn to £58.9bn during 2012. Total income is made up of much more than individual giving, including statutory and trading income, however the analysis shows that income was up across the boards. Voluntary income showed the lowest increase at 3.6 % or £639m but this is still a substantial amount. To temper this slightly it must be added that many charity accounts included in the analysis cover 2011 rather than 2012, however the author of the analysis claims that the figures show a sector still growing faster than inflation.

Giving is stable

On the one hand there’s the Institute of Fundraising who have reported that their members are not experiencing plummeting levels of giving, although they do not report numbers. Then there’s Locality, who are reporting that two-fifths of their membership have experienced a fall in their total income in 2012 of around 8% on average – although that’s only 218 charities. Membership surveys and the like are not terribly useful in cases like these as they tend to be too small to be significant and slightly more homogenous than the sector at large.

A good indicator of giving is large national appeals: BBC’s Children in Need which took place in November, raised £26.8 million during the live show, a sum which, in real-terms, barely surpassed last year’s total, by around £100,000.

Other evidence

Indicators such as Net National Income per Head and Gross Domestic Product – good indicators of living standards – have both fallen over the last five years to second quarter 2012. As we have argued elsewhere, wellbeing may be a better indicator of giving and participation in Big Society than economic measures. We have shown that there may have been a relationship between falling wellbeing scores in the Middle East and the decline in civic engagement, even while GDP was rising in some of those countries just prior to the Arab Spring. Gallup figures for the UK in 2012 show a 0.1% decline in wellbeing as measured by the ‘best possible life’ today and a 4.8% fall in ‘thriving’ which includes an element of future-gazing (worldview.gallup.com).

Keep calm and carry on giving!

So the jury is still out on whether giving is up or down. I’d like to echo Richard Harrison, CAF’s Director of Research, when he said recently that we are in relatively uncharted waters here. The UK economy has never faced such a prolonged and deep recession, and with the Autumn statement’s gloomy forecast that austerity measures will now last until 2017/18, there is no let up in the immediate future for the voluntary sector in particular.

The reality is that different charities will be experiencing the current times in different ways. Let’s not panic yet, Mr. Mainwaring, but we’d be foolish to ignore the plight of those charities who are suffering. We probably need to be doing more to boost giving wherever and however we can, so DSC will be supporting the new Back Britain’s Charities campaign because it’s always good to remind people to give more.

And talking of giving more, DSC continues to support the independent ‘Give More’ which has just launched a Christmas campaign to get people to create their own free, personalised Give Guide of practical things they can do for charity this Christmas and throughout the year to come. Now that’s what I call a great Christmas gift for the sector!

 

This blog first appeared in the Christmas 2012 edition of e-news from Directory of Social Change

Charity tax relief is not an incentive, it's a right

While the recent Public Accounts Committee report on gift aid makes some good recommendations, it seems to me that it fundamentally misunderstands the gift aid scheme. 

During the PAC evidence session into charitable tax reliefs that led to the report, committee members consistently referred to gift aid as an incentive scheme – at one point it is referred to as “a bribe” – and persistently asked whether it is value for money given the cost to the taxpayer.

This skewed view colours the conclusions of the committee that there is not enough evidence that gift aid is an effective mechanism.

Despite the complexity of its inner working the fundamental principle on which gift aid is based is clear, as a
National Audit Office report last year clearly restated:

"Tax relief on donations reflects a long-held principle, consistently accepted by Parliament, that charitable income should be exempt from taxation where that income is used for charitable purposes."

If there is an incentive factor, it’s only for companies and higher-rate taxpayers, who can claim back the higher rate part of their income tax paid on gift aided donations. But even they are only receiving back tax they had already paid on their donations.

Accepted wisdom is that tax reliefs do have an incentivising effect at higher incomes – as shown in 
this response to the Chancellor’s proposed income tax relief cap in 2012. 

DSC has previously estimated, using HMRC figures, that higher rate payers contribute around a third of all donations under gift aid, that around a quarter of all higher rate taxpayers may have given through gift aid in 2011/12, and that they gave nearly five times more on average than the average donor.

That leaves another £440m or so which was repaid on corporate donations. We can’t be sure of this figure. According to page 38 of the NAO report it’s “a rough estimate based on corporate tax returns and produced on a different basis to figures from 1999-2000.” Since the millennium changes to gift aid, HMRC has not tracked corporate gift aid so this is the first indication we’ve had in over a decade as to how much is actually claimed.

When questioned on this by the committee, HMRC said around half of corporate relief is charitable trading companies paying up profits to their parent companies. 

This would mean that corporate donors claimed £220m in the year, which seems an over-estimate. That would means companies gave around £1bn in gift aided donations to charities, yet our most comprehensive research into voluntary corporate donations in the UK puts the total from all giving at 
less than £800m. Corporate Gift Aid is clearly ripe for further investigation, as well as reform.

So the committee is right to haul HMRC over the coals about their figures, but let’s not let these technicalities obscure the main point here. Gift aid is successful in bringing in over £5 billion to the charitable sector – over one third of the total individual giving per annum. It could undoubtedly do more, and be better, and HMRC certainly need to get their act together, but it is essentially a good value for money scheme.

This article first appeared in February 2014 in e-news from Directory of Social Change

Would I lie to you……for money?

The recent Save The Children "gagging" scandal, highlighted on Panorama , , may have been just the tip of an ugly grey iceberg. A former member of staff alleged that SCF pulled criticism of a major company because it feared losing potential cash support from them.

Dominic Nutt, the SCF whistle-blower, told Third Sector that he decided to speak out partly because he believed that this behaviour was widespread in the charity sector. Is he right? And if so, what should we do about it?

This was one of the topics for debate at the House of Lords All Party Corporate Responsibility Group (APCRG) meeting, hosted by Baroness Greengross, at which our highly esteemed Chief Exec, Debra, and I spoke last week. Where do or should charities draw the line when trying to secure funding to help their needy beneficiaries? Can the end (more money for said beneficiaries) always justify the means? Well, not in our opinion!

"It's not really helpful to always invite the companies who have really good funding relationships with charities to these meetings," starts Debra, typically provocative, "because it prevents us from getting to grips with the wider problem that they are a very small minority."

We were at the APCRG to discuss the findings from DSC's Company Giving Almanac, launched last summer and Debra duly and deftly reeled off nearly every statistic it took me six months to calculate in under ten minutes! The figures speak for themselves (companies provide only 2% of UK charities' income compared to 43% from the general public; and donations make up only 0.4% of the average top company giver's pre-tax profits, to name but two). But the point we really wanted to hammer home was that it takes more than a few shocking statistics or one whistle-blower, to get the debate moving forwards.

We need to change attitudes towards corporate-charity relationships. It's all very well for the best companies to sit there smugly and talk about shared value and triple bottom lines, but the rest of the corporate world - all 4.8 million of them - are hiding behind these good examples. Lord Aberdare said it all when he told the assembled APCRG that: "in CSR terms, not a lot has changed since the 1980s. We were having the same conversations back then [at IBM]."

Now wound-up, Debra insisted that most corporate-charity relationships force charities to lie. The power dynamic is such that many charities feel that they have to toe the line and take whatever they can get instead of being able to ask for what they really need.

A good example of this came to our attention only this week while talking to a large company which told us of a teleconference with one of their charity grantees. The conversation was around the various ways in which the company could help the charity as part of its employee-involvement programme. The charity agreed but when the teleconference ended the microphone was left on at the charity’s end and they were overheard to say: “why do they keep fobbing us off with these employee programmes? Why can’t they just give us the money?” The company was “disgusted” at this and promptly terminated the charity’s grant. How different that conversation could have been if the power dynamic were different and charities felt that they could be honest about their needs.

The power differential is obvious in another example which came to our attention at an event where a representative of the Co-Operative bank was speaking about their charitable giving programme. The CSR guy told charities not to insult them by sending anyone below the CEO to meetings, to which one charity replied: “and will you do the same?”

But it was the unfortunate corporate in the Lords Committee room who received both barrels when he unashamedly made the point that his company (MITIE, by the by) is not always confident that charities will spend their cash "wisely", therefore they try to avoid cash giving.

It turns out that the company doesn't want to risk charities spending their money on their competitor's goods and services. So, let me get this straight, you'll give them money only if they buy your goods and services with it? I glance nervously at Debra across the grand Committee table. She is, of course, unable to contain herself.

I think the gist of it was (in polite terms): "charities can’t always get donations in kind for services they use, and they don’t have the time to ask all their suppliers for donations in kind. Many companies think they know best but they do not know as much about what charities need as the charities themselves, especially in the case of small charities. The best way to help charities is to give them cash." But I couldn't be totally sure as I'd taken refuge under the table at this point.

We need more whistle-blowers in this arena, whether they are general nuisance-makers like DSC, or more specific ones like Dominic Nutt who I give the last word to, as he summed up his interview: "I'm not saying you should never take money from corporates, but you should engage with them robustly, have an adult relationship with them and reserve the right to speak out if there is a problem." Amen from us!

This blog first appeared in February 2014 in e-news from Directory of Social Change

The Capitalist, the Communist and the giant chicken fight

Have you ever seen giant chickens fighting? No, I hadn’t either before my friends’ hen do, where people took it in turns to don sumo chicken suits and battle it out in a plastic arena. Seldom have arms and hands been so ineffectual as when flapping around in giant plastic wings, or feet rendered so useless in giant hen’s claws. Unable to see much out beyond the giant cockscomb dangling in their eyes, the fights became about simply who could push who the hardest.

I wouldn’t normally mention such extra-curricular activities, but this one provided me with so much illustrative mirth coming, as it did, hot on the heels of my recent visit to a much more solemn affair. In June, I revisited my Northern roots at the York Festival of Ideas, where the ever-brilliant Joseph Rowntree Foundation (JRF) were hosting a themed day of talks and discussions on the topic: “Economic Growth for the Many, Not the Few” – talking about the opportunities and battles which now await the UK economy post the biggest financial crisis in living history.

There are clearly some big questions to be answered here: Is capitalism to blame for the economic crisis? How do we ensure it doesn’t happen again? Is it time for a new world order? If so, what should that be? How do we make the system more equitable? Is socialism the way forward? Should we be looking for a third way?

Now I’m no ornithologist, but it doesn’t take much to see the current situation as one in which the banks and other financial institutions are flapping around like headless chickens blaming each other, crying “‘fowl’ play” and seeing who can trample on who to survive. At the risk of ruffling a few feathers I could go on…and I will!

The first discussion of the JRF themed day introduced ‘academic cosmologist’ Bob Swarup, author of Money Mania: Booms, Panics and Busts from Ancient Rome to the Great Meltdown. And Bob had some bad news for us all: financial crises are endemic and “efficient markets are a lie” he said. Constant change (boom & bust) is necessary, innate and inevitable. Apparently you can no more teach a chicken to fly long-distance than to get humans to step off this roller-coaster.

So far, so bad. But how so, you might ask? Why is this boom and bust cycle inevitable? Because money accentuates natural human biases, making us more prone to errors over money than in any other arena. This is one of the key findings from my field of economic psychology (like behavioural economics) over the last few decades.

But what errors and biases are these? Is it simply 'greed' at the heart of human folly over money? "Individuals and institutions are captured by the wondrous satisfaction from accruing wealth," asserted the economist J.K. Galbraith. Or, put another way, does our short-termist nature mean that we are doomed to setting up booms and busts as we chase short-term gain instead of looking at the longer term picture?

The problem is that money makes us go a little funny. We imbue it with many different psychological values which end up over-inflating its real price. So does 'human nature' mean financial crises are the cost of progress? After all, you’ve got to crack some eggs to make an omelette. They call it ‘creative destruction’!

Arguing for capitalism, in the blue corner, we have “the rational optimist”. This point of view holds that constant economic growth is an increasing good, that increased commercialisation (economic progress) should (and will) go on ad infinitum without causing the end of the world; so why worry? The market will come right in the end. In the blue corner, arguing against this, we have the likes of the Occupy Movement spitting feathers about the 1% versus the 99%, and arguing that booms don’t benefit everyone, and inequality being the root of all our woes. A battle between these two polar opposites would indeed be like a giant sumo chicken fight – ineffectual and hard to tell if anyone can win.

But is there a third way? Recent figures have shown that productivity in the UK has slowed almost to a halt over the last few years. This has been called ‘The UK’s productivity puzzle’, and the New Economics Foundation has recently asked whether it has hit an invisible ceiling? In fact, productivity growth has been slowing across the whole developing world at least over the last ten years or so. But before we panic that progress has unthinkably been stymied, NEF wonders instead whether we should be rethinking economic growth - not just in terms of ever-increasing GDP, but instead in terms of more meaningful goals, such as greater wellbeing for all?

This is also the thesis of Umair Haque, author of The New Capitalist Manifesto: Building a Disruptively Better Business, who reminds us that capitalism in its twentieth-century form under-estimated the costs of destruction while over-estimating the benefits of creation. This imbalanced equation of creative destruction could not continue indefinitely. The new order needs to value wellbeing over profit, and in order to be sustainable needs to create value which makes people, communities and society better off as well as making profit.

So what’s the solution? I believe that these ‘third way’ concepts are ideas which have come of age. These are ideas which supersede the old behemoths of capitalism, communism, and GDP. Now all they need to do is prove themselves. Metaphorically speaking we need to throw them into the ring with the Anzu Wlyiei; because I hope and believe that these are quicker, nimbler, more agile fighters which will succeed in battering the giant chickens – more Bantam-weight than old-fashioned heavyweight.

Despite my beliefs, however, I’m not betting my shirt on it yet because, as they say: never count your chickens before they hatch, and definitely don’t put all your eggs in one basket!

This post first appeared in September 2014 as an article in e-news, Directory of Social Change

Big Society? What Big Society? (2013 update)

It’s summer in the voluntary sector and there’s very little to report...  oh, apart from the open season on CEOs and charity costs. Yawn. I’ve even managed to tidy my desk, and....oh what’s this? A paper on something called “Big Society” from 2010. Now, what was that again...?

It was THE BIG IDEA of the Coalition Government back then, but, well, the very fact that it’s a phrase which has now gone completely missing from government rhetoric tells you a lot, but is there anything going on at all in the BS machine?

At the time there was a lot of murmuring from the voluntary sector that “The Big Society” was in fact what all of us do and work towards every day of our charity lives, and that we didn’t need Government meddling. In fact, some (including myself) went so far as to say that the Government backing for “Big Society” might actually stir up people against it, thus strengthening our version of the Big Society: – the one without bells and whistles and fairy lights on it, without fancy new funding models, ToyTown banks and Community Organisers parachuted in to ‘stir us up’ into Government-approved action.

The sole surviving remnant of the original idea, and where most of the money has gone, is in Public Service Delivery – an idea so fraught with difficulties, dangers and dragons for your average charity that it almost defies belief. Yet this is the one thing politicians are pinning their hopes on: Attempting to change the fundamental nature of the sector by turning it into a big business. Luckily for the charity sector, most charities are not in a position to undertake such work, yet those who pinned their hopes on it as a source of sustainable funding have either been dumped on from a great height by the (mainly) private sector contract holders or gone to the wall.

Time will tell how this particular strand of BS will pan out, but for most of us it will be panning out elsewhere on the horizon, as a thinly-veiled attempt by the Government to marketise charity’s bounty in the very largest charities, some of whom are more like businesses anyway.

It is true, as Charity Times Editor Andy Holt points out, the “Big Society” might have fared better if it hadn’t come at a time of massive recession and cuts in spending. But maybe more good money being thrown after it might have actually created a behemoth in a china shop, a white elephant charging through the undergrowth of society…

I suppose if Joe Public had had a bit more money in his or her pocket, brighter prospects and a cheerier outlook then what might Big Society have become? Who knows. For this did not come to pass, and now it seems as if “Big Society” is out to pasture.

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There have been many casualties along the way, but with the flagship project Your Square Mile coming out this month with damning statements of the complete and utter failure of Government to back it financially, meaning that it has only recruited 140 people instead of the 3 million it was meant to have by this September, there can be little doubt that Cameron’s Big Society is dead. Long live Big Society!

Good Corporate Citizen or Citizen Kane?

Barclays “is a tax avoidance factory” asserted Lord Oakeshott, Lib-Dem peer, at the end of February 2012, as the Government moved to close off two highly-lucrative schemes designed to save two of Barclays’ clients paying £500 million in UK taxes (http://www.thisislondon.co.uk/news/uk/barclays-is-a-tax-avoidance-factory-7497988.html). There are no possible excuses here either, since Barclays had signed a code of conduct on taxation that these transactions explicitly looked to dodge. Poor Barclays, and poor Bob Diamond, its beleaguered CEO, who is doing all he can to revive his own and Barclay’s reputation after its shredding in recent years. A year ago Mr. Diamond gave the inaugural BBC Today Business Lecture. In it he told the story of his visit to Washington just after the financial crisis of 2008 when a senior economic advisor to the White House asked him: “Do you think banks can be good citizens?” While Diamond was thinking about his answer the advisor added: “If the answer is “yes”, think about the fact that no-one will believe you.” He doesn’t tell us what he actually answered, but one thinks it should have been an embarrassed silence (http://news.bbc.co.uk/today/hi/today/newsid_9630000/9630673.stm).

Three years on and Bob tells his Today audience that: “Banks must serve a social purpose and meet a real client need”; and that: “rebuilding trust requires banks to be better citizens”. Forgive my cynicism, but around the same time he was also bleating to the Treasury Select Committee that: “the time for bankers’ remorse [over the financial crisis] is over.”

In the light of the latest press stories it seems harder than ever to believe that Barclays could be seen as a good corporate citizen and Bob as anything other than just another modern-day Citizen Kane. Indeed there has been speculation in some quarters that Barclays Bob cut the controversial bailout deal with the Qatari and Abu Dhabi states at a higher rate than that offered by the UK government specifically, in part, to avoid the government as a meddlesome shareholder so that such fiscal underhandedness could go unnoticed (http://www.leftfootforward.org/2012/02/warnings-about-bob-diamond-barclays-tax-dodging-greed-were-there-in-2008/).

Lord Oakeshott is very clear on Twitter (29/02/2012 @oakeshottm), saying: “If Barclay’s are good citizens, my name’s Bob Diamond.

This brings into much sharper relief the irony of three related events which go to the heart of the current issues with Big Society and corporate citizenship. Firstly, we had Francis Maude talking to the Institute of Directors about Big Society and the City, saying:

“Government is committed to helping businesses do well by reforms to taxation, regulation, public spending and public procurement to encourage enterprise and growth…In return we would like a commitment from businesses to do good. To use your skills, resources and dynamism to help us tackle Britain’s social problems from worklessness and deprivation to troubled families and community breakdown.” (http://www.cabinetoffice.gov.uk/news/francis-maude-speech-big-society-and-city)

Secondly, we had David Cameron at the beginning of the same week attending a Business in The Community (BiTC) Communities Summit and defending big business, saying:

In recent months we’ve heard some dangerous rhetoric creep into our national debate…that wealth creation is somehow anti-social, that people in business are out for themselves.

And:

Business is not just about making money….it’s also the most powerful force for social progress the world has ever known.

(http://www.politics.co.uk/comment-analysis/2012/02/23/david-cameron-business-in-the-community-speech-in-full)

He must have been spitting into his cornflakes when the Barclays debacle came to light.

And the irony doesn’t stop there, as on the very same day as Barclays’ underhand tax-dodges were unveiled, riot police moved in to clear the Occupy movement’s camp from outside St. Pauls’ Cathedral whose clergy had acknowledged that the #occupy movement (an international protest primarily directed against economic and social inequality) had made them "re-examine important issues about social & economic justice". Another example of trying to brush the inconvenient truths under the carpet?

So what to do? We are in the middle of the worst economic crisis of a lifetime. The voluntary sector is facing unprecedented demand for services coupled with unprecedented cuts to its government funding. And the only ones seemingly still carrying on regardless are the banks and big corporations.

Bob believes that the banks can still save us. But in order to do so he believes that banks must take more risks; that economic growth depends on it. Of course banks do and must take risks as part of their business. But risk must be regulated, and aligned with reward in the right way and for the public good. Only a few months ago, Andrew Haldane, Executive Director of Financial Stability at the Bank of England, gave the Wincott Annual Memorial Lecture in which he said: 

“Banks are special. That has long been recognized in the design of their ownership, governance and regulation. This status can have strange consequences. The historical distribution of risks and returns in banking is one. For a century, both risks and returns have been high. But while the risks have typically been borne by wider society, the returns have been harvested by bank shareholders and managers.” (http://www.bankofengland.co.uk/publications/Pages/speeches/2011/525.aspx).

Haldane goes on to give an incredible illustration of how far massive risk-taking was being rewarded: “In 1989, the CEOs of the seven largest banks in the United States earned on average $2.8 million. That was almost 100 times the median US household income. By 2007, at the height of the boom, CEO compensation among the largest US banks had risen almost tenfold to $26 million. That was over 500 times the median US household income.”

That banks were considered “too-big-to-fail” and too powerful in society’s rankings can be illustrated by the fact that in 2007 the assets of the big 3 UK banks constituted 200% of the UK’s GDP (Haldane, 2011). The power balance was fatally tilted in their favour. They could literally do whatever they wanted; and what they seemed to want to do, were driven to do was to take ever bigger risks. The narrow focus on equity, and the machinations of the stock market, Haldane argues, has ironically led to massive inequity.

However the ‘specialness’ of banks cannot mean that they are above the law, above regulation, above suspicion or question. Finance Mail recently counted over 550 offshore subsidiaries belonging to Barclays, Lloyds and RBS, a fact about which Bob Diamond claimed little knowledge in his appearance before the Treasury Select Committee (www.newstatesman.com/print/201102240018). Now is the time for the British government to stop quaking before the mighty banks who threaten to upsticks to Switzerland at the very mention of tax and regulation and to grow some cahones big enough to really help Big Society.

Now is also the time for the UK government to stop propping up the banks with an ‘implicit subsidy’ as Haldane puts it, or free bailout insurance to look at it another way, worth around £100 billion in 2009 – or roughly what the government spends on the NHS it is rapidly dismantling (http://www.iiea.com/events/andrew-haldane-on-fixing-finance).

At DSC we believe that in order to be good corporate citizens, businesses have fiscal, environmental and social responsibilities towards the communities in which they operate. So, David Cameron, if it really is true that: “corporate responsibility is an absolutely vital part of my mission for this government” and that: “The big society is all about people recognizing that they have obligations beyond paying their taxes and obeying the law” then please let’s start by enforcing those basics, across the board, for big businesses. In order to win back our trust I’m afraid the ball is very much in the court of the private sector, and the public sector, to prove that corporate citizenship is not just a fig leaf.

2012: The year of the all new old-fashioned society

2011 feels like it was the year of BS – in many forms. Certainly the Big Society agenda loomed large in the last 12 months, manifesting itself in all manner of initiatives (the Social Action Fund, Community First, the Community Organisers programme, National Citizens Service, the Work Programme, Big Society Capital and the Localism Act). And then there was also a lot of the other kind of BS as well (in many of the same programmes and initiatives; and in the form of disproportionate and ill-thought-through cuts and austerity measures, anti-competitive tendering processes favouring private providers of public services, and talk that the charity sector as we know it is dead). It’s not that the Government has got this Big Society thing all wrong. In fact there is an awful lot that’s right about it, but yet it still feels frustratingly far away from achieving what it could. The aims of Big Society are laudable. Need we even list them? Well, probably yes, because it seems there is STILL a great deal of scepticism and misunderstanding about them. So, as the Coalition puts it, the BS agenda’s aim is: “to create a climate that empowers local people and communities, building a Big Society that will ‘take away power from politicians and give it back to the people’”; or as DSC say, it’s: “about getting individuals to take responsibility for themselves, each other and their communities.” (CIPFA South East spring conference address, 22 March). All well and good in a world of mass democracy where people want to be seen and treated as individuals with the power to affect their own lives rather than a nanny state where nobody is trusted to know what is good for them.

However 2011 was a year of deep financial crisis in the UK and across our nearest neighbours in Europe in which we saw further fallout from the failure of our banking system. It was also a year of unprecedented rioting and the upsurge of the Occupy Movement (although we should not make any real linkages between these two which, in my opinion, would be to dignify the former with any of the intelligence of the latter). Both reactions however spoke in different ways to a deep malaise in our society. A deep unease about inequality, about the widening gap between the haves and the have nots – in Occupy parlance: the 1% and the 99%. Granted, in the rioters’ case it seemed to be just a case of not having a bigger TV or some more designer gear, but at its heart even then we must acknowledge something deeper than most of those involved would be able to verbalise.

What of 2012 then? We are still in economic crisis, with low growth and rising unemployment, homelessness and poverty in the wider economy and a raft of austerity cuts hitting the voluntary and community sector particularly hard – those ostensibly charged with helping to bring about the new Big Society. And the Chancellor’s Autumn Statement could do little to reassure us that it would end anytime soon. However, all should not be seen as doom and gloom. As some commentators have pointed out, historically times of crisis can also be catalysts for change.

As referred to in a previous blog on the links between the Arab Spring and civil society (http://catwalkerdsc.amplify.com/2011/07/06/big-society-and-the-arab-spring-making-the-connections/) Michael Edwards, the writer and activist, said recently that there are two sets of conditions which act as catalysts for a flourishing civil society: one is mass protests in the face of ‘outright oppression and the violation of human rights’; and the second, widespread economic security (http://www.opendemocracy.net/michael-edwards/what-can-‘big-society’-learn-from-history). Clearly in the UK right now we appear to have precious little economic security and increased levels of mass protests – although thankfully here we do not have that kind of oppression and violation of human rights. It is questionable however whether the level of protest seen in the Occupy movement is enough at this stage to promote real change unless in 2012 it evolves into a more widespread and effective force for change. Interestingly Edwards suggests that civil societies nascent during times of protest tend to flare up and burn out quickly, unless economic security follows swiftly, and surely Big Society’s fate hangs just as much in the balance of economic growth since it certainly requires some investment to succeed.

Psychologically though there could be some light at the end of the tunnel. The relatively recent emergence of the discipline of positive psychology tells us that even optimism that things will get better is enough in many cases to turn things around. One of the deepest issues in our society today is our loss of trust. Through various events and crises, and very much led by our national press, we have lost trust in politicians, the church, the police, bankers, celebrities and sports figures and eventually, in a glorious own goal, the press itself. The financial crisis has called into question the very system of capitalism upon which our whole economy and thereby society exists, with the inequalities and widening gap between super rich and growing legions of poor. And as any psychologist will tell you the one thing which makes us more unhappy than anything else is comparing ourselves unfavourably to others.

What the Occupy movement could do in 2012 then is to provoke a profound rethink of not just our society but our economic and political systems in the process. Already Ed Miliband is challenging David Cameron’s Government over the very nature of capitalism – the system on which our society has been built since the demise of feudalism and the Industrial Revolution. Miliband is testing the waters of Cameron’s so-called “free-market fundamentalism” (Metro, Tuesday, January 10, 2012). Not since Blair’s failed attempt at a “third way” has there been so much questioning of fundamentals that we have become so accustomed to that we seldom think to ask why.

There are other fundamentals in our system which need addressing if Big Society is to succeed. One of these is the increasing acknowledgement that positive psychology, well-being and happiness are important factors in a healthy society and form a good basis for BS. As an economic psychologist I’m all for this. We’ve been shouting from the rooftops since the 1950s that economic measures of a nation’s success are not the be all and end all, and that in a postmodern age of relative wealth our psychological needs become more important to us. Only this month the New Economics Foundation’s Happy Planet Index highlighted yet again that economic growth and GDP are not the be all and end all economists and politicians once thought they were for a nation’s wellbeing. Lower growth can lead to greater happiness. A rethink of what really matters to people is in order.

As an illustration of this, the Charities Aid Foundation’s groundbreaking World Giving Index, now in its second year, found that:

“Happy nations are more likely to give than wealthy nations: The link between the giving of money and happiness is stronger (a coefficient of 0.69) than the link between the giving of money and the GDP of a nation (0.58).”

(http://www.cafonline.org/pdf/WorldGivingIndex28092010Print.pdf)

The launch of the second part of the national consultation on the ONS’s well-being measures in October underlines the Government’s continued push in this direction, however there are those who think there is still a long way to go and that a deeper rethink in Government policy is needed before we can turn things around. Never has the Schumacherian approach of ‘economics as if people mattered’ been more needed.

Increasing numbers of respected academics from the field of human psychology are touting theories which call for a radical rethink of the traditional economic, political and social view of mankind as primarily selfish and life as nasty, brutish and short. Modern descriptions of individuals in society tend more towards a view of us as motivated to be fair, kind and cooperative. There are now decades’ worth of social and economic psychological experiments proving this, and these form the foundations for such popular works as “Yes!”, “Influence”, “Nudge” and “Bowling Alone” – a whole industry based on the exploitation of our better nature! The Enlightenment embodied this way of thinking with its focus on the fundamentally good nature of human beings with rights and responsibilities towards each other. We need to promote an ethical and moral approach to society and each other.

The whole cooperative movement is based on these principles and to prove a point has significantly outperformed the wider UK economy over the last few years, growing by 21% since the beginning of the credit crunch in 2008 (REF: Ed Mayo, “Making Life More Meaningful”, Resurgence magazine January 2012?? (www.resurgence.org/magazine/article3551.html)). The cooperative movement is also more sustainable (The Co-operative Bank was recently named the most world’s most sustainable bank) and more ethical (The Co-operative Food commits to stocking Fairtrade produce wherever that alternative exists).

Cooperation is built on relationships of reciprocal trust, on foundations of believing that others will honour their commitments, on believing the best in others. Cooperation not competition is the basis of a happy and productive society. We need to realign our thinking. Anthony Seldon recently argued for a new ‘Politics of Optimism’ based on the principles and presumptions of optimism, trust and goodness combined with more proactive policy-making (“The Politics of Optimism”, Anthony Seldon, Policy Exchange, January 2012).

Some of the thinking behind the Big Society agenda reflects this, showing that there is ahope of it transcending traditional Left and Right political boundaries. Certainly such radical thinking about humanity goes against conventional Conservative thinking. For example, David Cameron’s original statements on the topic::

"The contention is that just as we can create the climate for business to thrive - by cutting taxes, slashing red tape and so on - so we can create a climate in this country that is more family-friendly and more conducive to the good life." (my emphasis)

Chris White’s Public Services (Social Value) Bill could be thought of as epitomising this new way of thinking. The Bill requires all public bodies to give consideration to the improvement of “economic, social or environmental wellbeing” whenever they procure any service. Nick Hurd said it when he says that: ‘Big Society is about "a profound culture change"’ (http://www.bigcivilsociety.blogspot.com/). Phillip Blond said it at a recent ResPublica event on Big Society: “Ask yourself this question – what kind of society do we want to have?”We all need to ask these questions to push this thinking over the tipping point into a new zeitgeist. “Society is not a spectator sport” Cameron avows. He’s right there. It is our society. We need to reclaim it and rethink it in a more positive way. We can do it together!

In a world where we are daily faced with bleak warnings of the biting cuts and austerity measures to come, of continued low growth and concomitant societal ills and a charity landscape forever blighted, it might do us good to look on the bright side. Not in a Pollyanna, muddling along, kind of way, as some seem determined to see it; but in a positive, proactive, deeply thought-through attempt to see better, do better, and be better. As Roosevelt said, in his inaugural address in 1933: “The only thing we have to fear is fear itself”. There, that’s better!