Stephen Osborne: Can the voluntary sector survive in Scotland?

Despite a reported decline in voluntary giving and the withdrawal of much state funding, voluntary groups in Scotland are fighting back, writes Stephen Osborne

THE media in both Scotland and the UK has seen a spate of stories recently heralding the demise of the voluntary sector. Many have predicted a “double whammy” of a decline in voluntary giving together with the withdrawal of state funding for the sector, as a result of the global economic recession.

One response to this could be to say that this just does not matter – we all have to tighten our belts as the result of the recession, so why should the voluntary sector be different?

I would argue that there are good reasons why the sector is an important element of Scottish society and why we should all care whether it survives or not. On the one hand, it is a vital voice for the vulnerable, powerless and disenfranchised in our society. It champions unpopular groups and causes and articulates social needs that might otherwise go unnoticed. On the other hand, over the past decade, the sector has become a key provider of essential public services across Scotland. The Christie Commission on public services reform in Scotland, that reported last year, certainly saw it as an important engine of transformation for public services. Without the voluntary sector, we would be a smaller, meaner and less fair society (which is not to say that there aren’t parts of it that I do not agree with or which voice unpopular views – but that is part of its role). Moreover, many voluntary groups have been reporting a rise in the demand for their support from local individuals and communities, as a direct result of the impact of the recession on them. In light of these trends, therefore, now is a good time to ask “can the voluntary sector survive in Scotland?”

Recent research led by the University of Edinburgh (in partnership with Edinburgh Napier University) upon behalf of the Scottish Government in fact suggests that the sector is reacting positively to the challenges of the recession. It may not be thriving, but it is responding in ways that should ensure its survival – and allow it to continue to be a key part of civil society in Scotland. Five main themes emerge.

First, the funding picture is not entirely gloomy across the sector as a whole. It is true that voluntary donations have declined as a result of the recession, as has funding from charitable trusts, since their own investment income has come under pressure from the recession.

Many voluntary groups have also reported reduced or terminated local government and UK government funding (in such areas as social care and employability). However, this has been countered both by a Scottish Government commitment to maintaining its own funding of voluntary organisations and the growth of new sources of funding through social investment schemes and by an increase in public funding from government bodies wanting to divest themselves of areas of work (in fields as diverse as libraries and social care). These new funding sources do not equate to the money lost, and many parts of the sector are hurting, but they do suggest the picture is not total gloom.

Second, for voluntary groups that are finding their funding reduced, many have so far prevented this from adversely affecting services to local communities by absorbing the “hit” themselves – by reducing “back office” support of their organisations, by reducing staff hours and conditions of service, as well as through redundancies and by drawing on reserves. There is a limit to how long such a process can continue, of course. And whilst some might argue that this will make the sector a leaner one, there was precious little fat on it to begin with. If this is the only tactic, in the long run it will harm the resilience of the sector to survive future crises.

Nonetheless, it is indicative of a sector trying to respond positively to the recession rather than awaiting its doom passively.

Third, and more positively, there is evidence of a real enterprising and entrepreneurial spirit within many voluntary organisations committed to surviving in order to continue to play a role for local people and in local communities. Some of these groups are self-styled “social enterprises”, but in fact such entrepreneurial and business practices have been core skills within the sector for some time. The days of reliance upon government grants are long gone and, for many groups, business planning and competing for contracts has become a part of their normal life for a decade or more.

What is new is that more voluntary organisations are actively seeking out new forms of income. This might be through diversifying into new forms of service provision in partnership with the government (though this does also run the risk of distracting them from their original mission), raising income by making more effective use of their capital assets, perhaps through rental or property sharing schemes, and by raising income through trading activity to support their core work (this has always been the impetus behind charity catalogues and charity shops, of course, but it has now diversified into other forms of commercial activity).

Fourth, our research found evidence of mergers and other forms of organisational reviews across the sector, seeking to make economies of scale and to increase impact by consolidating skills and resources. Providing that the voluntary organisations involved remained committed to their core objectives and that these objectives were complementary, then the evidence is that this can be a positive (if time consuming) option.

Finally, we found the board and trustees of voluntary organisations taking a far more positive role in offering leadership within their organisations. This might be by actively seeking out important individuals with significant skills to join the boards, and by becoming more proactive in looking for strategic opportunities and challenges. As long as this process goes forward in partnership with the managerial teams of their organisations then this more strategic purview has enabled many voluntary organisations to be positive in their responses to the recession.

So – the voluntary sector is going to survive in Scotland, and I believe that we are all the more rich for this. There will be personal costs and casualties in the process, of course, and hard decisions will have to be taken about the purpose of some groups, their income profiles and about their own staff and members. These should not be under-estimated. But the sector is responding in a dynamic and, for the most part, positive manner.

• Stephen Osborne is director of the Centre for Public Services Research at the University of Edinburgh. This article is based upon a report just published by the Scottish Government Social Research Division – ‘The opportunities and challenges of the changing public services landscape for the third sector in Scotland: year two report’.