The value of small

Alex Van Vliet is the research and learning manager at Lloyds Bank Foundation for England and Wales, leading the organisation’s work on evaluation, data and evidence across all its programmes. Previously he worked on measurement and evaluation at New Philanthropy Capital.

In 2016, Lloyds Bank Foundation for England and Wales commissioned NCVO to use their almanac data to understand how the financial landscape for small and medium-sized charities had shifted since the 2008 financial crisis. The resulting research – Navigating Change – shone light on how smaller charities bore the brunt of public sector austerity.

A rapid shift from grants to commissioning at scale locked out many smaller organisations, with organisations with an income between £100k and £1m seeing a decline in government income of 38% between 2008 and 2015. At the same time, supermajor charities – those with an income over £100m – saw their government income grow by 38%.

None of that matters if we think charities of all sizes are created equal. The Foundation has long known from the experience of those we fund and support that small and medium-sized charities – by and for the communities they come from – can do things, reach people and solve problems that larger organisations can’t. But whilst the real-word evidence is strong there has been a lack of robust, academic evidence that smaller charities are different.

Filling the evidence gap

To address this gap – and to inform our new strategy – the Foundation has funded a major study into the distinctive contribution, value and experiences of small and medium-sized charities.

The research, led by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University with the Institute for Voluntary Action Research (IVAR) and the Open University, looks in-depth at four areas across England and Wales – Bassetlaw, Ealing, Salford and Wrexham. Combining new analysis of quantitative and qualitative data the study interviewed more than 150 people to understand the role small charities play and what sets them apart from their larger counterparts. In doing this it is the first study to compare the role of smaller organisations to larger providers in this depth.

A distinctive role

The research identified three core features that set small and medium-sized charities apart from large charities and public sector bodies:

• A distinctive service offer: playing a critical role in addressing disadvantage and social issues in their local communities, both directly and by plugging gaps in public services.
• A distinctive approach: reaching early and staying longer in their support, an embedded, trusted and long-term presence within communities. Their flat hierarchies means they can stay agile and respond quickly.
• A distinctive position: smaller charities have extensive local networks and relationships, reaching within and between communities. They play a stabilising role at a local level, frequently described as the ‘glue’ that holds services, other charities and providers and communities together.

A distinctive value

The research found this distinctive role for smaller charities gives rise to a distinctive value – value that is often not recognised or actively supported. This included social value for individuals using their service as well as added economic value too, generating bigger returns on investment than larger organisations. By making extensive use of volunteers and their ‘soft power’ navigating and holding together local networks, smaller organisations deliver more bang for your buck.

One case study charity in Wrexham received £92,000 from local public sector sources in 2016−17 but an additional £259,000 from voluntary sources, including grants from independent funders, donations and trading. This means that for every £1 of public funding, an extra £2.80 came into the local area from other sources −almost triple the public sector investment.

Sustaining the ecosystem

We’re delighted the research recognises many of the same things that we cherish about small charities, but this isn’t as straightforward as pitting large charities against small charities. As one large charity in the research put it well:

We worked with one [smaller charity] a few years ago – they’d got this vision and the name and address for every resident in the area and they could knock on the door and get buy-in. What we could do was bring in specialists, funding, capacity to engage with the local authority. We can [each] bring things to the party that the other can’t.

But it is about recognising the distinct strengths of small charities, and ensuring they are valued and supported, particularly in public commissioning and contracting which has marginalised and excluded smaller charities, leaving many under real and substantial pressure.

We want government, funders and infrastructure bodies – including NCVO – to recognise what small charities can do differently and to ensure that policy, practice, funding and commissioning changes. In response to the research, here at the Foundation we are launching a new strategy to tackle the under-funding, pressures facing, and lack of representation of small and local charities. We encourage everyone else to join us in recognising the ‘value of small’ and delivering the changes such small but vital charities need.