Article for Herald on charity investment

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Scottish care charity Quarriers lost £1.2m last year and is desperately trying to avoid cutting services. It is asking staff to take a reduction in terms and conditions or face redundancy.

Like charities and voluntary organi-sations across Scotland, Quarriers faces increasing demand for its services, coupled with a falling income. This gives rise to questions over what we do when charities providing services traditionally run by the state run out of cash. But it also begs the question, what makes charities different from businesses like Diageo or the Royal Bank of Scotland? Why should businesses be bailed out, when charities face cutting vital services?

The history of Quarriers shows how charities have changed. Its current troubles mirror what’s happening to Scottish charities more generally. But it also demonstrates why the vitality of the charity and voluntary sector will be vital to Scotland coping with the worst impacts of the recession.

Quarriers was founded in an age of philanthropy by William Quarrier, a successful Glasgow shoe retailer, who began caring for destitute children in Glasgow in the early 1870s. It has a turnover of over £42m, making it one of Scotland’s top 200 companies. It runs an diverse range of services and its 100 projects include support for young people with housing needs, disabilities and epilepsy. Thousands of people in Scotland rely on it.

The organisation is part of a growing and diverse voluntary sector, which employs around 130,000 paid staff in Scotland and manages an annual income of £4.1bn. That’s twice as many people as are employed in agriculture and 50% more than in financial services.

However, like the rest of the economy, this sector faces massive challenges. Following the collapse in the stock market, many philanthropists have found it hard to maintain their charity work. For example, the Moffat Charitable Trust, formed around a legacy from Jim Moffat, the co-founder of travel agents AT Mays, has indicated it cannot fund any new projects, due to the fall in the value of its RBS shares. Sir Tom Hunter’s foundation has indicated it will be giving much less than anticipated in the next few years. Smaller donations have started to slide, though most Scots are still incredibly generous.

The Herald said in November, that the Big Lottery Fund Scotland will be reducing the cash coming to Scotland by 70% because of the diversion of funds to the London Olympics.

For Quarriers, and other charities, the big problem is local authority funding. This is the main source of income for its projects. Having made a loss of £1.2m last year it has had to pump £700,000 from its resources into its projects to keep them afloat.

Quarriers Chief Executive Phil Robinson argues that unless they take urgent action, things could get worse. “Local authorities are operating in a very challenging fiscal environment. As an organisation, Quarriers needs to look at ways of reducing costs in order to continue to provide the current level of service to some of the most vulnerable people in Scotland.”

Local Authorities are already working to reduced budgets. In Glasgow we have seen £286,000 of cuts for voluntary organisations providing services to the disabled, elderly or ill – including Glasgow Disability Alliance, DeafBlind Scotland and the Terrence Higgins Trust. Glasgow has also reviewed long-term funding arrangements for key voluntary sector community care organisations in a bid to save another £464,000. These cuts are on top of a £1.6m saving that the council has made by not giving a cost of living increase this year to voluntary organisations providing existing contracts. An ongoing review of purchased care home placements, many provided by voluntary organisations, aims to make a saving of £4m.

If Quarriers was an ordinary business, the response to funding cuts would be simple. It would walk away from loss-making contracts and abandon the communities that rely on it. Yet while the First Minister meets with the bosses at Diageo to convince them to stay in Kilmarnock, Quarriers is faced with raiding reserves and asking its staff to take pay cuts.

Charities have often worked on shoe-string budgets, finding innovative ways to deliver services. But if councils’ response to the funding squeeze is to pass these cuts on to local charities and voluntary groups they may destroy the capacity of these groups to deliver. In doing this, they risk destroying the social infrastructure, that maintains local communities.

Funding charities and voluntary services delivers wider benefits, like community venues, volunteering opportunities and training.

Government investments to stimulate the economy have mostly been discussed in terms of physical infrastructure projects, such as roads and hospitals. It’s time to think in terms of social infrastructure projects that build communities and strengthen society. These projects can provide the social safety net to help stop the destruction of hope and ambition.

There are signs that this approach is being recognised. The Scottish Council for Voluntary Organisations (SCVO) led a delegation to a Scottish cabinet meeting, where we discussed plans for a Resilience Fund for voluntary organisations providing front line services. The UK Government has announced the creation of the Future Jobs Fund, which will fund socially beneficial jobs for unemployed young people. SCVO is organising a coalition of Scottish groups in a bid for over 5000 new jobs. The bid demonstrates how the voluntary sector is uniquely placed to deliver socially beneficial jobs, training and work experience that makes a real difference to communities We need to invest in people and build social capital. We should regard the problems faced by Quarriers as being just as concerning as any of the other economic bad news coming out of Scotland. The answer is investment and support from government, but also recognition that the voluntary sector can’t be an easy option for cuts. Charities cannot sustain long-term subsidisation of vital services.

Quarrier’s current problems may just be the tip of the iceberg. It is time to heed this wake up call, and recognise the potential of charities and voluntary organisation to support communities through the recession.

  • Mark Ballard is the Head of Campaigns and Communications for the Scottish Council for Voluntary Organisations
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