Charities are footing the bill for underfunded contracts

By Mike Barrett

11 June 2018

More charities are using their own resources to keep life-saving services running because public spending cuts have reduced the funding that's available.

That’s according to The Charity Finance Group who say an increasing number of charities – including Porchlight - are being forced to subsidise public service contracts.

We rely on these contracts, which are typically awarded by local councils, to deliver many of our services.

But in many cases – as councils struggle to manage their own slashed budgets – the funding on offer is less than it was 5 years ago. Charities are forced to make up the shortfall but many are struggling to do so.

Porchlight has been subsidising several of its contracts for the past few years. We do it because lives would be at risk if the help we provide were to disappear. However, we know that this isn’t a sustainable solution.

For charities like ours, it’s extremely difficult to generate the income needed to make up the shortfall. We’re operating in an increasingly competitive environment and we’re having to put a huge amount of time, skills and capacity into raising these additional funds.

And in order to attract new funding and support, we must prove that our finances are in good shape. How can we do this if taking on underfunded contracts is putting us in a riskier position?

Porchlight has had to withdraw several bids for public sector contracts because the operational risk was too high, even though we knew our expertise could have helped.

The fact is that the government is relying on charitable trusts and the generosity of the public to prop up this increasingly creaky system.

Ultimately, it means charities are becoming less and less able to support vulnerable people. It’s a sad state of affairs and unless things change the consequences will be dire.