15 Nov 2018

A study has found small and local charities offer a range of economic and social benefits and play a vital role in their communities.

Lloyds Bank Foundation LogoIndependent research reveals that when tackling social issues like homelessness, domestic abuse or mental ill health, smaller charities have a distinctive impact. They also generate benefits through spending and investing more in local areas; with some charities generating as much as three times more in additional funding than their public funding.

The research highlights the significant challenges facing smaller charities despite their clear benefits for people and communities. There is a critical mismatch between what smaller charities do and the people they help - which public bodies should find attractive - and how public bodies actually fund, commission and contract services and measure value, which instead favours larger providers. As a result 84% of local government funding is actually going to larger charities.

The Value of Small
was commissioned by Lloyds Bank Foundation for England and Wales and conducted by an independent research team comprising the Centre for Regional Economic and Social Research (CRESR)  at Sheffield Hallam University; the Institute for Voluntary Action Research (IVAR) and the Centre for Voluntary Sector Leadership  at the Open University. The researchers immersed themselves in four local areas - Ealing, Bassetlaw, Salford and Wrexham - to carry-out in-depth studies of small and medium-sized charities (those with an income of £10k to £1m) tackling issues such as homelessness, unemployment and helping refugees to integrate. Over 18 months they analysed a range of evidence and spoke to more than 150 stakeholders to understand the distinctive contribution and value of smaller charities operating at a local level and the challenges they face.

The research findings show that smaller local charities combine three distinctive features in how they support people and communities, which sets them apart from both public-sector providers or larger charities:

  • Who smaller charities serve and what they do:  through plugging gaps left by other organisations; being the 'first responders' to people in crisis, and for creating safe, familiar spaces where people can receive practical support or be quickly linked to other local services because of the charity's local networks.
  • How smaller charities work: building person-centred relationships with clients for longer; being known for their 'open door approach' and understanding of local issues, and for being quick to make decisions because of flatter management structures. and reflecting more closely the diversity of their local communities through their staff and volunteers.
  • The role smaller charities play in their communities: using their well-established and far-reaching networks to act as the 'glue' that holds communities together.

This combination of distinctive features in smaller charities is greater than the sum of their parts and offers additional benefits including: individual value for their clients, such as building confidence and self-esteem to help them prepare for and secure employment; economic value through charities buying goods and services locally and added value through recruiting more volunteers than larger charities and bringing in new funding from trusts and others which typically can triple the income they received from the public sector.

Lloyds Bank Foundation and the researchers behind 'The Value of Small' are together calling for national and local action to protect, promote and develop smaller charities to sustain their distinctiveness including:

i. Action on funding:
 greater use of grants by the public sector and that more flexible, accessible and proportionate tender and procurement processes are used for the contracts that remain;

ii. Action on social value:
 consistent and effective implementation of the Social Value Act 2010 with public bodies required to formally account for social value around a broader definition that recognises the distinctiveness of smaller charities;

iii. Action to sustain healthy local ecosystems:
preserving and protecting the role of smaller charities and the long-term and trust-based relationships they generate.

Access the full report on the CRSER website  or for the summary report click here