VAT’s it all about

This is a short piece about VAT as we want to collect some of your experiences with tax, and as it is a topic that has crossed my desk a few times over the last couple of weeks.

Picture used under licence

Like most small charities we are not VAT registered and therefore do not claim any VAT back, and honestly don’t really think about it. But it appears that once parliament has settled back into some semblance of normalcy after the election there will be some reform of VAT in a bid to make tax simpler. (Apparently the UK tax codes are longer than the bible).

We do know that VAT and other tax issues do cause concern for charities and we are lucky that we have the Charity tax Group who do a wonderful job of representing charities on all things ‘tax’. Do check out their information if you have any issues. They are also carrying out some research into VAT which you can find out more about here.

We have recently made contact with a local company VATadvice.org who specialise in VAT for charities. We are looking at how we can work together to bring more information to local charities. At this stage we have no firm plans apart from agreeing to continue to chat but

This brings me to the principle reason for this article. Is VAT an issue for you? Are you registered and if so how much work does it entail? Do you know what counts as VAT able when working out if you have reached the registration threshold? Are contracts subject to VAT? How does it work if we own a building?

Please tell us about your issues and questions about VAT are, this will allow us to get a feel for what we might be able to explore. We can’t promise to answer everything, but we will start to think about how we can provide members with more information, and possibly training in this area.

Contact us in the usual way or leave a comment.

What do you do when your lottery funding stops?

Featured

Or Is sustainability an urban myth?

There is no doubt that lottery funding has revolutionised how organisations are funded across the country, and that it has supported countless good causes. (Why not see what they have funded in your area on 360 giving). But what happens when your lottery funding runs out?

NCVO state that of the £50billion funding that comes into the sector in a year the lottery is responsible for 1% of this, so given the number of organisations that rely on this funding it is a surprisingly small amount. I have not analysed who is funded but this article concentrates on those organisations with incomes between £10K and £1million, that make up just under half the sector.

On the whole these organisations are relying on paid staff as well as volunteers to deliver predominantly local projects. Organisations work across the whole range of issues and causes that charities cover, and unfortunately NCVO research shows that these organisations have been disproportionately impacted by austerity, seeing income drop especially from statutory sources but also in other areas.

Apart from the biggest most of these organisations will not have a fundraiser, or, if they are lucky, they may have a part time fundraiser. Otherwise fundraising falls to other staff and to volunteers or trustees.

So, when these organisations get a three-year Reaching Communities grant, they breathe a sigh of relief and start concentrating on delivering services that make a difference. This funding will often cover the bulk of the programme that is being delivered. It will ensure a vital service continues and the organisation has a (by our terms) long term future. These days the money may also come with a Building Capabilities grant to improve how the organisation works and their sustainability.

But what happens when the funding starts to reach its end? How is this money replaced? What does sustainability mean?

If groups are very, very lucky they may get a second round of lottery funding, but this puts off the problem for another three years or so. But if this is not the case how do groups replace a single significant grant.

Earn your income. According to NCVO the biggest amount of money coming into the sector is from earnt income. This could be from selling services or a charity shop or from contracts. This is not long term income unless you are lucky to be able to get a contract which in the current climate is getting harder for small organisations. Couple this with the fact that many of these organisations are delivering to individuals and communities that can not afford to pay, earning significant income is not going to be a big source of new money. And to be fair the organisation was probably already maximising this to top up their lottery funding!

We have heard of groups being advised to try Social finance, but let’s get real this is a niche funding stream that the vast majority of organisations in this size range will not be able to access even if the trustees have reached the ‘we will try anything’ point to keep the organisation afloat. You can read one take on Social Impact Bonds here

Corporate sponsorship. If I had a pound for everyone that came to CCVS with the idea that this was going to solve their funding issues we could return all our grants! This is not a panacea as business does not have lots of free cash they are waiting to give to worthy causes. Building better relationships with business is extremely positive, many organisations benefit from financial and other support, but this type of fundraising takes time and energy. If you want to look at how business can help there are ways but it is more than simply sending them a well written email.

The public is the biggest external funder of the sector. But most of these organisations do not have the expertise, staff, or time to fund themselves in this way. Raising money from donations or legacies is time consuming. As technology moves on many organisations do not have the wherewithal to collect as much as they did in the past. Even in my local sandwich shop most people pay by card which means less change going into the collection tin on the counter. Fundraising from the public takes time and effort and you need to invest to make it happen. Maybe those organisations who get Building Capabilities funding should include investing in the skills and the technology to facilitate and grow this type of funding.

Statutory grants and commissions. This was a way many organisations were funded in the past but we are seeing grant levels going down, commissions getting bigger and services being taken inhouse. https://neweconomics.org/uploads/files/NEF_Local_Government_Austerity_2019.pdf. The truth is they are not in the money so neither are we.

This leaves the staple for many of these organisations, grant funding! But many of these are for small amounts, often they want to fund something new and anything more than one years funding is unusual. We regularly see organisations trying to raise money this way. It didn’t take long to find a local group getting money from 45 different funders to find the £180K needed to run. The time and effort to apply and report to these is phenomenal and it has to be repeated year in year out. No wonder we are seeing burn out, organisations cutting projects and organisations closing.

What is sustainability in the real world. It is something we aspire to, something we pay lip service to because we have to, or something we can only dream about? How many of us are one funding decision away from partial or total collapse? People want our services, so do the professionals, it is not the need that is the issue it is the expectation that we will be there to deliver whatever. How much energy in the sector is wasted in getting the money and reporting and measuring? Energy that would be better used in delivering solutions and solving problems. Pretty much every organisation has the most senior person in the building not actually delivering services but filling in forms and writing reports.

What is the answer?

We need multi year grants from all providers three years minimum, 5 is better.

We need all funders to stop demanding their own reports. Organisations do financial reporting for trustees, they should also be reporting on activities and impact. Let us tell you as funders what we are already reporting and only ask for something different if you desperately need it.

We need more standardisation across how we apply for funds. This is the CV vs application form debate. If organisations have written project plans with budgets, needs analysis, outcomes etc. there should be an easy way to apply using them along with a covering letter about how you meet the funders particular priorities.

We need funding to enable small charities to catch up digitally and technologically with bigger charities in order to allow them to raise funds more effectively.

We need a long term, high profile campaign to change the narrative about charities so that the public recognise charities as the majority and not the minority of mega charities. That way they will think about smaller local organisations when they fundraise, donate or leave a legacy.

We need to reverse cuts to local government and other statutory services and ensure that they are funding local services and groups.

We need the HNS and local Clinical Commissioning groups to put their money where their mouth is about the importance of non-clinical and preventative services. We need to start to fund this to save money in the future.

We have to address inequality as a country in order to reduce its impact on people across all aspects of their lives.

Lottery funding is fantastic (if you are reading this we could do with some here at CCVS) but with it comes the inevitable cliff edge of what happens when it runs out. Fundraising is taking more time, energy, and resources away from delivering solutions. This is especially true in the smaller organisations who have been most impacted by austerity and reductions to income. We really need to address this or more organisations will be forced to close projects or simply cease to exist.

Is Competition bad?

This is a response to a great blog on the Community Matters Yorkshire page. You can read it here. The blog poses some questions about competition in our sector, both around the role of different support organisations (like CCVS) but also around to the wider sector as well.

The national body that supports organisations like CCVS is called NAVCA and they are undergoing a major strategic review and this is what has prompted these blogs. CCVS was one of the many organisations that the new chair of NAVCA met with before he (unfortunately) retired. At this meeting I spoke about the importance of support organisations working together and not bidding or working in a way that might put others out of business. This may seem odd as the CEO of an organisation that has taken over the work of one very small CVS and has also bid against another to work across Cambridgeshire. That said neither of these things happened on my watch, but that does not mean I would not have made the same choices.

What concerns me is that we are seeing increasing instances of work that was grant funded being put out to commissioning and procurement. We are also seeing cuts to the funding that many support organisations receive from local government and health providers. The days of a CCVS type organisation working in every district are long gone, we now see a broad church of organisations working in different areas and providing very different services. Some are large and some are small. Some provide direct services and projects some don’t. Some are well funded some are not.

I wanted NAVCA membership to have a clause that one support organisation from outside an area would not bid against an existing organisation to deliver core CVS services. I want us to be working together to deliver the best services to the sector not competing against one another. I still want this.

That said the Community Matters blog does make some good points. I think that there are instances where there will be competition, this could be because it is a new service, or it could be because the existing service is not producing the impact it should be. I think that the first conversation should be about collaboration, but if this fails there will be, and should be, a more competitive process.

So is this possible or am I being unrealistic? I think that a more collaborative approach is possible, I think we can be more open and I think we can embrace politeness. This means being open about plans to move into other areas or provide new services in an area you haven’t worked in before. This applies to local organisations growing and moving to new areas, but also to national organisations looking to deliver locally. So if you are a national support organisation delivering locally then talk to the local support organisation to see how you can add value to local groups. If a new opportunity is tendered then start by talking with other providers about how you can submit joint applications. I also think that if collaboration is to happen you have to be open and honest, so no hidden agendas.

Too often we are as worried about collaboration as we are of competition, we all fight for our organisation and we feel threatened by new kids on the block with new ideas. I don’t think that I am immune to these fears, but I have found that where we do collaborate we have better impact and I have faced and overcome (mostly) those fears.

Finally there is a nod to the commissioners. It is important that things like local knowledge, social value, the local economy etc. are taken into account when dealing with our sector. These are hard to put a monetary value on but they do make a great difference to those receiving a service. There have been too many examples of national organisations winning local work only to see the quality of service go down because it was all about outputs and money.

I don’t think any charity has the ‘god given’ right to be a local provider just because they always have been. In the end it is about those receiving the service, they need the best whether they are a group looking for funding support or an individual looking for support. I do think that sometimes smaller local organisations struggle to compete against bigger organisations, and this should not be the reason they fail.

Competition can drive improvements and help develop new services, but so can collaboration. Maybe we should be calling for collaborative tendering and not competitive tendering. We should all be thinking collaboration first, competition second.

Written by Mark Freeman, CEO of CCVS. Follow him at @skillsmark on Twitter or on LinkedIn

Decision on which deckchairs to move delayed as healthcare in Cambridgeshire and Peterborough slowly sinks.

Earlier this week the Cambridge and Peterborough Clinical Commissioning Group (CCG) met to look at what funding it could cut to help it relieve its £192 Million deficit. This was of importance to local charities as they were looking at the funding for community services which includes a number of small grants that were to be ended or renegotiated. This blog concentrates charities but other community services that play a vital role are also under threat.

The first thing to say is that the groups affected have worked really hard with Support Cambridgeshire, and especially Julie Farrow from Hunts Forum to show the value of the work they do and to raise awareness of the impact of the cuts. This blog is simply CCVSs views which incorporate points raised by both Support Cambridgeshire and Healthwatch Cambridgeshire and Peterborough. You can read a statement from Healthwatch here.

The second thing to say is that the CCG are the second lowest funded per person in the country. This means that they get £350 per person less than West Norfolk CCG as an example. This is compounded by the speed at which the area’s population is growing. This is not new news, but it is relevant. What is also relevant is the fact that the CCG made a disastrous decision to contract out its older people’s healthcare and adult community services a number of years ago and lost a lot of money. It is probably also worth pointing out that this is not the first round of cuts for the sector from the CCG, I can still remember when many more projects were funded, including CCVS!

So what were the plans? I have highlighted the charity aspects from the papers which recommend

The Governing Body is asked to approve:

The outcome of the MDT process, Steering Group, COT and IPAC discussions is that we would cease funding or decommission the following:

  • Dial-a-Ride
  • The Stroke Association
  • The Alzheimer’s Society
  • The Carer’s Trust Cambridgeshire & Peterborough, Norfolk
  • The Health and Wellbeing Network
  • ECHIS (The Evelyn Community Head Injury Service)

The CCG would seek to renegotiate service provision and/or payment for the following:

  • The Care Network
  • Cambridge Hearing Help

The CCG would continue to fund:

  • The East Anglian Children’s Hospital

Just some initial thoughts.

The grant to Dial-a-ride is £6,516 a year or 0.003% of the deficit. The fact that this service is for Cambridge only and is not seen as clinical does not mean it is not saving the health service money. People can get ambulances, and in fact the CCG have a contract with the ambulance service. But dial-a-ride is so much more than just getting people to hospital, and is also I assume way cheaper per trip.

Cambridgeshire Hearing Help (CHH) work with 6500 users at 43 clinics across Cambridgeshire plus house bound provision to help them with hearing aids, they receive £34,682 or £5.34 per user. Specsavers receive £1,682,653 a year for their audiology service and charge £17 a session and people have to get to the shop. So, if these are to be renegotiated as per the papers lets hope loads more money goes to CHH. These figures do not even start to think about the value added of the CHH delivery model and the benefits of working with volunteers.

Why is the first main finding on the East Anglia Children’s Hospice (EACH) entry in the papers is “This service has great reputational impact on CCG if funding was ceased.” I think that the work EACH does is fantastic and needs to continue, and I hope that the proposal to continue to fund it was not because of the possible reputational impact and simply because EACH is fantastic!

So what’s the problem and what’s the solution?

There is undoubtedly a lack of money in the system and things need to be fairer. The local MPs are on the case

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We should be putting pressure on whoever we can to get a fairer funding settlement, just as we are for education (what has Cambridgeshire done to upset the Whitehall mandarins to get such lousy settlements in education and health?)

Along with this we need to help the CCG understand the true value of funding the voluntary sector and the added value we bring. The savings that family carers make to the health system is massive, and so funding them to be better able to continue seems like a no brainer, but the CCG feel that the service supplied by Carers Trust is not cost effective as

“ this service provides services for carers rather than patients themselves and is more of prevention and crisis management rather than clinical provision.”

So if it prevents people accessing expensive services and helps the management of crises outside the system it should be welcomed. At an event I attended recently a Carers Trust volunteer and ex carer stated (and I paraphrase this)

“Carers Trust didn’t save my life, but they definitely saved my sanity and allowed me to continue to provide care for my partner”.

I know all the charities facing possible grant cuts would have similar stories, and I know that much work has gone on to ensure that these are shared with the CCG decision makers. At the end of the day they have to decide if it is making decisions based on just the basic figures, or if it recognises that prevention is always better than a cure.

“They heard me… but they listened to you”

Some wise words from Julia Campbell.

Julia is one of my favorite experts. Despite the fact that she is from ‘across the pond’, and despite the fact that we do very little non grant funding it is worth signing up for her emails etc. The reason for this is because she is fantastic in helping you think about how you communicate and how you tell your story, and whilst these skills are often seen as being those of a great fundraiser I think they should be skills everyone working or volunteering for a small charity or community group should be looking to improve. Check out her website here.

This was the introduction to one of her recent email newsletters, and I love it!

Have you watched the fantastic HBO show Chernobyl?

In the last episode (no spoilers), one of the characters says to another, regarding their influence during the disaster:

“They heard me… but they listened to you.”

One was a scientist, who had all the data, info, and hard facts to back up his hypothesis about the explosion that caused the tragedy.

They heard him, they processed all the facts that he relayed to them patiently, somewhat in disbelief.

One was a career government man, but one of integrity, one that people felt good about listening to.

He carried the weight of trust and credibility, and people literally went into the fire for him.

This reminds me of the famous Maya Angelou quote:

Maya Angelou

You need statistics and data to demonstrate that there is a problem, that it is urgent, and that it needs to be solved.

You need information and education to be seen as credible, and to build trust with your audience.

But if people don’t feel GOOD about the person telling the story, about the people delivering the message, it won’t resonate, and it won’t change hearts and minds.

The truth of human nature is that we trust our guts much more than our heads.

Getting people to pay attention is challenging.

But attention can be manipulated, through irrelevant but eye-catching imagery, click-bait headlines, and other unsavory digital practices that steal attention and interrupt and annoy people.

While getting attention may seem like an uphill battle, it can be purchased, stolen, or exploited.

However, getting people to CARE – that’s much more difficult.

In all of our communications, we need to aim to go deeper than just a click, or a like, or a view.

Attention is great. But action is better.

How are you working not only to get people to hear you, but to listen?

Julia Campbell https://jcsocialmarketing.com/

I suggest you check out Julia’s website sign up to her emails and follow her on twitter @JuliaCSocial or on your social media platform of choice.

And before you ask, no she hasn’t paid me!