- Public, Thursday 29 October 2009 11.00 GMT
Katy Wing
What's the big deal about grants and contracts? Commissioners are often unclear about which funding route is appropriate. Processes are often muddled and lack transparency and consistency. As a result, public money is wasted on disproportionate funding processes, which fail to deliver value for money and the best outcomes for individuals and communities.
In his article of 30 September, In praise of contracts', Seb Elsworth accuses parts of the third sector of presenting a "nostalgic" view of history, which "idolises" grant funding. However, the wider context for the campaign to defend local grants is that local authority grant funding budgets have been slashed by over 20% in recent years[1].
This is despite the fact that there is a consensus across all mainstream political parties for maintaining an appropriate role for grant funding. This is particularly critical for small, local organisations, which are rooted in their communities and play a key role in delivering early intervention and preventative support.
In fact, those of us who defend local grants are not arguing against the use of contracts for the delivery of mainstream public services. We are advocating for an intelligent commissioning approach, which involves a better option appraisal process for determining the most appropriate funding route.
We believe grant funding is a key feature of good commissioning. Interestingly, so does Seb, who states that grants "have an important role to play in the public funding mix for the third sector." Unfortunately, he then goes on to spoil it, by stating that grant funding relationships are "fundamentally patronising".
Such assertions have the opposite effect to Seb's stated aim, in that they polarise the debate on the respective roles of grants and contracts by presenting them as competing philosophies.
Thankfully, there are general principles involved in selecting the most appropriate funding route. These are clearly set out in a Decision Support Tool, produced by the National Audit Office. There are basic principles which apply to any funding process, whether for grants or contracts. These include proportionality, transparency and accountability for public money.
Contracts, awarded through competitive tendering processes, should normally be used to purchase public services, particularly where there is a functioning market. Grants should fund activities which are in broad alignment with the objectives of a public body, particularly in the absence of a competitive market, or where the aim is to build capacity, or support the activities of organisations which are of strategic importance to the statutory body.
There are good and bad examples of grant funding processes, just as there are good and bad examples of public procurement. However, grant funding relationships are not "fundamentally patronising" - nor need contractual relationships be fundamentally adversarial. The quality of the relationship between funder and provider is determined by other factors, including adherence to good practice and principles for working together, such as mutual understanding and respect.
Intelligent commissioning involves the appropriate use of both grants and contracts and leads to more effective partnerships between public sector funders and third sector providers. Ultimately this will deliver better outcomes for communities.
[1] The State and the Voluntary Sector: Recent trends in government
funding and public service delivery, NCVO, 2009
Katy Wing is Local Services Partnerships director at NAVCA
