Many third sector organisations are proving resilient, but others are struggling, finds Brian Wilson.
Think tank IPPR North is embarked on a three year research programme about the future of civil society. It has published an interim output called Third Sector Trends in the North of England, reporting the results of a survey carried out for it by Durham University. This gathered data from 3,594 third sector organisations across the North West, North East and Yorkshire and the Humber.
The report's introduction reminds us of the third sector's historic track record tackling social problems, establishing co-operatives, mutual societies and trade unions. Today's policy makers frequently look to the sector to help deliver social solutions, not least given financial and other pressures on the welfare state. But perhaps this view overlooks the equally important role of the third sector, plugging gaps left in private sector provision.
The IPPR North publication is not a rural specific report, but is certainly relevant given the ever-expanding 'ask' of the third sector in rural areas. A key message in the State of Rural Services 2016 report, produced by Rural England CIC, is the sector's growing role in rural service provision, often seeking to mitigate for public sector austerity and private sector retrenchment.
Indeed, a disproportionately large share of third sector service provision takes place in rural areas. Of the 325 community shops that existed by 2014, the Plunkett Foundation tells us that 277 were in rural areas of England. Or take the 43 pubs operating as co-operatives, where 28 are in rural locations.
Or note the clusters of Community Land Trusts now operating in counties like Cornwall, Devon, Cambridgeshire, Somerset, Oxfordshire and Cumbria.
This is interesting, given the IPPR North reports finds that the third sector forms a significant part of the northern economy. It employs 233,000 people (in full time equivalents) across the three northern regions, which is worth £4.75 billion in terms of their salaries.
Of course, the third sector – and especially its smaller organisations – is heavily dependent upon the input of unpaid volunteers, both for service delivery and as trustees. Across the north the third sector benefits from the role played by 930,000 volunteers, whose hours of volunteering are valued in the range £475 million to £816 million.
The survey also highlights the scale of collaboration between third sector organisations. Among smaller organisations this is typically informal in nature, but a clear majority of larger organisations have entered into formal partnership arrangements.
Relationships with the private sector are widespread, too. Whilst the most frequent form of relationship is through private sector donations, other fairly common means include taking free professional advice, free use of facilities and staff volunteering. Third sector organisations based in rural areas are less likely to have strong relations with business than their urban equivalents. Might this reflect the dearth of larger businesses in rural areas?
Grant funding continues to be the most important source of income for smaller third sector organisations, which undoubtedly puts them in a riskier position when local authority and other public sector budgets are under such pressure.
By contrast, income from contracts ranks as the most important source for the larger third sector organisations, with earned income from trading of growing importance.
As all of this implies, organisations within the third sector are hugely varied in almost every sense. IPPR North major on the fact that this variety extends to their performance, with some proving adaptable and resilient, whilst others are struggling. Perhaps it was ever thus, but external trends – such as austerity and increasing service demands – are impacting unevenly across the sector.
Where organisations draw their income from has a bearing on their resilience, with those most dependent on the public sector experiencing most difficulties. Some 55% of those who depend mainly on public funding are described as being in a strong or stable financial position. That figure rises to a healthier 70% for those depending mainly on private or community sector funding sources.
IPPR North lay down a challenge for part of the sector, concluding that too many of the organisations that are in a relatively weak financial position are overly focussed on fundraising, grant bidding and tendering. Whilst this can be viewed as understandable, the report says they may be distracted from more fundamental change that is needed, for example to their strategy, financial model or people management.
We know, as stated above, that the third sector is heavily represented in rural areas. But we also know that many rural organisations are small-scale and that local authority budgets are especially tight in rural areas. Let's hope the rural third sector proves sufficiently resilient and adaptable. Its contribution to rural service provision is needed as much, if not more, than ever.