Scotland’s voluntary sector: An essential partnership for local government

Anna Fowlie, Chief Executive of the Scottish Council for Voluntary Organisations (SCVO), makes the case for a meaningful and properly funded partnership between local government and Scotland’s Voluntary, Third or ‘Essential Sector’.

The voluntary, or third, sector is an integral part of our social and economic fabric. Without charities, community organisations and social enterprises, 136,000 people wouldn’t have a job, around a million people wouldn’t have volunteering opportunities, and the economy would lose out on over £9bn. But more importantly, we wouldn’t have services and facilities we all rely on, and that make our communities better places to live.

There are over 46,000 voluntary organisations in Scotland, with half of these being charities. Three-quarters of them don’t employ any staff, but the fourth quarter employs around 6% of the Scottish workforce.  Our sector is present in every part of the Scottish economy. Social care, childcare, youth work, mental health, and homelessness are the obvious areas, but also include arts and heritage, the natural environment, renewable energy, transport, skills, sport, animal welfare, tourism, and more. Voluntary organisations range from youth clubs, befriending services and grassroots football to big campaigning organisations.

What they have in common is that they are all run by boards of volunteer trustees, don’t make profits for individuals and are independent of the state.

In a typical year, 80% of households use a voluntary sector service. The sector contributes £9.7bn to the Scottish economy and looks after £37bn worth of significant assets, ranging from social housing to historic buildings and village halls. 35% of voluntary organisations are based in remote or rural areas. Without them, much of what we take for granted simply wouldn’t exist.

Voluntary organisations should be natural allies for councils. They contribute to the well-being of people and communities, bringing discretionary effort from volunteers and vital investment from philanthropists, the private sector, and the public.

Challenges in the public sector partnership

Community planning partnerships often include local third sector representatives, sometimes in a meaningful way and sometimes in a tokenistic manner. Surely, if we are to maximise the services available to local communities, we should be pooling our expertise and resources and planning together.

Most people that I talk to in our sector believe local government is undervalued and under-resourced.  However, they also claim that councils don’t value, or even understand, the voluntary sector and seem to think we have no costs. It’s known as cost shunting.

About 40% of the sector’s funding comes from the public sector. Around 60% of that comes from councils, while the other 40% comes from the Scottish Government, the NHS, and other public bodies, such as Creative Scotland or Historic Environment Scotland. Council funding is a combination of contracts for services such as social care or employability, and grants for smaller projects or activities.

The other 60% of the sector’s funding comes from public donations, trusts and foundations. The ability of charities to secure funding that the public sector doesn’t have access to is often overlooked. Cutting funding to those organisations not only impacts staff, volunteers, and services to people and communities, but also shuts off significant additional funding.

Earlier this year, the Community Planning Improvement Board (CPIB) issued guidance on funding for the third sector. It was produced because, in all the areas the CPIB was examining, such as net zero and child poverty, sustainable funding for the third sector emerged as a significant inhibitor of progress. COSLA and SOLACE endorsed the guidance. Unfortunately, current practice often fails to reflect that guidance.

All the things councils complain about in relation to Scottish Government funding of local government, they pass on to voluntary organisations they contract with or grant-fund. Disproportionate, bureaucratic paperwork that wastes council staff’s time as well as draining resources from the recipient, delayed decision-making, poor communication, and, of course, short-term allocations. Our staff have no job security, therefore struggle to get mortgages or even to rent. And that uncertainty is passed on to the people and communities they work with, often those who are the most vulnerable. Risk is transferred to those least able to mitigate it.

And that’s before we even get to the “price” – the value allocated seldom if ever represents full-cost recovery, doesn’t acknowledge the need for staff and volunteers to access training, let alone pensions, and doesn’t increase with inflation. And yet ironically, those grants and contracts contain fair work conditionality. The public sector approach is actively preventing fair work.

Councils will say that it’s all the Scottish Government’s fault, in the same way that the Scottish Government will say it’s all Westminster’s fault. Annual budgets do cause everyone a headache, but councils and the Scottish Government are not issuing redundancy notices to all their staff every year. NHS boards can pay their staff 20% more than someone doing the same job in a charity and offer them a decent pension. Public sector uncertainty revolves around how much funding they will receive, rather than whether they will receive any at all. For councils, it’s about the quantum; for the voluntary sector, it’s an existential threat.

The system is not serving anyone well.

I’ll give you two examples. I’m on the board of a small charity working in two council areas and one NHS board. In one council, funding for a part-time family worker (less than £50k) was subject to a contract that was more suitable for building a school. 40 pages of legalese, including unnecessary requirements such as £5m insurance. All it needed was a two-page grant letter – a complete waste of time for the council’s procurement officer and for the charity.  Meanwhile, in the NHS board, a similar part-time family worker post was grant-funded with payment three months in arrears. Did they expect the worker to wait for three months to get paid, then another three months, and so on? Or was a tiny charity meant to bankroll the NHS out of public fundraising from picnics and raffles?

My other example is a national organisation delivering services to vulnerable people through contracts with several councils. In one council area, the contract is on a rolling three-month basis. Is it reasonable, let alone Fair Work, for the staff to be working on contracts as fragile as that? Not knowing if they will be able to pay their rent, book a holiday, or buy school clothes for their kids. And that’s without considering the employer’s ability to plan or the needs of the service users.

The lived experience of our members doesn’t paint the public sector in a great light.

A path to meaningful reform

But it’s not all about the money. It’s about working in partnership, trust and respect. From the Christie Commission to various committees of the Scottish Parliament, the Auditor General, the CPIB, the Public Service Reform Strategy, the vital role of the voluntary sector in delivering public services has been recognised and highlighted as something that needs to be nurtured and made more sustainable. The best example I’ve seen is the recent Population Health Framework.

As with so many things in Scotland, we’ve got lots of good words, policies, and even legislation. But the reality doesn’t reflect those words. Too often, our sector isn’t included in planning, decision-making or even delivery. Organisations, from small specialist providers to large centres of expertise, are left out as an afterthought. Or they’re told to apply for funding to do something very specific that the council or the government has decided is the right thing, rather than agreeing on an outcome and using their own expertise to deliver that outcome.

This is no different from the Scottish Government allocating funding to local government for something very specific that probably won’t make a difference, such as teacher numbers. However, if councils had the flexibility to deliver something they know will work in their local area, it would be significantly better for everyone. But councils need the money, and it’s better than nothing, so they have no real option other than to take it.

There are practical things that would make a difference. Improvements to our current processes. Often, just by applying a bit of common sense, or thinking about people, not spreadsheets. But surely we must be more ambitious? At the risk of sounding like Keir Starmer, we need a reset.

Meaningful public service reform requires us to close the implementation gap and actually do what we’ve been talking about for too many years to remember. We don’t need another review to redescribe the problem, and we don’t need another strategy. We need to shift from a funding lens to an investment lens, with a longer-term, outcomes-focused view. We need to consider what we’re trying to achieve for people and places across Scotland, what all of us can contribute, and focus on delivering results.