How government policy can help charities be more effective

Leah Davis

Amidst hard times and rising social needs, better government policy and regulation of the social sector  becomes ever more urgent. 

With the right policies, governments can support charities and funders to be efficient and effective with their resources. With the wrong policies, governments either fail to do this or even actively disincentivise it. For example, government commissioning practices may mean, some charities are taking on more financial risk than they should. Our State of the Sector research revealed that more than half of charities with a government contract are subsiding that contract with income from other sources, including voluntary donations. This may jeopardise not only the future of these charities, but also the delivery of government’s social programmes. 

A lack of policies to drive charities and funders to better understand, measure where appropriate and report on what difference they are making on their causes may also be affecting the effectiveness of social sector. Without this information funders, charities and government alike will find it hard to understand what is working, where resources could be best used, and where to invest limited funding.  


We need a rethink of our public sector commissioning processes to incentivise more efficient use of public funds to meet social needs. It starts with better recognising social value when drawing up contracts, but it’s also about designing contracts to play to the strengths of the organisations likely to be delivering them and that are conscious of the incentives relevant to the outcomes. 

Reporting what works

Government policy also needs to drive a bigger focus by charities and funders on activity that achieves the biggest impact. Supporting more Data Labs to learn what types of activity are most effective would support this goal, as would requiring charities to publicly report the difference they have made. The Charity Commission could play an important role in guiding the sector on this. 

We’d love to know what you think in response to these questions, comment below with your thoughts, ideas and what else we should be asking…

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Its not just policy – fine words etc. Current government contracts are drawn up by Crown Commercial Services and Crown Legal Services – these push risk onto the contractor; frequently include an absolute right to ownership of all IPR used in the funded programme whether background or foreground IPR and indeed whether or not the contractor has the legal authority to do so (e.g. third party licenses); give Government the ownership of and right not to publish independent evaluation reports; put contractors in the role of data processors and the Government Department as controller even where its crystal clear this is not the lawfully correct position. There is also always scope built in to penalise the contractor financially for ‘under achievement’ even where the project is by common agreement experimental and there is no baseline of what is ‘the right level of performance’. Finally, the underpinning concept of value for money is wrongly applied; it becomes about unit price of activity and not outcomes and impact. Whatever sage words Government Ministers etc have about ‘social value’ public sector commissioning and procurement, the reality is CCS and CLS treat it as adversarial and with the presumption that the contractor intends to profiteer and deliver as little as possible.