The Community Sector Coalition (CSC) has already written to third sector minister Angela Smith saying that the draft lacks sufficient focus on the community sector and claiming that the “bulk of it” reads like “a Compact for third sector sub-contractors”.
I think they’re over-stating their case. The draft does acknowledge the importance of community-based organisations. It notes that they are the most numerous groups making up the third sector (estimated at 500,000) and make a contribution to local services, community cohesion, and mobilising volunteer effort.
What the draft doesn’t do is commit Government to any specific actions or principles in its dealings with the community sector. And exactly the same is also true of the social enterprise sector. In fact, beyond generalities, there are many areas where this revised version of the Compact fails to commit its parties to specifics.
Many will be more concerned that the revised Compact no longer mentions the term ‘full cost recovery’ (FCR). Instead, it says that public procurement should recognise the inclusion of relevant “overheads” and “administrative costs” in the prices quoted for delivering services, and notes that “back office functions” are often as vital to achieving success as “other more visible activities” (p.33).
The disappearance of FCR could be attributable to the fact that in June 2007, the National Audit Office published Office of the Third Sector: Implementation of Full Cost Recovery – a report which concluded that FCR was “too difficult to pin down in any practical way”, “too blunt an instrument”, and useful only as “a code” for fairer funding but not as “an accounting treatment”. The report also noted – more ominously – that FCR misleads organisations into thinking “that all costs will be recovered in all situations”.
While NAO’s conclusions about full cost recovery seem difficult to disagree with, it’s nonetheless fascinating to see principles which just a few years ago were being touted as intrinsic to the sector’s future already being quietly airbrushed out of the picture.
Don’t forget to have your say on the draft Compact before the 12th October.