Charitable Sector

Baroness Greengross Excerpts

Tuesday 5th October 2010 Lords Chamber

[Baroness Greengross]

My Lords, I have worked in the charitable sector for more than 35 years, nationally and internationally, and, indeed, I still do. Noble Lords will understand the passion that I feel about the work that charities do. I add my thanks to the noble Lord, Lord Taylor, for initiating a very important and timely debate.

The charitable sector in this country is renowned for its innovation; it has been over the years and, one could say, over the centuries. It really is the third arm of society: we have the state, the private sector and civil society. It is extremely important but, more than that, we have an enormous variety of charities. With the philosophy of a thousand flowers blooming, we have always had this huge variety, and it is very dear to the national character of this country.

The variation in the sector is extraordinary. We have, for instance, the lifeboat service, big international charities such as Oxfam and the little organisations which make up the majority. Those are usually established because people have experienced life-changing or tragic circumstances, such as the illness of a child. They feel that they must get together and work very hard as volunteers to right a wrong or actively pursue a cause. The majority of charities are tiny: only 0.3 per cent have an income of more than £10 million, and 53 per cent have an income of less than £10,000. These are very small local initiatives.

The Government say that they are very committed to giving increased power to the charitable sector and increasing its role. That is excellent, but in doing so they have to be very careful. For many charities, very rapid growth can sometimes be a problem. I have had experience of this in a big organisation—a federation of charities, some large and some small—and saw how very rapid growth can be difficult if people have not learnt how to manage it or had the appropriate time to adjust to a completely new way of managing an organisation.

Secondly, many charities change dramatically from being independent bodies. Their whole role changes. They start with a strong role as an advocate in representing a particularly vulnerable group in society, which is important. Then they change into the sole provider of a service to the state. They become a contractual provider of a service, often paid—quite rightly—a per capita income, which is their sole income. They are then faced with a difficult situation: can they still go on representing the group, or are they putting their funds at risk? Can they go on being independent when they are under a contractual obligation? These are very difficult situations but they happen often. The Government—whether at a local or national level—have to be careful to get the balance right.

Rapid growth does not always mean greater efficiency. Today staff costs in the charity sector represent around 41 per cent of expenditure. That would not be an appropriate percentage in the private sector. Sometimes we have to question how efficient the charity sector is in its management. These things need to be watched because with rapid change they are difficult to get right. Despite this, I make it absolutely clear that I have total commitment to the charity sector. It does invaluable work and is a cornerstone of our society.

In saying this, we know that the charity sector has to live in the real world. It is in the real world, in which we find ourselves today, that we have to exist. Financial stringency applies to everyone. We need to be careful, again, to get the balance right. When cutting back state provision we must be careful that we do not revert to some of the more unfortunate philosophies of 19th century charity. That is not how we live in the 21st century. We have a different attitude towards the people that the charities represent. On the other hand, the charity sector must also never be viewed as a cheap solution to social ills if it takes over a function from the state. It is worth remembering that in the original language of the Bible, the word for “charity”—tsdokah—is the word for “justice”. Justice is what charity must always be about.