Charging for services is better for beneficiaries: a debate

People should pay up front for charity services, or should they? This was the topic for an engaging debate at the NCVO Sustainable Funding Conference last week.

Stephanie Flower of ENRYCH and Kris Ambler of Advice Derbyshire gamely took the two sides of the debate, with Professor Ian Bruce MBE chairing.

Note: The debate was about charging end-users at the point of delivery, and the views expressed by our debaters may not be their true opinion!

Here are the highlights.

Opening arguments – in favour of charging

Steph_photoCharging is better, Stephanie began by saying, because charities can’t live on fresh air. Budgets are under constant pressure and fees are a welcome additional source of income.

There are opportunities in the disability sector because ever more people have access to personal budgets to purchase support.

A charge also helps people – whether beneficiaries or funders – understand the value of your organisation’s work, and the true costs of providing a service.  As people understand that value, they also raise their expectations.

It’s a virtuous circle, she concluded, of improved outcomes and better finances.

Opening arguments – against charging

Kris_ambler_2Charging is worse, Kris countered, for three reasons: ethics, structure and finance.

On ethics, charities need to hold on to their values. Government is driving the efficiency agenda, but charities need to show their social value, not just financial. People often access advice services because they are in poverty. Hitting them with a charge is plain wrong.

The structure and financial arguments are also strong, Kris added. You need decent regulation and quality guarantees in advice services. Too much competition can lead to declines in these standards as providers cut corners.  Financial returns from charging can be patchy and are often too low to provide a stable funding base.

So charging adds additional complexity to the service with no guarantee of returns.

Does it depend on the service?

Bringing in the workshop audience of 25 charity managers, staff and trustees, an early question was, does it depend on the service?

Stephanie’s view was that there are some services you can’t charge for, and some people won’t be able to pay. That is why you should have a flexible system of prices and services – you can even include voluntary donations in the mix.

Kris also conceded that you can charge if people can afford it, but that the starting point should be that the service is provided for free. This is best for access and equity.

An audience member added that, in their experience they could not charge for volunteer befriending services. The ethical implication of a vulnerable person “buying a friend” was a step too far for their organisation.

Does charging invite in the private providers?

Another burning question from the audience was, can charging by charities clear the path for private providers?

Kris stated that there can be a certain element of protectionism from some providers. They prefer to work with grants and contracts to avoid “opening up” the service.  However, for him the watchword was partnership between providers, and centralised funding helps to strengthen this.

Stephanie countered, “Competition is great. Bring it on!” She added that we need to learn from businesses. By borrowing their techniques charities can avoid getting squeezed out in an evolving social economy.

Concluding remarks

Ian_Bruce_2Ian Bruce summed up the arguments: You can’t just look at a sub-sector, you have to understand the whole market, he said. A charity has to ask itself if it is charging to make a profit, cover costs, or make a partial contribution to costs.

Ian also noted that many charity beneficiaries do have money, and prefer to pay and therefore hold to account the people providing the service.

Finally, he said that non-profits need a non-demeaning method of finding out if people can or cannot afford to pay.

The vote!

With the atmosphere humming, and many questions remaining in people’s minds, we took a vote on the motion.

“Charging for services is better for beneficiaries”

  • Those in favour: 15
  • Those against: 9
  • Abstentions: 1

So fully 60 percent agreed with the motion, but it looks like this healthy debate will rumble on!

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