Third sector organisations and welfare to work

Third sector organisations can and already do bring a lot to welfare-to-work delivery in the UK. However, quite a few not-for-profits, charities and community organisations aren't sure what Freud, Pathways to Work, flexible New Deal and ongoing changes to DWP commissioning mean for them. So, a quick summary seems in order.

What can third sector organisations bring to welfare to work delivery?

  • Credibility - One of the most obvious reasons for third sector involvement is to reassure benefit claimants, the government and the wider public that contracting out delivery of public services to potentially vulnerable people will be handled ethically, with due concern for and understanding of the needs of customers. Third sector organisations often have better relationships than private providers with Local Strategic Partnerships and Regional Skills Partnerships, rather handy when it comes to working on City Strategies, LSC projects and flexible New Deal, and Working Neighbourhoods Funds.
  • Additional funding streams - Organisations such as Shaw Trust and Tomorrows People have a history of non-governmental financial support. By aligning this with government-funded social activities, it may be possible to find synergies or economies of scale that benefit both funding streams.
  • Specialist expertise - Mainstream welfare-to-work providers may struggle to assist customers with specific needs. Many charities exist solely to help people with disabilities or health conditions, drug or alcohol addictions, or various other needs.

What opportunities do the new contracts offer?

  • Direct bidding - Some charities, such as Remploy, Shaw Trust, and RBLI, are large enough and experienced enough to bid for the new, larger contracts. This is not the case for most third sector organisations, as much of welfare-to-work delivery is likely to be outside their remit, even on specialist contracts such as NDDP or Pathways to Work.
  • Subcontracting specialist services - A more comfortable place for specialist support organisations is in providing their support to a range of providers under a subcontracting arrangement. Most DWP contracts require providers to ensure they can deliver suitable provision to customers regardless of their needs. However, making a convincing case to one of the large providers can be a difficult task, given the daily barrage of offers they receive from would-be subcontractors.
  • Referral pathways - If you already have your own funding, and would like to tap into providers to access potential beneficiaries of your support, then you're in luck. Providers are always looking for added value to give them the edge over their competitors, so you should have no problem getting into the tender. In actual delivery, you'll need to market your services to the local operational staff to get referrals, but provided your customer base includes people they have to deal with, and your support helps them to move towards employment, you shouldn't hit too many problems.

What are the risks to third sector organisations?

  • Mission drift - Delivery risks and commercial imperatives could distort the core mission of charities, making them less focused on the needs of those they're meant to be helping. At the very least, this could see a clear split emerging between campaigning organisations such as the Disability Alliance, which spoke out against the reduction in benefit payments that will hit former IB recipients once the new ESA benefit rolls out, and delivery organisations such as Shaw Trust, which, er, didn't.
  • Window dressing - If government contracts encourage cherry picking, then welfare-to-work providers will face a sticky problem. It will be in their interest to link with specialist organisations as part of tendering, but they won't benefit from working with harder-to-help customers in actual delivery. If you're a specialist provider working with the hardest-to-help it would be actively damaging to the provider to pay you large amounts of money for a low job entry rate. If you're funding the service without charge, this risk clearly doesn't apply.
  • Commercial risk - Subcontracting requires a clear idea of the customers and their support requirements, your likely impact on job outcomes and sustainment, and how you'll ensure full cost recovery for providing these services. Even if you're paid at the point of service rather than on job outcomes, it's good to have an idea of how much value you're giving to providers. After all, they're getting paid for job outcomes. It's also worth taking note of the traditionally onerous paperwork requirements of government funding, although flexible New Deal is claiming an online system will relieve this burden somewhat.

How do we get in touch with welfare-to-work providers?

Charity support organisations have set up online partner matching facilities to support you in marketing yourself to providers. Additionally, the DWP website will publish a list of e-mail addresses of providers who attend the flexible New Deal briefings taking place over the next week, and the winners of Pathways to Work have been published both on this site and on the DWP site, with NDDP and ESF results coming out shortly. Just be aware that you're going to be one of many, so you'll need a compelling reason for them to partner with you.

If they do partner with you, you'll need some kind of service level agreement to guide your joint expectations. The DWP appears to have indicated it will start policing prime and subcontractor relationships in its new commissioning strategy, so if you get something in writing it may actually be worth the paper it's written on. At any rate, you'll need something legally binding before you start delivering!

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