A blueprint for Northern Ireland's Third Sector

The Law Family Commission published a report back in January, which Scope examined here, exploring how to get the public, private and social sectors firing on all cylinders to build truly inclusive growth.

It provided tangible ideas for policymakers, businesses, philanthropists and society to adopt in order to tackle the systemic challenges that are stopping civil society delivering on its potential.

That report has now been supplemented by a follow-up specifically for Northern Ireland which recognises the unique challenges faced here. For its authors to acknowledge this, and to produce this companion report to reflect them, is both unusual and refreshing. It will be especially so to those working for UK-wide organisations who have become used to the deep sigh and rolling of eyes which are the default English response when differences are pointed out.

Here, as elsewhere, civil society plays a vital triple role. As the report states: “[B]ringing people together, campaigning to solve pressing problems, and providing services – particularly to those who are otherwise marginalised and overlooked. From improving health to peacebuilding and boosting economic growth, when it comes to achieving the changes that everyone agrees are needed, civil society is essential to each and every goal.”

For all that, the report concludes, the sector does not have all the tools and the environment it needs to fulfil its full potential.

This will not come as a startling revelation to people involved with voluntary and community organisations given cutbacks, funding shortfalls and being forced into permanent crisis mode.

But the real strength in the report, and what makes it a must-read, is its calm and compelling analysis of what needs to be done to put things right. And to achieve that action is required not just from government but from business and charities themselves. It is measured, well-argued and seems achievable.

The Commission’s central argument is for strategic investment in the productivity of the social sector, the data available to and about it, and in the changes needed to unlock philanthropy. This to be accompanied by a dramatic acceleration in the partnership between civil society and business, and advances in the relationship between civil society and government.

In order for that to happen it will be necessary for there to be a greater understanding of the nature and role of civil society from both experts and the public.

Northern Ireland’s civil society is highly diverse, including small volunteer-run community groups and neighbourhood WhatsApp groups, as well as major providers of public services, especially in housing and social care.

Overall, there are more than 7,000 registered charities in Northern Ireland, employing nearly 54,000 people, 7% of the total workforce. And there is a high level of both trust and public involvement.  Nearly three in ten (28%) people volunteer and nearly two-thirds (64.5%) donate to charity. Overall, 71% of people in Northern Ireland report trusting charities, 12% higher than in Great Britain, and 14% higher than in the Republic of Ireland.

And as the report argues it combines some of the features of the other two sectors, which makes its role so distinctive. Like the public sector, it is concerned with providing public goods rather than generating profit. Like the private sector, it is dispersed, agile and driven by individuals and communities.

Per the report: “This combination of characteristics enables civil society to play multiple roles both in local communities and national life – spotting problems and opportunities; innovating to meet them; driving social change; enabling communities to take action to improve their area; and reaching groups often marginalised in both the political and commercial realms.”

The sector quite clearly has unique strengths. The challenge is to harness them to the full.

And the Commission outlines what needs to be done.

First there would need to be an overhaul of the funding landscape.  In practice this means funders need to make more long-term, flexible financing available more simply to the sector.

The short-term basis on which many grants are offered leads to uncertainty, leaving charities unable to plan for the future and is inefficient, forcing charities to expend valuable time and resources constantly reapplying for funding unnecessarily.

As one contributor to the survey put it.  “As a charity, you’re in an endless roundabout of tracking down funding, applying for it, evaluating it, reporting on it. It just goes on and on and on and on … [During] the time that you should be working with the people, [which] you got involved with the charity to do, you end up getting stuck in this endless round of funding.”

There is also typically a lack of finance for long-term organisational growth and the tendency of much funding to come with stipulations restricting their use to narrowly conceived projects. Restrictive funds are more expensive to implement and difficult to manage, and they overlook the importance of investing over the long term in the skills and capacities an organisation needs to deliver these projects well in the first place for example salaries, rent, energy bills and a wide range of other costs which must be met for the charity to function, but which are all too often excluded from grant funding.

The sector in Northern Ireland also faces a further obstacle for which it requires help.

Better data to inform good decision-making is required both within the sector and among the funders and policymakers who influence it. This would involve working with the statistics body NISRA and the Charity Commission to develop a data strategy, and encouraging organisations to share more data they currently hold.

The Commission also estimates that an additional £5 billion per year could be raised from public donations if the UK matched other leading countries, which would translate to an additional £31 million for charities in Northern Ireland.

Linked to transforming funding is the need to improve the sector’s productivity. The language of productivity is not often used in relation to charities, but it is vitally important to the whole sector. It is more common to discuss impact, effectiveness, performance or social value for charities, but these are all essentially describing the same thing as productivity – maximising an organisation’s ability to achieve outcomes using the resources at their disposal.

Improving the productivity of charities is not about cutting costs, prioritising efficiency over quality or simply working harder. It is about increasing their ability to transform inputs into outcomes.

Per the report: “The challenges facing charities mean it is more important than ever to make the best possible use of every available resource, with many facing rising demand, rising costs and falling real-terms incomes.”

There is a close link between improving productivity and transforming how organisations are funded so that organisations end up with more time and resources to invest in their capacity and capabilities. This is especially true for smaller organisations where the same individual may be delivering services, fundraising, supporting other staff and volunteers, while also responsible for developing strategy and identifying improvements.

The report identifies four major factors in driving productivity within organisations: innovation, technology, management practices and people. Innovation, for example developing new services, processes, and products that can reduce costs or increase output or quality – can significantly boost productivity growth.

This is especially so when married to digital adoption, ranging from using advanced technology, such as artificial intelligence, to basic digital technologies, such as digital software for customer relationship management. And where charities are enabled to consider more transformative, long-term changes to overcome the challenges facing their communities, substantial change can happen. Funding for this sort of work is scarce. It shouldn’t be. Charities are often highly innovative and creative, as was demonstrated by how so many adapted during the restrictions brought in during the Covid pandemic. But skills gaps, leadership issues and under-investment, and funders need to help fill those gaps.

The report also wants to see a transformation in the relationship between the sector and government. This would include a drive to increase public sector volunteering and secondments between sectors, and to ensure that formal structures, such as advisory groups, fully include and value the contribution of civil society representatives.

There is also much to be achieved through partnership with business. As businesses seek to achieve greater purpose alongside profit, there is a huge opportunity for the private and social sectors to work together and leverage each other’s strengths.

The report states: “Businesses are a strikingly underused source of funding and skills for the charity sector across the UK and especially in Northern Ireland. It is particularly important to tap into this source given current pressures on other sources of funding, with public donations expected to be affected by the cost-of-living squeeze and economic downturn and government finances under strain. More charities should prioritise identifying and cultivating opportunities to tap into the business sector, with charity umbrella bodies supporting them to access opportunities to do this.”

The Commission’s report is a fine piece of work which was two years in the making. It should be seen as an important contribution to developing the sector.