Briefing Note
(1) Don’t let the fear of failure cripple your effectiveness
(2) Big society day shelved?
(3) Navca sets up commission
(4) Second Sorp recommended
(5) Under contract to stay silent
(1) Don’t let the fear of failure cripple your effectiveness
“Eventually we all realise that the real learning has occurred where there has been a failure”
Risk-averse culture
The voluntary sector can be very risk-averse, which is perverse, given that most organisations and
activities within it started by taking a risk: a leap of faith, if you will, asserting that something
needed to be done and this was the way to do it. Yet once it is established, the organisation’s
need to protect, conserve and be prudent means that everything is about eliminating and mitigating
risk. The big, unspoken risk that every board fears, though, is the risk of failure.
At the turn of the century the wonderful Ceri Hutton and I wrote a report called Burying
Failure, Smothering Success about the aims of the Single Regeneration Budget (anyone
remember the SRB?) and the way it was delivered in Hackney. I often mention this report to
boards I work with as they struggle to articulate what they have learned over the past year.
Eventually we all realise that the real learning has occurred when there has been a failure. Very
little learning emerges with the successes. What’s more, the failures haven’t always been in the
areas where boards were concerned that risks might be too high.
How we manage risk is an important part of the duties of trustees. Financial risk is
uppermost in our minds as we live through times that continue to be tough financially.
Reputational risk often comes up in the discussions I have facilitated, while the loss of key staff
and the effect of their departure on delivery simply lead to a shrug of the shoulders. But the risk of
not doing something is rarely considered.
Life is risky and we are constantly evaluating the small and medium risks we face from day
to day. We do it without much thought and, using our experience and judgement, make the
adjustments to mitigate the risks.
Sometimes we make the decision to take a big risk in life. In my case this was giving up my
happy existence as a chief executive and facing the poverty and vagaries of being out there,
scrabbling for work. Some organisations I know have taken on big mortgages and bought their
own buildings. For your organisation the risk might be to pull out of a contract, change the
direction of your work (within your constitution, of course), merge or finally try out a new idea.
Informed decisions
Think about what failure might look and feel like. Don’t ignore the risks, but, equally, don’t get
paralysed by the thought of taking a risk. Was there an idea that failed in the past but you really
think you should try again? Recycle, upcycle, reuse, renew and revisit this, and in doing so be
sure to apply the lessons of the past, the knowledge of the present and the forecasts you have of
the future.
Do not fear failure; if you have done everything you can to plan, and are able to learn from a
failure, even when it might cost you financially and possibly even dent your reputation, then it will
be a good, honest failure, not a bad, underhand one. Own up to it and share the learning so that
we all learn and improve. Hiding your failures looks like you have something to hide. Be proud of
trying something new and shout about the success.
Footnote: this article was published in Third Sector on 1st April 2014, by Elizabeth Balgobin, a charity
governance consultant
(2) Big society day shelved?
Nick Hurd, the Minister for Civil Society, has appeared to suggest that the government has
dropped plans to run an annual big society day, as promised by the coalition government in its
report Building the Big Society of May 2010.
The document outlined plans to give more power to communities and support voluntary
action, and included pledges to launch the big society day and to set up the National Citizen
Service.
But asked last week on BBC Radio 4’s World at One programme if the government had
dropped the big society day plan, Hurd said: “If you’re going to ask me what’s more important, the
big society day or investing significantly in something like the National Citizen Service, I would tell
you that it’s much more important to get behind things like the National Citizen Service.” A Cabinet
Office spokeswoman declined to comment further.
Footnote: this article was published in Third Sector on 1st April 2014, by Andy Ricketts 26 Mar
(3) Navca sets up commission
The local infrastructure umbrella body Navca has set up an independent commission to consider
the future of local infrastructure.
Navca said that the Commission on the Future of Local Infrastructure would examine
existing voluntary and community infrastructure and the challenges facing it and come up with
practical ways to secure support for local voluntary and community action in England.
The commission, which is chaired by Sara Llewellin, chief executive of the grant-maker the
Barrow Cadbury Trust, met for the first time this week. Other members of the 17-strong group
include Dharmendra Kanani, England director of the Big Lottery Fund, and Justin Davis Smith,
executive director of volunteering at the National Council for Voluntary Organisations.
The commission will hold a series of evidence sessions around England and is expected to
publish a report in the autumn.
Joe Irvin, chief executive of Navca, said its members had strong views on local
infrastructure, but the commission would be independent. “Our members are drawn from a wide
range of organisations and bring vast experience and many difference perspectives,” he said.
Footnote: this article was published in Third Sector on 1st April 2014, by Andy Ricketts 28 Mar
(4) Second Sorp recommended
The Statement of Recommended Practice Committee has recommended that a second Sorp
should be introduced to cater for smaller charities.
The committee, a panel of finance experts that advises the Charity Commission and the
Office of the Scottish Charity Regulator on the Sorp, has proposed that two Sorps be introduced,
one based on the new FRS 102 reporting standard, the other on Financial Reporting Standard for
Smaller Entities. It would mean that charities could choose between either Sorp, depending on
which accounting standard they used.
The change has been put forward as part of the ongoing review of the existing Sorp, which
was launched to take into account changes introduced by FRS 102, the new internationally geared
financial reporting standard. The new Sorp will be introduced for accounts for financial years
beginning on or after 1 January 2015.
Ray Jones, policy accountant at the Charity Commission and member of the Sorp
committee, said: “Having two Sorps will remove the criticism that there was too much focus on the
new Financial Reporting Standard.”
Footnote: this article was published in Third Sector on 1st April 2014, by Edward Lander 24 Mar
(5) Under contract to stay silent
Public service contracts that prevent the charities involved from speaking out do not align
with government calls for transparency, according to some observers. Andy Hillier
investigates and, on the facing page, Stephen Cook hears why one subcontractor ignored the
gag.
An extract from a gagging clause quoted in the 2013 report by the Panel on the Independence of
the Voluntary Sector gives an indication of just how draconian such conditions can be.
Taken from a Work Programme contract issued by a prime contractor, it warns
subcontractors that they must “pay the utmost regard to the standing and reputation” of the prime
and of the Department for Work and Pensions, the contracting body, and agree not to do anything
that will “damage the reputation” of the prime or the contracting body or “attract adverse publicity.”
In the new era of public sector commissioning, most contracts issued by NHS trusts, local
authorities and central government department, or by their prime providers, now include such
restrictions on providers speaking freely or releasing any information without permission.
The Panel on the Independence of the Voluntary Sector included in its 2014 report a
specific request to the government that such clauses be outlawed,. Nick Hurd, the Minister for Civil
Society, said in response that it was the government’s ambition for the UK to be “the most
transparent and accountable government in the world;” but he said it had a duty “to ensure all
publicly released information is accurate and validated, and contracts with providers are designed
to reflect this”.
A DWP spokesman says it works “closely and constructively” with providers and
subcontractors, but adds: “It’s right that all publication of statistics is carried out in line with UK
statistical authority rules to ensure accuracy and consistency.”
Many in the sector have concluded, however, that such clauses are designed not only to
prevent publication of inaccurate figures, but also to prevent discussion of the terms, conditions,
strengths and defects of the contracts. Asheem Singh, director of public policy at the charity chief
executives body Acevo, says gagging clauses are unacceptable and charities and social
enterprises should challenge them.
“There is no doubt that many confidently clauses in government contracts are designed to
protect not the public but the department or the ministers concerned,” he says. “We need an open,
transparent system where data is freely shared. We have reams of data protection legislation that
is designed to protect the vulnerable. Contractual confidentiality clauses that aim to prevent
‘bringing a department into disrepute’, as one example puts it, merely protect officialdom.”
Joe Irvin, chief executive of the local infrastructure body Navca, is equally critical. “We’ve
had members say they couldn’t attend meetings to discuss the Work Programme because of these
clauses,” he says. “With the Work Programme this hasn’t helped people looking for work; it’s just
hidden poor practice by primes. The government has a transparency agenda and must ensure this
is achieved right down the supply chain.”
Irvin says that, even in cases where there is no formal gagging clause, the voluntary sector
can feel constrained about speaking out. “Sometimes the clause is perceived rather than real,” he
says. “Smaller charities dealing with large prime providers can feel browbeaten. Such charities
need support, or they end up signing unfair contracts. And there must be proper procedures for
whistleblowing.”
Tom Murdoch, senior associate at solicitors Stone King, says such clauses have become
commonplace because of a profound imbalance of power between those issuing contracts and
service providers. The result is that commissioners can dictate terms. He says that in many
respects the contracts given to the voluntary sector follow the same principles as those used in the
private sector, which is fair in some ways. “Subcontracting in the private sector has long been
subject to this secrecy, and it’s reasonable in a way for the public sector to echo it when it gets into
equivalent commissioning,” he says. But he questions just how enforceable gagging clauses are in
practice: “In theory, if someone breaches these provisions, they could be taken to court for
damages-but it’s rarely going to be in the commissioner’s interest once the confidential information
is out.”
But like Navca’s Irvin, Murdoch believes that many charities are inhibited from disclosing
information or speaking out not necessarily by a clause in a contract but by the need to preserve
relationships. “It’s not in most charities’ interests to fall foul of their local authority or other public
bodies that are funding them,” says Murdoch.
He also draws attention to the right to whistleblow if individuals believe there has been
serious wrongdoing. “If it’s in the public interest, there is a right to disclose and be protected from
the consequences,” he says. One problem, he says, is how commissioners are being told to
commission. In the NHS, convoluted model contracts have been produced, which are now being
applied to relatively small contracts. “What they are trying to do is assist commissioners, but one
side-effect is that sledgehammers are used to crack nuts,” he says.
The problem is compounded when some large prime contractors add onerous extra
conditions to contracts issued to their subcontractors, he adds.
There are signs that the government is listening to the complaints. The draft contracts for
the Ministry of Justice’s Transforming Rehabilitation programme do not, say some in the sector,
include some of the more onerous requirements of Work Programme contracts. But the
government has so far failed to remove gagging clauses from WP contracts, despite the request of
the independence panel.
Caroline Slocock, head of the secretariat s the panel, says it believes clauses that prevents
charities speaking freely are a breach of the Compact, the agreement that sets out how public and
voluntary sector organisations should treat each other: “To the panel, it seems obvious these
clauses should not exist, and there should be a proper respect for charities’ campaigning role.”
She also questions whether trustees should agree to such conditions: “It is inconsistent with
the duties of trustees to sign such clauses particularly if a charity has objectives that can be
pursued only if it has an independent voice.”
Footnote: this article was published in Third Sector on 1st April 2014, by Joe Irvin, Chief executive Navca