By Cathy Pharoah
BondSeptember 2002
Within the current climate of extreme government interest in the role of the sector in service delivery, its seems an astonishing oversight that no figures at all on central government funding to the voluntary sector were published between 1995 and 2000. In fact, even when figures for central government funding were published, few in the sector took much notice of them - an equally interesting oversight! Cathy Pharoah, Director of Research at CAF (Charities Aid Foundation), looks at how, and why, this has changed.
The recent updating of figures by government has attracted enormous sector interest. This is a symbol of the growing political significance of such information in a context of growing global awareness of the role of civil society and of new partnerships between public, NGO and private sectors.
So what does the information tell us? This year is the first time that a total aggregate figure for government funding from all sources (local, central, European, National Lottery and other quangos) to UK NGOs has been published. The total estimate of £5.06 billion probably came as something of a shock to everyone. It shows that government funding now represents about one-third of the income of general household charities. It is a figure which has led to some alarm. Not that anyone thinks there is too much money from government - in certain sectors, particularly in international aid and development, it is all too obvious that funding is desperately short. In fact total central government funding to the sector has only begun to grow slowly within the last three years, after a long period of stagnation and even decline in some areas. There has been no Big Bang in government funding support - the big bang has been in government interest in, and expectation of, the sector. The real issues are whether the balance of funding in the sector is right, whether government funding comes with too many strings, whether the concept of 'partnership' is laughable where the distribution of power is so disproportionate. In other words who is setting the agenda?
These issues do not affect every part of the sector in the same way. For many reasons, international aid and development is an inherently more political arena than some other major causes such as, for example, health research. The balance of funding, therefore, might seem of particular significance in this sector. Funding from DfID to UK NGOs represented about £182 million in 98/99, grew to £195 million in 99/00, and has probably fallen back slightly in 00/01. DfID is the third largest government department spender in the voluntary sector (and would be the second if expenditure on housing were taken out of the picture). In spite of this, however, the amount of funding is considerably less than levels of individual donor support for international NGOs in a comparable period - in 98/99 it lay between £350 - 400 million (depending on what is included as an 'international' cause), and has continued to grow since then. In fact international NGOs receive the highest proportion of total income from voluntary donations of all causes.
Such a robust level of income from independent sources might seem to put international organisations in a strong - if not enviable - position. This is not the case. Firstly, international causes receive the lowest proportion of their income from legacies which means that they are on a treadmill of constantly having to raise small amounts from large numbers of donors. Secondly, funding for international causes is particularly vulnerable to shifts in public opinion. For example, the current bad press about the needs of asylum seekers and the issues surrounding immigration might have a fairly negative impact on levels of public support for international causes. Thirdly, although public support for international charities has continued to grow, the rate of growth itself has declined.
Other vulnerabilities are that international charities have little investment income, and often struggle to get support from independent foundations in the UK who do not give international needs much priority. Corporate support is a double-edged sword, as UNICEF may now be finding. This all means that after voluntary income, international charities are particularly dependent on income from government. Recent government department questioning of Community Fund grants to groups supporting asylum-seekers illustrates again how easily the relationship between international causes and central government becomes politicised. And while there is some general consensus in the UK that poverty is the fundamental problem where international development issues are concerned, the Johannesburg summit, taking place at the moment, is cracking open all the fault lines of global partnership approaches. Governments and their agencies are losing their nerve in the face of corporate opposition to formal accountability on social responsibility. In relation to government funding, however, it seems that international agencies are in no position to bite the hand that feeds them.
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