Funding of Voluntary Sector in the UK - Essay Example

Funding of Voluntary Sector in UK Funding of Voluntary Sector in UK Clement Attlee is a big name in British history. He did a lot of work in order to improve Britain and the lives of people living even today in Britain. Some of his remarkable work includes Beveridge Report implementation along with a state which is based on Post war welfare but still the greatest achievement of Clement Attlee was the concept of philanthropy along with voluntary actions. Churchill indeed supported this idea. Philanthropy concept also evolved with time just how the concept of State, business and households changed and evolved. Former Chief Secretary of Treasury Liam Byrne before leaving said regarding philanthropy that it is about what to give, how to give, whom to give, the purpose of giving which needs to be clearly explained along with keeping in mind the impact it is having on the society. There is one point of view of public limited understandings which gives rise to some of the problems such as the issues which are between treasury and charities related to tax which is on the donations given. (Guardian news 2012) Where Britain lifestyle based on Voluntary work is commendable it also brings with it some major downfalls. For some giving time and money for survival of others is a voluntary work which is conducted for the betterment of the society however for others the organizations created to perform voluntary work are basically an integral thing for the State. For some services delivered which are under a contract is an act of donating and for some philanthropy is basically a market. Philanthropy is basically a term which is derived from ancient Greek and originally meaning “the love of humanity”. A well known sociologist Augusta Comte introduced this word. This act is motivated by the concept of betterment of others and benefit of others. It is also present in a human being who makes them do something for others, this feeling of selflessness is integral here. Some believe that the joy which one gets after giving something to others is what makes them help others, on the other hand intangible reward motivated people in becoming philanthropic. Charity and the concept of voluntary work changed with every changing century, where during the nineteenth century charity was conducted as an act of showing superior position for self satisfaction. The role played by Attlee was explained by Justin Davies Smith and Nicholas Deakin as an act of mutual aid and creation of friendly society which is full of cooperation. Help was provided to non family members through groups and small organizations and informally volunteering people. The people who volunteer to conduct such activities are more enthusiastic and passionate about the work compared to those who are hired and paid to perform voluntary work. Personal emotions and feelings in a person who wants to do something for others help them perform well appose to people being paid to do voluntary work. Giving and Charity is an integral part of UK’s lifestyle. There are many surveys conducted regarding the charity work in UK, in 2011 about 29.5 million people donated around Eleven Billion pounds for charity work. The society is overall charitable and giving which thus ends up in being valuable for the State (Guardian news 2012). In England the trend of Charity however is declining now, where it was 32 % in 1978, households giving charity every two weeks, in 1999 it fell to 25 %.Over all the trend is that generation pre world war two is more giving compared to those who were born post world war two. Now the portion of people who are consistent in giving charity has declined magnificently. Civic core basically gives money now from their wealth for the betterment of the society. The adult population provides ninety percent of their time for the charity work (BAINES, D., & CUNNINGHAM, I. 2011). The funding is coming from a small percentage of people in UK , now the concern is regarding the people who are not giving their share in the charity work, also the people who are giving getting the recognition compared to those who are not giving and living more like free riders in the society. The concern which is important here is the role of voluntary work which is taking a shape of a duty being performed more than personal wish. Here people who are not giving are basically not fulfilling their duties towards the State as voluntary work is a compulsion. Act of voluntary work is an important act of society and all the governments of England played their role in encouraging voluntary actions in UK. There are various forms of funding of Voluntary work in UK, one of them being Gift aid which was introduced by the conservative government of John Major and later on expanded by the labour administration. The general concept is public spending which is conducted for the betterment of the society which is basically getting more with less. Various voluntary organizations of UK are trying to sustain and maintain good quality of work which they offer along with safeguarding their position. For some politicians of UK voluntary work conducted is restricted to better quality of work provided by the State, on the other hand for some it was a great tool for cost effectiveness. Some wants a partnership with such voluntary organizations with the aim of earning profit. Voluntary sector of UK is largely dependent on the statutory funding. Overall the UK voluntary sector is a huge tool and weapon in the economic and social force of UK. The figures clearly show how well it is funded in UK and the success and share is just increasing with the passage of time. In 2006/07 the voluntary organizations were about 170,900 which was also a number more than what it was a year before that. The income earned by the voluntary sector also showed an increasing trend as it was 33.2 billion pounds. This sector was moving upwards with an increasing trend in the statutory income which showed an accumulated total of 12 billion. Although the income increased but UK government share of public services is huge (BAINES, D., & CUNNINGHAM, I. 2011). Government is spending a lot on public sector along with the services being delivered by voluntary sector also increasing. Voluntary Sector of UK where is independent and at the same time being dependent on the government funding basically do not share a financial relationship with the government of UK. An estimate shows about 117,000 voluntary organizations where about 75% are free from government funding and are also not involved in contract income. Majorly the organizations are small. Very few percentages of these voluntary organizations have a financial relationship with the State (BAINES, D., & CUNNINGHAM, I. 2011). Now about 40,000 organizations working for the benefit of the society and being dependent on government funding rely on the government income, where 27000 organizations gather three quarters income from the medium and large statutory sources. It is crucial for the voluntary sector to have a relationship with the existing government in such situations. Funding by the local government is another important source of voluntary organizations in fact the local government is the largest source of statutory income which is provided to 46% of the voluntary organizations. Also the central government funding is showing an increasing trend when it comes to voluntary sector income. Voluntary sector which is an integral sector in UK where was largely financed by local government was successful in attracting the central government as well as a great financing partner. Overall as of yet a small portion of voluntary funding is done by the central government. The funding is basically divided between the departments and communities of the local government whose major budget is allotted to the voluntary sector. Now the form or the way funding is done also showed a change, where grant and contracts were the basic tools, statutory bodies were using both the grants and contracts for the transfer to resources to the voluntary sector. Where grant played a major role, contracts also became an important factor in the resource transfer. This increasing trend was majorly witnessed due to the contact income showing an increase. This stands true for both the central along with the local government. The major purpose of this being the social care thus major statutory funding is a result of this and for the social care voluntary organizations. There are many workers who are a part of the voluntary organizations along with the major portion of the statutory income being awarded to the larger organizations with more work, employees and huge turnover majorly crossing 1 million as the minimum. The organizations which are medium in size are completely dependent on the statutory income however they are not getting that percentage which the larger organizations are receiving. Two important factors affect the statutory funding, geographical location and the local authority. The amount of government funding is largely affected by the local author. There are almost one fifth and one third of voluntary organizations which are based on the funding done through the statutory funds. Now the geographical locations of these organizations also play a vital role, where the Voluntary organizations based in Humber, Yorkshire, East Midlands and also Wales are majorly looking for government income and funding for their voluntary services and work. Funds being received from the foreign governments and international agencies are basically of very small amount and percentage. International and foreign funding which is received by the voluntary organizations of UK are basically from the European Union. The satisfaction level of voluntary sector organizations is not very high with the funding received both from the national and local sources. The program “Three-year funding” is an important plan showing the relationship with the government. The satisfaction level of organizations which are majorly large and also based in some sub sectors is huge however here the “Three-year funding” is not a very important or major factor, where Gift Aid is an important factor being selected and it is important at both the national level and also non domestic level of charities being performed. Here the social enterprises receive more of statutory funding .The social enterprises therefore plays an important role in the development of the public sector compared to those third sector organizations. National Council for Voluntary organization research conducted basically aims at supporting the practice along with the policies which are made for the development of the community sector in order to perform voluntary work. There is also a National Council for Voluntary Organization Civil Society Almanac which is providing a size overview along with the characteristics and scope being clear of the civil society as well. The guide provided is unique and indispensible for the sector’s trustees, funders along for chief executive officer. There is also an office for the national statistics which aims in providing support for the research program which are important for the quality measurement framework. The civil society in UK now is made of the voluntary sector. The civil society here is made up majorly of the societies, organizations and also the groups which are important for sharing the values associated with the voluntary associations. The organizations are divided into universities, housing development along with the trade unions. There are also political parties who are important along with the co operatives and schools which are completely independent. Income generation for these charitable organizations is not a very easy task this the voluntary sector is dependent on the already existing organizations along with the creation of new organizations and this sector is looking for funds based on various activities. Now the basic funding or the income generation for the voluntary sector comes from the private sector, there is also internal funding along with various statutory sources. Voluntary income from individuals, statutory sources, voluntary sources, private sectors, family foundations, charitable grant makers such as the Big Lottery Funds, Welcome trust, Christen Aid and various others and also the community foundations contribution towards the voluntary sector of UK (Bridgend Association of Voluntary Organizations,2012). There are 162,440 charities present in the UK during the year 2007 which then increased to almost 180,909 during December 2010. In 2007, 2008 majorly organizations almost 133074 which is 78% of the organization present at that time did not receive any funding from the government, these organizations were based totally on the individual funding which was 13.1 billion pounds which was 37% of the annual income (UK Fundraising 2010). Individual funding is an important source of funding in the voluntary sector of UK. There is a major role played by the individual sector when it comes to the funding of voluntary organizations. About 56% of individual households immensely donated for charitable work in UK. Almost 12 pounds were donated per person of we calculate it through median and about 31 pounds calculating it through mean. A total of 10.6 billion pounds is donated. There is a huge impact of the donors which are of high level, which is of donations more than 100 pounds, basically increased from 6% during the year 2005 and 2006 to 8% during the year 2009 and 2010 (Charity Commission for England and Wales 2012).   There was a decrease in the charities given by individual households due to recession during the year 2007, 2008 and 2009 however during 2009 end and 2010 there was an increase in the individual donations given for the funding purpose which was about 10.6 billion pounds. There was also an amazing reputation and demand of overseas causes and about 24 % donors were involved in overseas causes. Haiti appeal played a significant role for this cause and purpose. Medical research is one favourite area of donators along with religion causes being another important factor (North Yorkshire County Council pg 32) Donations come majorly from women comprising of 68% of age between 45 and 64, least being young men of age between 16 and 24 which comprises of 31 percent donations. Also proper professionals and managers provide great donations of about 19 pounds on average with almost 69 % of population being a part of it. Cash is one favourite mode of donation and almost 50 percent of donors paid in cash, direct debit mode is another important way of payment being done however for larger amounts, cheques and debit cards are preferred. Gift aid scheme is used by almost 40 % donors and people giving huge donations majorly use the gift aid which is for donations of more than 100 pounds compared to those giving 10 pounds or even less (The Steve Sinnott Foundation 2012). There was a total income of 36.7 billion pounds of the voluntary organizations which was divided into 2.1 billion incomes coming from the grant making organizations and other sources basically generate an amount of 34.5 billion. Apart from funding another important aspect is the expenditure of the voluntary organizations which was about 36.3 billion in the current year which is 99% of the total income. Operating surplus however is not something which is a part of this as the capital, building and equipment expenses are not added here (UK Fundraising 2012).   Statutory sources are also important source of funding for the voluntary organizations which are not including the national lottery in there. In 2007 and 2008 4195 pounds were donated by them for the voluntary work. Charity work was not that much affected by the recession of 2007 and 2008 compared to the voluntary organizations suffering during the recession of 80s and 90s (Bridgend Association of Voluntary Organizations 2008). The problem is tolerating the decrease in the income along with the pressure which exists regarding the services being offered. The role which is played by the voluntary sector along with the civil society is huge and immense; they are responsible in removing social tensions along with creation of social cohesion and eliminating the negativity from becoming a norm of the society. It is not just about delivering best services but also the trust which is generated along with connection and confidence between the communities. Another important funding source is the Statutory funding which basically constitutes of the UK central along with the devolved and local administration. It also consists of the overseas governments along with international bodies and national lottery distributors. Now the earned income is divided as income coming from contracts and also the income which is earned through the grants. Statutory income constitutes of 36 % or one third of the voluntary sector funding (Voluntary and community organizations awarded 2007) Overall highest is the individual sector income which is 38% followed by the voluntary sector makeup and the funds which are internally generated which is almost one tenth. Private sector funding is almost 5 percent which is of the entire sector’s income (Essex County Council, 2007). There is also a huge level of funding which is done by the national lottery which accounts for almost 2 percent of the total income being earned. There are about 40,000 voluntary organizations relying on the relationship which they have and share with the State. Now the statutory income is also divided into the income which is from the public sector and then the income coming from the private sector (London Borough of Richmond upon Thames 2012) There is also a significant change in the way funding is conducted along with the nature of the voluntary funding changing along with a change in the purpose. These voluntary organizations are now playing a role on behalf of the government which was originally by the public sector. Contracts now are a more popular mode of statutory funding as appose to the grants which was earlier a preferred choice. Research and Capacity building is one preferred form of the sector and the earned income is something which is preferred as appose to the entire funding mix (Merton Council – Home, pg 45). There is another important and famous voluntary sector funding mode which the national lottery earns which is through the sale of the lottery tickets along with the HM treasury. Now social service organizations are not very famous and well dependant source compared to the statutory funding organizations. Almost half of the organizations performing voluntary work are dependent on the relationship which they share with the government (Department of Health 2012-2013). There are basically four important sectors of voluntary work in the UK which are largely dependent on the statutory income and their relationship with the government hence is important here, these sectors include the advocacy and law sector which is almost 54 % along with the education sector comprising of 52 %, housing and social services being 51 percent each. Now these are the sectors which are closely linked with the State and are working with the public sector along with the government role being extremely important (UK Charities and Voluntary Organizations 2009). Now the amount of the funds received also varies where on one hand few departments end up in getting more income compared to others having less amount of the income, it all depends on the government and the priorities which are set by them. Now the sectors which are getting more percentage of the statutory income are more involved ones and comprises majorly of the training, law along with employment, education and also social services (National Archives, pg 23). Service delivery is immensely important for the voluntary organizations. It is important for them to meet the needs and requirements of the communities. Here it is important to recognize the social life along with the economic, cultural and also political life. Medium sized voluntary organizations are majorly dependant on the statutory funding compared to the government funding. Larger organizations are on the other hand receiving more from the government. Small organizations now are getting their funds from government but it is of a very small percentage (local direct 2006) Funding shifting is also a common trend which from more of contract based funding rather than grant based funding. Contract being used provides bad points to that sector that is providing services to wider sector (Protecting childrens rights 2012). Another important source of funding for the voluntary sector is the central government. Departmental returns which are to the office of the third sector along with the charities aid foundation are major sources of funding which is through the central government. Now core voluntary sector is one well reputed sector as far as the central government is concerned (Calder dale Council 2012) There are also some of the national housing agencies which are involved in the central funding process. Now the donations for the core sector were also showing an increasing trend from 2004 till 2006 onwards. This basically targets the Home office community which was available when the voluntary sector and the policies related to it were introduced. Now the spending of the government plays an important role which is based on the sector budget which is majorly based on the local government along with the housing work and income (Essex County Council 2005). Where the local governments are playing a huge royal in funding the voluntary organizations, the central government is also showing an upward trend when it comes to the funding for the charity work in UK. The income is divided into income generated through the contracts which is through the fees coming from the local authorities along with the grants being offered as well. Now almost half of the income from the local government is given to the social service sector which is involved in the voluntary work. Now these contracts are granted to the sectors which are involved in working for the housing sector of UK along with the health, culture and also recreation sector which is from the local government (The State and the voluntary sector 2010). Almost 32 % of the funding is coming from the local government , now it also depend on some important factors such as the area and location, places deprived from facilities will receive more local funding . Thus it is for the communities who re majorly deprived (Funding for the voluntary and community sector 2006). The geographical locations and the size also played an integral role in deciding the proportion of income coming for the organization. Almost 76% of the statutory income will be given to the larger and major organizations. Now the voluntary organizations are doing social work for the society by receiving income from the government (Volunteer Work Abroad) .The proportion of the funds being divided is dependent on the voluntary work which is done for the area, the government will thus grant income and funds depending on the area where it is located and is a part of. Various areas of England and Wales receive more funds from the government as they are more deprived communities. The funding here is small and sometimes of various sizes, all the varieties of the contracts and grants are thus offered (UK double 2011). Some areas have very less and few State funding and then there are few areas which receive huge amount f funds from the government. Over all almost all the places receive almost 18 percent to 33 percent of the government funding in order to perform their voluntary work. Now places like East Midlands, Wales, Yorkshire and also Humber are majorly dependant on the government funding. Income here is more than half which is of the sector. Northern Ireland is making half of the income as per the statistics displayed by the Northern Ireland Council which is working for the voluntary actions and tasks (UK Fundraising 2012). There are various modes of transfers which are used by the resources by the voluntary sector. There are some important flows which are thus involved which include the grants which are the voluntary incomes along with the contracts which are therefore the income which is earned. The income which was generated through contracts showed an increase when the income earned through contracts is analyzed along with the pace and speed increasing as well. An efficient accounting practice here is important and crucial (National Council for Voluntary Organizations 2011). There was a decrease in the grants which was of almost 400 million pounds. This decline was deeper and it is visible through the grants being offered. Over all it is seen that it is difficult for the smaller and local organization to work through the grant funding whereas the grant funding is one favourite mode of the central government. We can see an increase in the contract income for both the local and central government. The sector has some important value for the contracts (Voluntary Sector Investment Programme 2012) There is one more important source of funding of the voluntary organizations and that is the foreign government along with the international agencies. European Union and the United Nations are two important agencies which are an important source of funds being provided to the voluntary sector. In 2006 and 2007 the foreign government along with the international agencies provided 615 million pounds which was basically 1.9 percent of the total income. It is depicting the role and importance of the charity which is in UK and also in other countries. There are almost 13500 organizations which are providing benefit to the areas which are based overseas and the reach is global (London Borough of Bexley 2009) Now the existence of these organizations is basically in London and thus they get a benefit of being in the capital city which is that foreign government will donate to these voluntary organizations with an open heart. These foreign donors basically comprises of the Japanese governments, Scandinavian and also US governments who are providing major aid and foreign support to the voluntary organizations which are working for the society. The economic and social problems are covered by the voluntary organizations which are receiving European funds and aid. There are some structural funds which constitutes of the major funds and they totalled to about 309 million pound. Here the target was done through the geographical location and was based on the employment along with the training which was distributed. Here the structural funds clearly indicate a benefit coming from London, North West along with the Humber and Yorkshire (Home and community 2006). UK will receive about €9.4 billion from the funds which are the structure funds and it will be between 2007 and 2013. It is also important to keep in view the tax reliefs which are provided to the charities. There is one more important tool and source of the funding which is provided to the voluntary sector of UK and that is the statutory sources tax relief. There is some important subsidies expenditure which is present from the range of tax reliefs and is for the betterment of the UK charities. These help in increasing the income which is provided specially the gift aid payments. There are also some taxes which are paid by the voluntary organizations which are majorly employer’s national insurance contribution along with the VAT. The cost of the taxes was about 3 billion pounds in 2007 and 2008 which was more compared to it being 2.1 billion during the year 2000 and 2001 (Funding Central 2007). As per the recent statistics in 2012 the donating proportion decreased, from 58 percent to 55 percent this year. 28.4 million Adults gave charity with generously during the year 2011 and 2012. Median value per donor was 12 pounds during 2009 and 2010; however it decreased by one pound and became 11 pounds per donor during the year 2010 and 2011. Sadly the fall was constant with one pound decrease again during the current year 2011 and 2012 and it is now with the median value of 10 pounds per donor. 2011 and 2012 also remained a good period for donors giving cash as about 50 percent gave charity through cash as appose to the records in 2010 and 2011 where debit accounts were used majorly for charity work and donations which was about 31 percent (Camden Council 2010) Even in the year 2011 and 2012 women were more charitable as women of age between 45 and 64 gave and more than 65 giving 62 percent of the charity. 15 pounds was given as charity per woman as per the median value during the year. Medical research was the favourite area of interest for the women in giving charity and donations. About 33 percent of the women donated for the medical research work during the year 2011 and 2012. Gift aid was not a very popular mode of donations during the year 2011 and 2012 as it fell from about 42 (London Borough of Richmond upon Thames 2009). Overall there are many sources and sectors which help the voluntary organizations in UK in gathering funds from the government which is not only local government but also the central government. The funds are also raised through donations which are coming from the legacies along with the selling of cards and gifts in order to gather donations. There are also individual fundraising activities which are conducted so that proper amount of funds are gathered and generated. Many organizations are also playing an important role here which includes the role played by the corporate partners along with the event organizers. There are charitable trusts which are formed along with many foundations specially working for the voluntary work. 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