Compact breaches are institutionalised

In the midst of this latest review of the Compact, government funding administered by Capacitybuilders was pulled from 32 campaigning charities, despite them having received grant letters. There has been a great deal of discussion and conjecture about the real reasons for doing so (with no-one believing the official explanation), including FOI requests from NCVO trying to get to the bottom of the whole sorry mess.

Angela Smith is, I’m sure, well aware of the consternation that her decision to cancel the programme caused, and it goes without saying that breaches of the Compact by her office do tremendous damage to the agreement’s legitimacy.

However, in all the furore surrounding the decision, a really important issue has been missed, about the terms and conditions of the funding and whether they complied with the Compact in the first place.

Capacitybuilders’ Standard Terms and Conditions of Grants 2009 state:

37.  Either party, with one month’s notice in writing, may terminate this agreement.   Reasons should be given.

Such conditions may absolve Capacitybuilders and The Office of the Third Sector (OTS) of any legal responsibility in this case, but they clearly do not fully reflect Compact undertakings. 

The Compact Funding and Procurement Code states that:

7.6    Government undertakes to give enough notice of the end of grants or contracts. This should be a minimum of three months.

There is a (rightly) a clause in the same conditions referencing the Compact, but this is completely meaningless if subsequent clauses in the same document override and contradict Compact guidance.  It’s obvious that a clause which stipulates one month’s notice for termination of the funding agreement does not reflect Compact guidelines of three months’ notice.

The refreshed Compact has met with a mixed response from the sector, with support ranging from unequivocal to grudging, and criticism ranging from vehement to private grumbling.

An awful lot hangs on the forthcoming implementation guides – which are intended to provide guidance on the practical, real-life application of the Compact.  Whether they can fill the gaps left by the recent slimming-down of the main document remains to be seen.

The reality is though, until we stop agreeing to conditions that contradict the Compact (and, more importantly, which are against our own best interests) this won’t change. The short lesson is to always, always get hold of, read, and challenge the terms and conditions. It’s not always easy, and not always possible to change them, but not doing so is irresponsible and a wasted opportunity.

Through our work on governmentfunding.org.uk we’ve seen the full range, from the irrelevant, to the unreasonable, to the just plain bizarre.  Conditions that were clearly just “the ones from last time”, or meant for a different programme than the one you applied for.  A couple of years ago Capacitybuilders included a condition of their funding that required funded organisations to create a second account in which to keep any interest gained on their grant in case they were required to pay it back. When challenged on the basis that it was ridiculous, it was removed.

Our own funding odyssey with the OTS provided a particularly clear window on how flimsy some of the reasoning underpinning such conditions can be.

On one occasion we challenged 7 out of 15 proposed conditions and they agreed immediately to all our changes, particularly after we pointed out that the original terms referred to a completely different funding programme.  Which, on the one hand, is all credit to them, but on the other it does beg the question of why they were included in the first place.  

The rather terrifying lesson?  Start from the assumption that the funder does not have a clue, and work back from that.

An effective Compact can only ever be an aspiration if the largely imaginary “sector to government” relationship is undermined by fundamental contradictions in the fine details of the funding relationships that actually exist. 

If every contract and every grant letter we sign offers worse conditions than those “promised” in the Compact, then it truly is a waste of time.

DSC is calling for OTS to ensure all funding programmes which they manage in-house or through external bodies (i.e. Capacitybuilders) provide terms and conditions publicly with other application materials. 

Further we are calling on OTS to conduct an evaluation of the terms and conditions of all their funding programmes to ensure they fully reflect Compact undertakings.

This article also appears in Charity Times February 2010. Download Compact and the Government breach [pdf document].

by Ben Wittenberg, Director of Policy and Research, Directory of Social Change