Examination of Witnesses (Questions 440
THURSDAY 14 DECEMBER 2000
440. From my experience of being a constituency
Member of Parliament, I am always overwhelmed by the bureaucracy,
the difficulty, that small voluntary groups have to go through.
Many of them fail, yet obviously enough get through when you say
that there is 10.6 of bidding but only 1.8 of distribution. Do
you provide any sort of expertise, any support centrally, to the
myriad of voluntary organisations when they are getting together
their bid for the Lottery funds?
(Ms Bush) It is fair to say that a lot of the support
comes from the CVS, the Councils Voluntary Service, and the rural
community councils. They are more at the front line providing
that sort of service, particularly CVSs. In fact, we have heard
from a lot of CVSs, in preparing for today, about the help that
they give and the problems their beneficiaries have experienced
because of the complexity that you have talked about. We have
examples of that which we could share with you.
441. I find it interesting that you are saying
about the community councils. Yes, they do help particular voluntary
organisations, but you will be aware that there are a lot that
do not have contact with those organisations that you have just
mentioned; that are just a tiny community voluntary organisation.
They are not even aware where to go for help but they do know
about you. But you do not offer any pathway or any support? Is
that what you are saying?
(Mr Etherington) If community groups approached us
through a helplinewe take about 15,000 calls a yearwe
would refer them to a local organisation to give them help. Often
the help that they need can be provided by funding advisers in
the localities. It is true to say also that some local authorities
have been extremely helpful to community groups as well. More
and more community groups are being asked to become engaged in
a variety of funding programmes, which include Lottery funding.
In those circumstances, they will often turn to any advice they
can get. We would tend to refer back locally if they approached
us because principally it is the only way we can cope with the
demand if there were hundreds or thousands of community organisations.
But what you will often find, of course, is that the actual weight
of applying for and accounting for funds of this nature, particularly
some of the large partnership funding programmes, they do in themselves
dissuade community organisations. There is a slight paradox that
people want community organisations in, but the actual cost of
the transaction is so high that they just will not do it.
442. I am glad you have made that point because
I have to say that from my point of viewand Mr Buse is
nodding his head emphaticallythe real crux of this issue
is that we all want the money to go to the little community groups
but it is impossible.
(Mr Buse) It is a very strange irony, yes. The people
in most need are frequently the most difficult to help and to
get to. One of the issues that we would like to explore would
be the question that many of these grants are for discrete projects.
With organisations that have structures and processes to submit
projects, that is a relatively easy task. With a group where it
needs to come together to start with, to get to the stage where
it is discussing a project, then what we are engaging in, in that
situation, is capacity raising. Engaging with a community in self-help.
To date it has been quite difficult for the Charities Lottery
Board to extend that level of expertise and that level of help
into those very groups that you have identified, yes.
443. When the National Lottery distribution
bodies were in front of us just a little while ago, they made
the point that they tried to get to smaller groups, and you are
saying that they have been a little more successful. Derek Casey
from Sport England said that they hold regional surgeries, particularly
interfacing with the voluntary sector, such as yourselves, and
the Charities Distribution Board has regional offices. Is that
enough though? Is there more you would like to see those bodies
doing? If you are talking about regions, if you take my region
of the south west, their regional office will be in Bristol, which
is not much help for those people in Redruth or those people who
live in Mitcheldean in Gloucestershire.
(Mr Buse) The evidence coming forward from our members
begins to describe several areas we would argue that need a spotlight.
One of them would be that it not always clear why a bid is being
turned down. There are one or two examples that are deeply disturbing,
when apparently the goal posts move part way through the process.
You are turned down on the first count for one reason and that
reason is addressed, and then all of a sudden there is another
reason put forward. So there are real concerns about that. Helen
is spot-on when she said there were concerns about sustainability.
Many of these projects, on the face of it, are funded for three
years. When you are in a large organisation, with a discrete project,
that can frequently be a right and meaningful intervention. But
when you have to bring a group of people together for the first
time, solely to do something real and purposeful, if there is
a sense that there is a real chance that it will not go through
and expectations are raised; and that the funding, if it comes
through, is for three years, and then a huge exposure at the end
of three yearsin fact, quite a serious concern that no
further funding then comes forwardthen we would be arguing
that for such groups one should be looking at other forms of support
over time. This is why loan schemes and endowment funds and local
chests of one sort or another begin to support organisations beyond
that three-year critical grant phase, because for me it is a little
bit like starting up the motor only to see it then stop. The damage
to beneficiaries is not so much the charities but the beneficiaries,
when they can see their expectations raised and then damaged so
severely after a period of three years. So this is also something
we would like to see end.
444. So are you advocating that Lottery funds
should be core funded for charities?
(Mr Buse) We argue that it is immensely damaging for
all organisations, and particularly for small organisations, where
core funding is not supported to any extent which enables that
capacity to be raised. We feel that if you bid through two or
three or four different grant makers, all of whom contribute nothing
towards core costs, then you risk damaging the underlying effectiveness
of the organisation. You are then reliant on public giving. If
public giving becomes volatile, you can put your core purpose
at risk, yes.
(Ms Bolton) There is a real problem as well, where
Lottery distributors are not recognising that when an organisation
develops a project, that will increase its core costs. There are
examples of distributors saying, "Okay, so this very large
project will mean that you will need extra finance officer capacity,
but we are not prepared to fund it." That is a really difficult
issue for voluntary organisations. They are being encouraged to
develop projects to get access to funding but it is eroding their
core, so they are finding it very difficult to maintain these
projects. I think that is another point which is very important
in relation to core costs.
445. Since you are predominantly dealing with
small community groups, one of the things which we think is so
good about our Lottery system here, as opposed to the ones we
saw in the United States, is that we have this identification
with the projects locally. You can wrap your arms round something
that you have done very locally. There is also a concern that
some constituenciesmine is onewhere my constituents
are putting more into the Lottery then they get out. How would
you view the proposal that maybe 20 per cent of all the Lottery
funds go to a community chest? For, say, the Forest of Dean, 20
per cent of what my people put into it goes back, which goes to
community groups, such as those groups that you represent, for
maybe their core funding through the Lottery. How would you view
(Mr Buse) It is highly supportive. Helen can fill
in some of the detail.
(Ms Bush) We would certainly support the development
of community giving and a greater delegation for giving to the
local level, particularly using the expertise of existing grant
given to do that. So, yes, in that sense.
(Mr Etherington) We have also been rather attracted
to the idea of community endowments for the poorest areas. There
are examples that already exist, which are not funded by the Lottery
but by other means. The Isle of Dogs and in the north east, where
there have been significant endowments created for local communitiesoften
very poor communitieswhere people from those communities
actually play a part in engaging in discussions about distribution.
I am rather attracted to the idea of the Lottery boards being
able to endow for community benefit. Perhaps all of them because,
in a sense, they all deal with slightly different policy areas,
coming together to endow local communities with funds. Obviously
they would need expertise. They would need to bring in people
able to manage those funds. But I have always been attracted to
empowering people locally in poor communities by giving them a
source of cash that was theirs to control.
446. One of the problems in this area is: what
is a charity? Are you happy with the definition of charity?
(Mr Etherington) The Scottish are obviously looking
at this because they are looking at redefining their charity law.
The law, as it stands, is very complex. We are, ourselves, bringing
forward proposals next year to look at whether any changes could
be made in charity law but Margaret is our resident expert on
charity law, so perhaps she could bring us more up-to-date on
(Ms Bolton) In terms of access to Lottery funding,
who is eligible?
447. It is very difficult but I think I am right
in saying that Eton is a registered charity, but I do not think
many of us would consider giving very willingly to that particular
(Ms Bolton) As Stuart said, we have been working on
this issue. We have been reviewing the law on charitable status.
Obviously the charitable status of public schools is an issue
which has come up. At the moment, our thinking is very much along
the lines that the law on charitable status needs to realign itself
more closely with public benefit. That public benefit needs to
be more at the centre. That applications for charitable status
should in the future be looked at in that light. However, I should
say that we are at quite an early stage. We are developing proposals
and we need to consult our constituency about them.
(Mr Etherington) If I may just say on the definition
of charity, the NLCB use a wider definition than charity in distributing
money. That is helpful. I suppose one of the things that might
be helpful to us is if you could encourage your colleagues on
the Home Affairs Select Committee to have a look at charity law
at an appropriate time. We might find we could look at this more.
448. Derek Casey from Sport England was saying
that he would like to see many more sports bodies being giving
charitable status because that would allow them to claim back
the 17½ per cent VAT they pay, including on Lottery funding.
It would then give more money to sport.
(Mr Etherington) That is true. The irrecoverable VAT
burden on charities is pretty well documented. It is now about
£400 million a year. Whilst the tax review on charitable
giving was extremely welcome, it did not deal with the tax on
spending that charities face.
449. Anyway, that is not really the issue. Well,
it is, because it makes a difference as to how the Lottery give
moneyto some extent anyway. Can I switch a little bit.
Obviously charities just do not benefit from the National Lottery
Charities Board. They benefit right across the whole area. Are
you happy with what you might term as charities: that the co-operation
between the various giving bodies is sufficient? Obviously the
Paralympics is a very good example of what, in normal terms, would
be considered as a charitable giving, if you like, but in fact
was funded from the Sports Council, not from the National Lottery
Charities Board. Do you think there is insufficient co-operation
between those givers on this?
(Ms Bush) It is fair to say that things like the Awards
for All scheme show very good levels of collaboration between
boards. Certainly small charities that we deal with have really
welcomed the Awards for All scheme and sing its praises. But we
would like to see more of that collaboration going on. We have
also had some concerns over the collaboration between the New
Opportunities Fund and Charities Board. Our members tell us that
there are still confusions and that projects are falling between
the two boards. Maybe they could work more closely together.
450. Do you think there is some argument for
working out some form of single application; so that you have
one application form which would go to three or four of the distributing
boards for money, rather than simply being a matter of sending
out applications to three or four?
(Ms Bush) The Awards for All scheme is a good example
where that has already been achieved. Some of our members say
it is difficult for their beneficiaries to access funds from boards
other than the Charities Board. It may help if the guidelines
were more unified and the application forms were unified across
the different distributors.
451. Will the disappearance of the Millennium
Commission make a difference to that? That is yet one more board
that people are asking for money from.
(Mr Etherington) It might be helpful if the money
was equally distributed between the boards.
(Mr Buse) There is just one point which I had hoped
Helen might have addressed when that question was asked, because
the guidance given by the different boards is very different,
as well as the application form. The guidance given by the New
Opportunities Fund (I think I am right in saying) runs on 26 pages.
(Ms Bush) The policy directions.
(Mr Buse) Yes, the policy directions. We were wondering
whether there is something beyond the application form that could
also be simplified amongst the various bodies.
452. May I ask you, you have talked about the
problems that smaller community bodies have in getting funds.
To what extent are you, yourself, regionalised and do you, yourself,
provide expertise to organisations applying for money?
(Mr Etherington) We have 1,700 members. We do not
have a regional structure ourselves, simply because we do not
have the money to do it. This is quite an expensive option for
us. But what we do have is pretty good ways of communicating with
our members. Many of our membersI would guess, around 6
to 700are umbrella organisations themselves, like us, so
they pass on the information. For example, we have about 200 councils
of voluntary service in membership of NCVO. Therefore, we would
tell them what was going on; what changes were happening in policy.
They would tend to use that information to advise their own members.
It is quite difficult to estimate how many organisations NCVO's
advice ultimately cascades down to, but it cannot be short of
453. Do you do anything to encourage some of
your members, who have been successful, to offer their assistance
to others who maybe are struggling?
(Mr Etherington) I do not think there is enough of
that because it is a competitive market that they are in. Therefore,
they want to make sure that they get the funds. There are some
examples of larger charities assisting smaller charities and we
try to encourage that. We do quite a lot of joint working together.
But it is not that common because they are all after a relatively
small pool of funds.
454. I know that you carry your charitable work
into your leisure activities as well, because you support Surrey
County Cricket Club.
(Mr Etherington) I do. You mean the county champions
for the last two years!
455. Thank you very much indeed. The perspective
you have given us is very important indeed. Thank you.
(Mr Buse) Could I make one last point. I know that
Helen, in particular, has gone to enormous lengths in talking
to a host of our members who have come forward with some absolutely
wonderful case studies. If you would allow us to put those forward
after the meeting I think they would be helpful.
Chairman: Of course, absolutely. Thank