CC(3) VS1

Communities and Culture Committee

CC(3) 03-07 (p1): 10 October 2007

Funding of Voluntary Sector Organisations in Wales

1. Purpose

To give an overview of the Assembly Government’s policy and strategy for the funding of voluntary organisations, as part of the Committee’s inquiry into the funding of voluntary sector organisations in Wales.  

2. Background

The statutory basis for Assembly Government investment in the Voluntary and community (or 'third’) sector is set out in the Voluntary Sector Scheme, established under the Government of Wales Acts 1998 (S.114) and 2006 (S.74).  The Scheme sets out the Assembly Government’s policy on, and mechanisms for

(a) working in partnership with the sector

(b) consulting the sector

(c) promoting volunteering, and

(d) promoting community development.  

The Scheme also includes the 'Code of Practice for Funding the Voluntary Sector’, which is published as a separate document. The Code sets out the key principles which underpin Assembly Government funding for the sector, to ensure that best practice is applied in the administration of its grant schemes and those of agencies which manage funds on its behalf. It aims to deliver an effective funding framework based on ten key principles - see Annex 1 for further details.

The Scheme also establishes a range of mechanisms to facilitate partnership working, including the Voluntary Sector Partnership Council, which must meet a minimum of twice a year and biannual meetings between the sector and each portfolio Minister. These meetings give the sector a formal opportunity to raise funding needs, issues and concerns.  The Scheme requires that one of the biannual meetings should be tied in with the Assembly Government’s Budget Planning Round, to allow for discussion on funding issues.

The Voluntary Sector Scheme and the Code of Practice for Funding were reviewed by an Independent Commission in 2004, which took evidence from the sector and a wide range of other stakeholders.  

On funding, the majority of evidence indicated that the introduction of the Scheme and the Code, and the grants awarded to the sector under its terms, had had a beneficial impact. It was felt that levels and types of funding, and funding practices, were greatly improved from Welsh Office days. It was generally accepted that there had been a significant increase in funding to the sector since the establishment of the National Assembly for Wales in 1999.  Major examples included 'Communities First’, support for volunteering, and the Local Voluntary Services scheme.  

The Review made several recommendations in relation to funding on how the implementation of the Scheme could be improved, detailed at Annex 2.  These recommendations have either been implemented, or are to be included in the Assembly Government’s new Strategic Action Plan for the Scheme.

The development of the Strategic Action Plan was another of the Commission’s recommendations.  Work on developing this has been taking place over the course of the past 18 months, and a public consultation was carried out earlier this year. We expect the final version to be available by December.  The Plan will include a clear explanation of the Assembly Government’s approach to funding the sector during the next four years.  

The Plan will also use the term 'third sector’, as a term that is acceptable to the full range of independent not-for-profit organisations, i.e. community associations, self-help groups, voluntary organisations, charities, faith-based organisations, social enterprises, community businesses, housing associations, cooperatives and mutual organisations.

3. Current Assembly Government investment

Currently, the Assembly Government’s direct financial support for the sector can be split into five main categories.  An outline of each element, and the funding that is currently being provided, is given below, followed by a note on the work being done to support the sector to extend its role in public service delivery.   

(i) Support for the Generic Voluntary Sector Infrastructure: The Welsh Assembly Government has signed a 5 year Partnership Agreement with the Wales Council for Voluntary Action (WCVA) to provide support to the Voluntary Sector Infrastructure. The agreement provides core funding for the WCVA, for the County Voluntary Councils (CVCs) in each local authority area, and for the Wales-wide network of volunteer centres (formerly known as volunteer bureaux).

In addition to the Partnership Agreement, other elements of the infrastructure are supported by funding through the Partnership Capacity Building Fund (PCBF) and core funding for the Institute of Fundraisers. The total value of infrastructure support allocated in 2007-8 is £5.2million.  

(ii) Support for Volunteering: The Welsh Assembly Government also supports a range of grant schemes which provide project funding, mainly to extend the number and range of volunteering opportunities. The grant schemes also seek to overcome barriers to volunteering. These specific, competitive grant schemes are in addition to the core funding made available under the Partnership Agreement.

The schemes available include: Volunteering in Wales, Wales the Active Community, Millennium Volunteers, and the Russell Commission Youth Volunteering initiative.  The current combined annual value of this funding is £3 million.   In addition, the Welsh Assembly Government also meets the cost of Criminal Record Bureau checks for volunteers in Wales. The cost of this service in 2007/2008 is £373,000.  

(iii) Support for community regeneration / development:  the main focus of our support for community development is the 'Communities First’ initiative, soon to be taken to its next stage under the banner of 'Communities Next’.  The Assembly Government actively engages the third sector in both the development and implementation of 'Communities First’ (CF), and this will continue as the programme evolves into 'Communities Next’.

The sector is closely involved in the operation of the programme at local level - as members of CF Partnerships in their own right and, in many areas, as Grant Recipient Bodies for the funding awarded to Partnerships, and as host employers of CF staff.  The Assembly Government has also provided three year funding to a range of national third sector organisations to provide support to individual CF Partnerships.   

In terms of supporting community development and community regeneration outside of CF areas, the Assembly Government currently provides core funding to Community Development Cymru, to give specialist community development advice to groups across Wales and to take forward their 'strategic framework for community development’.  It also operates the Community Facilities and Activities programme, and provides funding for the Coalfields Regeneration Trust and the Groundwork movement.

(iv) Support for social enterprise:  Our approach to supporting and funding the development of social enterprises and the social economy is set out in the Assembly Government’s Social Enterprise Strategy, published in 2005.  The main principles will be reaffirmed in the forthcoming Strategic Action Plan for the Voluntary (Third) Sector, in recognition that social enterprises form an important element of the broader 'Third Sector’.

The Assembly Government is keen to promote social enterprise as an effective delivery model across the Welsh Assembly Government because of its 'triple bottom line’ of social, economic and environmental benefits. Social enterprises already effectively deliver a range of services including recycling, childcare, community transport, crime prevention measures etc.

(v) Grant schemes specifically aimed at the voluntary sector: The Welsh Assembly Government provides funding for a wide range of grants schemes aimed specifically at the voluntary (third) sector.  These schemes enable the sector to play an important role in delivering Assembly Government policies.  Full details are given in Annex 3, together with an overview of Assembly Government funding to the sector in 2005/06, which highlights the wide range of investment provided.

Public service procurement rules and practices have been identified as barriers which prevent third sector organisations competing successfully for contracts.  So in addition to its funding programmes, the Assembly Government is working to raise the sector’s profile with procurers via Value Wales.  The aim is to help the sector take better advantage of tender opportunities, and to identify how organisations can work together to increase efficiency.  This work is being forward through the 'Third Sector Procurement Group’.   Outputs will include the publication of a 'charter’ outlining good practice in the procurement of services from the third sector.  

In addition we are examining the feasibility of introducing an investment fund to build the sector’s capacity to deliver public services, and will be revising the Code of Practice for Funding to include the principle of 'full cost recovery’, and to include a new section on procurement.

4. Monitoring

For traditional grant schemes, the Assembly Government monitors the performance of grant recipients in delivering their agreed project objectives. Monitoring requirements vary according to the size of grant, but typically involve:

• Regular progress reports on agreed objectives
• Regular written financial reports, performance indicators and targets
• An annual report on the agreed objectives over the past year if an organisation has received funding the previous year
• Audited accounts on previous years’ funding
• An annual monitoring visit.

Since 2006, the Voluntary Sector Unit has carried out an annual compliance exercise to ensure that officials involved in administering Assembly Government grant schemes are meeting the requirements of the Code of Practice for Funding the Voluntary Sector. The effectiveness of monitoring arrangements is also monitored by the Assembly Government’s internal audit service, and can also be scrutinised by the Wales Audit Office.

Monitoring of the Partnership Agreement takes place via biannual monitoring meetings between Assembly Government officials and representatives of the WCVA, the County Voluntary Councils and the Volunteer Centres.  In advance of these meetings, the organisations in receipt of funding have to submit detailed performance information, setting out how they are meeting the service specifications.

Evaluation of the overall impact of voluntary sector grant schemes, and the decisions on whether they should be continued, modified or disbanded at the end of each grant round, is a matter for individual portfolio ministers, in consultation with the sector and other key stakeholders.

5. Total Investment

Over recent years, there has been a marked, real terms growth in the amount of Assembly Government funding provided to the third sector in Wales, as shown below:

2002/3 - £79 million

2003/4 - £107 million

2004/5 - £125 million

2005/6 - £162 million     (figures from Annual Report on the Voluntary Sector Scheme)

Our investment is helping the sector to flourish, and is enabling it to respond to new challenges, including the key challenge of public service reform.  

6. The Way Forward

These figures demonstrate that the Assembly Government's financial support for the third sector is a significant success story.  We will shortly be issuing a new Strategic Action Plan, setting out a detailed, four year vision of what we want the sector to deliver in future, in return for our investment.  In particular, we will clarify how the sector can support our 'One Wales’ agenda, including its role in delivering key strategies such as 'Delivering Beyond Boundaries’.  

Minister for Social Justice & Local Government

Annex 1

Code of Practice for Funding the Voluntary Sector: extract detailing the key principles within the Code:

The Assembly Government is committed to operating an effective funding framework for the voluntary sector. Its decisions are based on the following principles:

- Delivery of strategic policy objectives - acknowledgement of the role the sector can play in delivering these.

- Respect for the sector’s independence - recognition that the sector can often reach groups that the Assembly Government cannot and provides innovation.

- Early and constructive dialogue - opportunities to discuss proposals well in advance of the formal application deadline and early in the budget cycle.

- Timely decisions - notification of approvals for each financial year by 31 December of the preceding year unless, in exceptional circumstances, notice has already been given of an alternative timescale.

- Security of funding - longer term commitments, subject to performance: 3 years for strategic core funding and commitment for the life of any specific projects which are funded, providing firm year one funding and clear baselines for subsequent years.

- Fair funding levels - Levels of funding for the sector should be determined no differently than for other sectors or agencies where increases for inflation and growth can be built into bids.

- Payment in advance - provision under all grant schemes for advance payment of grant, where a clear financial need is established, including those schemes provided by Assembly Government Sponsored Bodies and European funding provided through the Wales European Funding Office.  

- Fair and reasonable treatment - prior discussion and reasonable notice before any policy changes or decisions which would lead to withdrawal or significant reduction of grants.

- Joint approach to monitoring and evaluation - the simplest procedures consistent with ensuring proper use of public funds.

- Who does what best - commitment to identifying where the sector might take the lead in or contribute to the implementation of new policies, and ensuring that there are the appropriate funding mechanisms in place.

Assembly officials and Ministers will expect voluntary organisations putting forward funding proposals to have taken account of the priorities and as set out in the Cabinet’s strategic policy documents and the Assembly’s guiding principles of sustainable development; equality; and social inclusion.

The full text of the Code is at: http://new.wales.gov.uk/topics/housingandcommunity/voluntarysector/publications/fundingcode?lang=en

Annex 2

Independent Commission to Review the Voluntary Sector Scheme (2004):  Recommendations relating to funding

The Commission recommends that the Assembly Government should:

• Review the Code as scheduled, in Summer 2004, taking into account the amendments already agreed by the VSPC and reflecting the Commission’s recommendations below. The Code should be updated annually thereafter.
• Adopt a minimum 3-year period for grant awards, with wherever possible an assumption of continued funding, conditional on performance against agreed indicators and periodic review of policy priorities.
• Strengthen the requirements in the Code:
• To consider granting core funding to organisations where a strategic role is envisaged or capacity building is an objective;
• To include core costs in project funding where core funding is not otherwise provided;
• For robust exit or continuation strategies to be agreed where long term funding is not envisaged.
• Move to a 6-year review cycle for grant schemes, with reviews starting in year 4.
• Develop, promote and monitor the use of an updated Manual of Guidance for Assembly officials to assist them in following the Code consistently. Make the Manual available to ASPBs and third party funders. The Manual should provide templates for standard arrangements for all stages of the bidding, assessment, award, payment, monitoring, and evaluation processes.
• Introduce training on the Code and Manual of Guidance, for managers of grant schemes offering funding to voluntary organisations.
• Regularly update the Guide to Voluntary Sector Grants. Include in the Guide ASPB and third party intermediary schemes, and consider feasibility of including schemes operated by Whitehall Departments but available to organisations in Wales.
• Review the outcome of the pilots on eligibility "passports” in England with a view to introducing passporting in Wales.
• Continue with more urgency the work on identifying and quantifying all grant paid to voluntary organisations by the Assembly Government, and its ASPBs, to establish a baseline of funding.
• Continue to use third party organisations in the voluntary sector as a channel for its money to local organisations, and require them to provide better communication, information and support for smaller organisations.
• Consider the mechanisms and approaches to funding set out in the Treasury Cross-cutting review and Futurebuilders programme and their appropriateness in Wales.

Annex 3

Welsh Assembly government grants available to voluntary / third sector organisations

Aggregates Levy Sustainability Fund for Wales: Some of the money has been used to set up a Sustainability Fund to address the environmental costs associated with aggregate extraction.      

Children and Families Organisation Grant: The grant is to, to develop preventative child and family support services and to avoid family breakdown.      

Civic Initiatives (Heritage) Grants: This grant contributes to increasing awareness of the historic environment and promotes its appreciation.   

Coalfields Regeneration Trust: The grant provides support and to help reinvigorate and regenerate the former and current coalmining communities across Wales.

Communities Facilities and Activities Programme: The programme can fund any proposals that support the involvement of local people in community activity that will contribute to the regeneration of an area.   

Communities First Programme: This is a long-term strategy for improving the living conditions and prospects for people in the most disadvantaged communities in Wales.    

Communities First Trust Fund: The purpose of the scheme is to support any type of activity that involves local people, through small community organisations, that benefits their community.

Communities First (Music) Trust Fund: The purpose of the scheme is to support any type of music activity and community music that involves local people, through small community organisations, and promotes social inclusion.

'Environment Wales’: The scheme aims to support voluntary action which contributes to sustainable development by helping to protect and improve the environment in Wales.

Health and Social Care Sector: Grants for All Wales Voluntary Organisations   

The purpose of the grant is to support funding gaps in the core activities of voluntary organisations operating in the Health and Social Care Sector.

Health Challenge Wales Voluntary Sector Grants Scheme: Grants are offered to national voluntary organisations, which can contribute to health promotion and complement national developments in health promotion in Wales.

Home Improvement/Care & Repair Agencies/Rapid Response Adaptations Programme: This scheme provides practical, technical and financial help and advice on home improvements, maintenance and repairs to older and disabled home occupiers to allow them to remain in their own homes in the community for as long as they wish or are able to.

Mental Health Care Sector - grants for Local Voluntary Organisations: The scheme funds the mental health development service and a range of local voluntary organisation projects. Activities supported include drop-in centres, supported accommodation, activity programmes and information and support services.  

Millennium Volunteers Grant Scheme: This funding stream is for organisations able to offer or develop volunteering opportunities for young people aged 16-24 in line with the Millennium Volunteers award  

National Voluntary Youth Organisations Grants Scheme: To assist national voluntary youth organisations, which facilitate youth services for young people in Wales, to increase the extent and quality of opportunities for non-formal learning for all 11 to 25 year olds in Wales.

Prevention and Alleviation of Homelessness and Rooflessness: Revenue support to assist voluntary organisations to alleviate homelessness and rooflesness

Provision of Advice and Services in Relation to Youth Crime and Domestic Violence: The grant scheme allocates funds to specialist voluntary organisations who provide a range of services and advice to local agencies in respect of youth crime and domestic abuse

Social Housing Management Grant Programme: The Social Housing Management Grant Programme is designed to help social landlords achieve high standards of housing management.  

Substance Misuse Action Fund/ Substance Misuse Action Fund (Capital)/ Community Safety Partnerships (CSPs):  commission services both from the voluntary sector and public sector to address gaps in service, meet locally assessed needs and deliver improvements in existing services.   

The Sustainable Development Fund: The Sustainable Development Fund (SDF), aims through partnership, to develop and test new ways of achieving a more sustainable way of living in a countryside of great natural beauty and diversity, in which the local characteristics of culture, wildlife, landscape, land use and community are conserved and enhanced.

Volunteering in Wales Fund: Funds are made available for the promotion of volunteering in Wales, particularly involving unemployed people, in the fields of health and social welfare.

'Wales the Active Community’ Initiative: The aim of the Active Communities initiative is "to rebuild a sense of community throughout Wales, we support all Wales projects that raise the profile of and stimulate more volunteering and community involvement.

Welsh Archaeological Trusts Grants Scheme: Grants are made to the 4 Welsh Archaeological Trusts to undertake threat-related archaeology throughout the Principality.

Assembly Divisional Funding to the Voluntary Sector 2005/06

                       Department/Division                                                                               £ Total