Hampshire County Council Item Policy and Resources Policy Review Committee 26 February 2002 Best Value review of support for the voluntary and community sector - Options Report Report of the Chief Executive

Contact: Paddy Hillary, Ext: 7391

1. Summary


1.1 This report presents Members with the options for the way in which the
County Council delivers its support for voluntary and community organisations following the best value review.


1.2 The report presents 4 main options and suggests ways in which these options could be implemented. This implementation will be more fully explored in the final outcome report to members in April depending on Members preferred option.

2. Introduction

2.1 Members will recall that the scope of this best value review, which was agreed in June 2001, included all support provided to voluntary and community organisations by the County Council, both financial and through other means (e.g. provision of accommodation, loan of equipment, professional services etc). The review specifically excluded service level agreements and contracts for purchase of service as it was expected that these arrangements would be covered by specific service reviews. The review also excluded grants to individuals.


2.2 The review has therefore been conducted as a cross cutting, corporate review, looking at the strategic aims of the County Council in relation to supporting the voluntary and community sector, the processes involved and whether these aims are being achieved effectively and consistently across the authority.


3. Current position


3.1 The County Council has extensive connections with the voluntary and community sector as a partner and funder of a diverse range of activities. In 2000/01 the County Council spent over £36m with the voluntary and community sector. Of this, some £6m was allocated through grant aid. The decision process for allocating grants has changed alongside the County Council's adoption of the new constitution and is now primarily through the executive members for Social Services, Recreation & Heritage, Education (mainly Youth Service) and Policy & Resources with limited delegation to officers. In some areas, specific application procedures are in place with targeted information to potential applicants and guidelines for application and uses of funding and there is a general guidance document (mainly in relation to the grants made by the Executive Member for Policy & Resources). Generally, however, the perception of voluntary and community bodies is that information on grant availability and how to apply, and the reasons why grants are made or not, is not easily accessible. This was a very clear message from both the challenge event with outside agencies and the consultation responses. Although guidelines exist, these are not comprehensive or consistent across the County Council. Equally, although in some areas monitoring is carried out as part of the process, generally there is little monitoring of the outcomes from grants in relation to the reason for making the grant or in relation to the County Council's key aims.


3.2 The County Council has a Community Support Unit based in the Arts, Countryside and Community Department which works directly with community bodies and provides grant support. For the purposes of this review, these grants and the processes involved have been included, but not the operation of the Unit itself.


3.3 The County Council appoints elected members to over 100 voluntary and community bodies each year either as trustees or as executive board members. It was not possible to review this at the time of the review, as the election had just taken place and nominations were still being made, but it proposed that, as part of an improvement programme, further work be carried out in this area to determine the value of these appointments both for the County Council and for the organisations involved.


3.4 The County Council has a long track record of funding for voluntary and community bodies and there are many positive partnerships for delivery of service. The Corporate Strategy highlights as a key outcome the improvement of relationships with voluntary and other public sector bodies to ensure effective delivery of services but gives no clear guidance on the outcomes which the County Council wishes to see from its support or any specific direction on priorities for grant aid or framework for allocation of grants. Individual departments have clearer guidance and statements of outcomes, but again there is little consistency or evidence of a corporate approach.


3.5 In 2000/01, the District Auditor conducted a review of the County Council's processes for allocating grants and made a number of recommendations. These can be summarised from the Annual Audit Letter as follows:

`Continued development of relationships with the voluntary and community sector to achieve the effective delivery of services is a key corporate aim. In order to improve existing arrangements the Council need to ensure that:

- the policy framework for funding is strengthened and to build on the Hampshire Compact

- policy and practices across the Council are co-ordinated

- resources are being used for the purpose intended and are achieving the desired outcomes.'

3.6 The County Council, in partnership with the voluntary and community sector, launched the Hampshire Compact in September 2001. This agreement is a protocol for working together and has set up a working group to look at resource and accountability issues. This group has produced a draft code of good practice which is being considered by the Compact Working Group and which will reflect the findings of the Best Value review.


4. Main issues for the review

4.1 The main questions for the review were whether the County Council should continue to provide support for voluntary and community organisations and if so whether improvements could be made in relation to:

- developing a consistent corporate approach and improving management and delivery

- decision making processes

- monitoring and review

- access and communications


4.2 As members will be aware from the progress report considered in December,
in line with the Best Value process, the review team carried out exercises to
look at challenge, compare, compete and consult. A summary of the main
outcomes of these exercises is attached as Appendix 1 to this report.

5. Options


5.1 As a result of the review, members are asked to consider the following options for the way in which the County Council delivers support for the voluntary and community sector.

Option 1: cease to provide support
Under this option the County Council would stop providing any financial or other support to voluntary and community organisations.

The review found no evidence to support this proposal. Members have identified support for voluntary and community organisations and the development of partnership working as a key aim of the County Council and the provision of support has demonstrable advantages for the County Council itself in extending the range of services which can be provided, for voluntary and community bodies in helping to develop and provide services and for the people of Hampshire to have choice and access to services which suit their needs.

There is clear evidence of the value of the voluntary sector in the community and the economy and there is added value for the County Council in achieving its own outcomes and being able to provide a wider range of service than would be possible through its own resources.

Ceasing to provide support would clearly have an immediate cost saving for the County Council but this would be off set by the likely further costs of providing services which are currently provided by voluntary and community bodies. There would also be a serious effect on the capacity of the voluntary and community sector to respond to community needs and, in some cases, to survive. The County Council would lose its ability to influence quality in voluntary and community service provision and innovation in the sector could be stifled.

It is also likely that there would be concern over a decision to withdraw support for the voluntary and community sector from a significant proportion of the community. The views of the public on the value of County Council support for voluntary organisations as tested by the Citizen's Panel research showed that some 75% thought that support should be given to local community groups. As part of an improvement programme, further research could be considered through future Citizen's Panels and opinion research.



Option 2: no change to current arrangements

Under this option the County Council would provide support in the way it does currently as outlined above.


The review found the County Council has policies and processes in place which provide support to a wide range of voluntary and community bodies in the county and which makes an impact on the provision of services in the community. However, the review also found that there are a number of areas where improvements could be made which would help both the County Council to have a clearer overview of the impact this support can have in the community and help voluntary and community bodies to be aware of and access this support more effectively.

Although there would be no additional cost to the County Council in adopting this approach, there would equally be no opportunity for seeking efficiency savings. There is clear evidence from the review that improvements should be made to the current arrangements and the conclusions of District Audit outlined in the Audit Letter bear this out.

Option 3: improve current delivery

Under this option the County Council would continue to provide support for voluntary and community organisations but would look at a number of ways of improving the definition of the strategic direction and the process of support allocation.

The review, along with the recommendations of the District Audit report in 2001, has identified a number of improvement options and models of good practice for funding arrangements, which could be developed to address the concerns expressed particularly through the review's challenge sessions. A key part of this improvement programme development would be the involvement of elected members in designing a new process. Headline improvements would be:


- strengthening the policy framework for funding and other support

- consideration of a corporate management system for grants and other support including the development of a database of grants made and a single point of initial contact for outside bodies.

- Production of clear information on grant availability, application processes and decision making and use of electronic access

- Review of guidelines, application processes and monitoring to ensure consistency.



The review team has looked at a number of actions which could be taken to achieve these improvements and is reviewing the costs associated with those actions. For example, if a decision is made to create a specific central post and database of grant allocations there could be costs of around £60,000 but this would be off set by efficiency savings from improved management of grant processes. This information will be presented to members in the outcome report in April assuming this option is approved.

It is worth noting that a number of changes are already taking place in relation to the County Council's relationship with voluntary and community bodies as a result of other Best Value review such as the transfer of Community Transport from Social Services to Environment, the introduction of accountancy and audit controls for partnerships and the formula funding discussions jointly with district councils for support for Councils of Community Service and Volunteer Bureaux .

Option 4: outsource support provision (grants)

Under this option the County Council would continue to provide support, in relation to grant aid , but would use the services of an outside agency to manage the process.

The review considered opportunities to use outside agencies to allocate, distribute and monitor grants on behalf of the County Council. There are a number of agencies who could act as an overall agent for the County Council in allocating grants. These include Community Action Hampshire, the district Councils of Community Service and the proposed Community Foundation for Hampshire. There are also specialist agencies who could administer specific types of grant such as sports or arts.

There is evidence that other local authorities have considered this option although in all of the cases reviewed, this has not been recommended. The reason for this has mainly been in relation to the need for the local authority to maintain overall responsibility for decision making, particularly for larger grants, and fact that the lack of financial gain would make it unlikely that private sector organisations would wish to get involved. Several authorities did, however, recommend further consideration of this option for smaller grants or for outsourcing to specialist organisations for specific types of grant aid..

The advantages of this option would be to remove the current concerns over equity of allocation of grants and application processes. The County Council would be able to retain a limited influence in the sector and quality standards could be specified. There would be savings in terms of administration costs although it has not proved possible at this stage to quantify this saving. There would be some costs associated with agreeing a contract to deliver this service which again have not been quantified.

The disadvantages include the removal of the ability for members to consider grant applications and for the County Council to raise its profile and influence in the sector. It would also remove the ability for the County Council to act, in times of tight budgets, in response to immediate need in the community. Additional costs could arise in purchasing the service and the County Council would still need to provide clear guidelines for allocation.

Option 5: combination of Options 3 and 4

Under this option the County Council would continue to provide support and would use a combination of in house processes and either outsourcing or working in partnership with outside agencies for allocation, distribution and monitoring.

The District Audit report identified that some 7% (by value) of grants made were under £2500. Under this option, the County Council would continue to administer and allocate the larger, recurring grants and look to use the services of an outside agency to manage applications for smaller grants. This could help to address the issue of over burdening smaller organisations with having to provide bureaucratic evidence of spending and outcomes. Equally, as mentioned under option 4, rather than outsource below a certain cut of point for size of grant, specialist organisations could be brought in to administer specific types of grant. Full costs are not available but a reduction in the number of grant applications processed and monitored could mean an administrative saving. Members could still influence the direction of these smaller grants through the contract with the agent.

6 Conclusions


The review has demonstrated that the County Council has a long track record of supporting and working in partnership with voluntary and community organisations for mutual benefit. There are however opportunities to improve the policy framework and processes for delivering support, again benefiting both the County Council and the voluntary and community bodies in Hampshire.

The evidence collected by the review points to a clear view that the County Council should continue to provide support and that option 3 is most likely to deliver improvements in the short and medium term and that improvements would increase over time as the action programme is implemented. It is also clear that if any other changes are to be made, or other options adopted, there is a need for improvements to in house management as a first step.

There is also evidence that more work could be carried out into consideration of option 5, combining in house changes and use of an outside contractor, to reduce the administrative workload and cost in the longer term. The proposals for a Community Foundation in Hampshire, which are currently being drawn up with County Council involvement, could form the basis of a further proposal for members to consider in April.

Recommendation

It is recommended that members consider the options identified by the review team and approve the preparation of an improvement programme based on option 3, and that more information on the implications of option 5 are presented to members in April.

Background Information


Section 100D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.


2. Documents which disclose exempt or confidential information as defined in the Act.

File Local

Evidence files for BV review Chief Executive's Department

Appendix 1

Best Value review of support for voluntary and community organisations

Summary of review findings

1. The review team examined the current way that the County Council delivers support for voluntary and community bodies. Most of this information is included in the original service specification but there were some areas where it was difficult to establish the exact position across the whole authority. These include:

- numbers and costs for staff involved in administering or decision making in relation to grant aid in some departments

- organisation and decision making structures in some departments

- levels of support other then through grant aid

The team is proposing that as part of the improvement programme, clearer information in these areas is established.



2. The review team carried out exercises to consider the 4 Cs of the best value process:

- challenge

- consult

- compare

- compete

Challenge:

i) The review carried held 2 challenge events involving staff from County Council departments and representatives of outside bodies. These included those who had received funding or support, those who had applied and been rejected and those who had not sought support. The external group also included representatives from other funding bodies such as district councils.

The groups were asked the fundamental questions of whether the County Council should provide support for voluntary and community organisations and whether the current policies and processes could be improved either by the County Council itself or by using other agencies.

The main findings were:

External Challenge group -

The County Council should continue to work with the voluntary sector. There is a two way benefit helping the County Council to deliver its services and objectives and helping the voluntary and community sector to attract more funding and stay in business, harness volunteers and achieve their own objectives.

Recognition of the benefits of partnership working between the County Council and the voluntary and community sector - partnership is important for social investment and the creation of an active voluntary sector enhances community life. There is also an economic argument that the County Council can achieve more for its money by working with voluntary and community bodies.

Improved communications between the County Council and the voluntary and community sector - the need for better and more consistent information and access to County Council staff. Signposting to access `the right person' and to other funding bodies of appropriate.

Need for a more centralised approach with a single point of contact to ensure consistency, reduce duplication and improve communication on the decision making process for applications. Linked to the need to be consistent with requests for information, application processes, timing of payments. Also need for monitoring requirements to reflect size and type of organisation.

The positive effect of core funding for organisations - helping them to attract other funds and be sustainable in ensuring continuity of services. Linked to the need to recognise the diversity of the sector and that support should be available to organisations whose objectives do not directly relate to County Council aims.

Internal challenge group -

Many similar views were expressed as in the external discussions. Additionally, link to Community Strategy development and Corporate Aims - voluntary and community bodies help to deliver these therefore need to maximise benefit and ensure sustainability of the sector.

Need to monitor and measure results bearing in mind the size of the organisations involved and volunteer status. Also need to have clear guidance for officers and members and clarity between departmental needs and corporate aims. Should work with sector to agree monitoring and criteria.

Possibility of developing a central database to ensure equity, reduce bureaucracy and improve communications. Electronic access and communication should be used where appropriate.

Role of County Council in providing advice and guidance for voluntary and community bodies need to be discussed further i.e. acting as `critical friend'.

ii) In addition, a desk top research exercise was carried out into the role and value of voluntary and community organisations in the community. The main source of information was `Meeting the Challenge of Change: Voluntary Action into the 21^st Century' - The report of the Commission on the future of the voluntary sector (Deakin Commission) NCVO 1998. The report highlights the interdependence between the public and voluntary sectors with four main issues impacting directly on the voluntary sector:

- the withdrawal of the state from any of its service delivery functions

- the pressure on the public funding of welfare

- the search for means of `sustaining' civil society

- the need to have an alternative voice to articulate independent or minority cases.

The report concludes that this inter relationship, along with changes in the role of central and local government and the move to more partnership working, mean that the role and contribution of the voluntary and community sector will become increasingly important to statutory agencies.

A Charities Aid Foundation report (giving the latest available figures at 1995/6 and 1996/7) gives the following details for England:

- estimated 1,469,000 volunteers

- estimated 244,000 full time equivalent paid staff

- local government funding to sector estimated at £1.4 billion (@£23 per capita)

- local government revenue spending (96/97) at 2.84% of gross budgets.

There is no clear picture of the Hampshire voluntary and community sector and Community Action Hampshire are currently commissioning a project to map voluntary and community organisations in the county (including Portsmouth and Southampton). This project is being funded by the County Council, Business Link Wessex and the Southern Strategic Partnership.

Consult:

i) A consultation exercise was carried out by Lynne Miller Associates using 50 semi structured telephone interviews with organisations in the voluntary and community sector; 24 who currently receive funding, 7 who had applied and been refused and 19 who had not applied for support. The interviews were intended to:

- find out how organisations get their information regarding support

- understand response to the process involved in applying for support and to the ongoing administration

- understand why organisations have not applied for support

- obtain feedback on corporate priority setting.

Two groups emerged; those who had been receiving funding over a long period of time and had developed good relationships with County Council and knew the system well and those who had received one off grants, had been refused or had never applied.

The first group were mainly satisfied with the way the system works and had a good relationship with their main contact at the County Council. The second group knew very little about the County Council's funding policy or corporate aims, had never received any written information on the process and often grant applications were undirected. They had sometimes found the conditions attached to grants onerous.

It was apparent that there were differences and inconsistencies between service departments and this caused problems for organisations receiving funding from more than one department at the same time. In cases of on-going funding where payments were staged, late payments occurred and caused cash flow problems.

There was a clear need for more information about funding. Those without this, an without an ongoing relationship with the County Council, were disadvantaged. In particular organisations wished to know what type of funding was available, what the criteria for eligibility were and how applications should be directed.

Organisations were keen for the County Council to take a lead in relation to obtaining funding from other sources such as Europe. Others were keen for the County Council to take a more proactive role in helping to develop their work programme and would welcome support from the County Council in terms of issues such as employment law and lottery bidding.

ii) Additionally, a question was included in the County Council's first Citizen's Panel questionnaire to try to establish the views of the residents of Hampshire on the direction for County Council support. The question asked was:

Hampshire County Council provides support for local voluntary groups and organisations. Which two or three of the following do you think are most important for the Council to support:

- local representatives of national charities

- local representatives of national sports/arts organisations

- local support groups

- local community groups

- local sports groups

- local arts groups

- don't know

The results were strongly in favour of support for local support and community groups with 68% and 75% respectively. The next highest result was for local sports groups.

Compare:

There are no national or local performance indicators for voluntary sector support and so comparison or benchmarking relates to levels and type of spend and processes for administration. The team did not undertake a specific exercise to compare spending levels and numbers/types of organisations funded. It was felt that it would be more valuable to concentrate on the policies and processes used by other local authorities in allocating support and monitoring to identify best practice. The main sources of information were best value and inspection reports from other authorities carried on the Audit Commission website and the results of a postal survey carried out by Crawley Borough Council of 380 local authorities in England in 2000.

The key findings, in relation to this review, were:

- of the 122 responses (32%) only 8 were County Councils (not including Hampshire)

- 17% reported grant allocation budgets over £1m

- 58% provided additional support other than grants

- 51% of grants were allocated to local organisation and 48% to national

- 80% had an agreed set of criteria and priorities for allocating grants

- 60% had a full time dedicated post to manage the grant budget

- 54% had a dedicated post to offer help on finding external funding

The County Council's spending of over £6m in grant aid alone means that Hampshire is in the top percentage for grant funding, although this needs to be viewed in relation to population. In terms of the other key findings, the County Council currently does provide other support although exact details are difficult to quantify, allocated around 90% to local bodies (including local representatives of national bodies), has no consistent set of guidelines across the authority and no real guidance on priorities and has no specific staff for grant allocation or helping voluntary bodies with external funds.

Compete:

The team considered the competitive elements of providing support for voluntary and community organisations. This is a clear distinction from `competition' as a process for choosing a service provider.

Using the DTLR's tests of competitiveness:

Test	County Council response
Cessation of the service	Not a statutory duty but would cause difficulties as identified in main report.
Creation of a public -private partnership	Not appropriate
Transfer or externalisation to another provider	Could use outside agency such as Community Action Hampshire or the proposed Community Foundation. See main report
Market testing (in house provider bidding in open competition)	Not appropriate and unlikely to attract interest from private sector.
Restructuring of in house service	See main report
Re-negotiation of arrangements with current providers	Not appropriate
Joint commissioning	Possibilities for working with outside agencies and closer working with District Councils.

The County Council is involved in a joint working group with other grant providers in Hampshire such as district councils.