Factors Holding Back Small Third Sector Organizations’ Engagement with the Local Public Sector

• DOI: http://doi.org/10.1002/nml.21260
• Published date: 01 June 2017
• Date: 01 June 2017

513

N M  L, vol. 27, no. 4, Summer 2017 © 2017 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/nml.21260

Journal sponsored by the Jack, Joseph and Morton Mandel School of Applied Social Sciences, Case Western Reserve University.

Factors Holding Back Small  ird

Sector Organizations’ Engagement with

the Local Public Sector

Piers  ompson , 1 Robert Williams , 2 Caleb Kwong 3

1 Nottingham Trent University , 2 National Entrepreneurship Observatory , 3 University of Essex

In many developed countries there has been a shift from grants to contracts as a source of

local public sector funding of the third sector. Smaller third sector organizations may strug-

gle to compete for this funding due to the complex process of accessing and maintaining

this funding and conveying their capabilities to funding providers. This study utilizes data

from the United Kingdom to determine what factors increase these administrative and

communication barriers for smaller organizations. Resources in income and volunteers

affect perceptions of the process of obtaining funding. A solution may be standardization of

evaluation and monitoring, but this may lead to isomorphism and loss of variety of provi-

sion. Better two-way communication may allow local authorities to retain variety in public

service provision through improved knowledge of their partners.

Keywords: United Kingdom , finance , administrative burdens , impact assessment

THE THIRD (NONPROFIT) sector is seen as a key contributor in providing public services in

many developed countries, including Australia (Furneaux and Ryan 2014 ), Germany (Bode

and Brandsen 2014 ), Italy (Ranci 2015 ), United States (Garrow 2010 ; Pettijohn et al. 2013),

and the United Kingdom (Cliff ord, Geyne-Rahme, and Mohan 2013 ). It has the advantage

of being able to more successfully engage with hard-to-reach groups (Fyff e 2015 ; Lu 2015 ).

However, when attempting to access public funds, third sector organizations struggle to com-

pete with private and public sector providers on a pure fi nancial basis and must emphasize

their additional social contribution (Arvidson 2009 ; Flockhart 2005 ). For smaller third sec-

tor organizations with fewer resources, highlighting their full impact to show their additional

value is problematic (Bovaird 2014 ; Osborne and Super 2010 ; Ranci 2015 ).

Much of the work examining these difficulties has relied on smaller case studies (Senyard

et al. 2007 ), and less attention has been paid to examining which factors have the greatest

influence, whether internal resources or external environmental factors (Kendall and Knapp

2000 ; Westall 2009 ). In this study we investigated the difficulties faced by UK third sector

organizations with the fewest employees in accessing local government funding in terms of

Correspondence to: Piers  ompson, Nottingham Trent University, Nottingham Business School, 8th Floor Newton

Building, 50 Shakespeare Street, Nottingham NG1 4FQ United Kingdom of Great Britain and Northern Ireland.

Email: piers.thompson@ntu.ac.uk.

Nonprofi t Management & Leadership DOI: 10.1002/nml

514 THOMPSON, WILLIAMS, KWONG

their perceived difficulties in overcoming administrative burdens and communicating suc-

cessfully with the local public sector.

The analysis used a large dataset containing information on perceptions of the environ-

ment created for the third sector in the United Kingdom, the National Survey of Chari-

ties and Social Enterprise (NSCSE). To examine which factors have the greatest effect for

different sized organizations, we adopted a regression approach using subsamples based

on employment.

The structure of the remainder of the article is as follows. The next section covers the litera-

ture, setting out the context and policy climate faced by third sector organizations looking to

access public sector funding. The third section introduces the NSCSE data and approaches

utilized to analyze organizations’ satisfaction with funding arrangements and ability to com-

municate their value. The results of this analysis are reported next. The article closes by sum-

marizing and examining the conclusions that can be drawn from the study.

Policy Developments and the Implications for

Third Sector Funding

The public sector remains the largest single source of third sector funding in many developed

countries (Clifford et al. 2013 ; Pettijohn et al. 2013). The last Labour Government in the

United Kingdom encouraged the third sector to become involved in the provision of public

services, but Carmel and Harlock ( 2008 ) have argued that the policies pursued under the

premise of partnership allowed governments to turn the third sector into a “governable ter-

rain.” This effectively “privatized” social provision in countries such as the United States and

United Kingdom (Åberg 2013 ; Garrow 2010 ; Lu 2015 ).

Austerity measures being pursued by governments, particularly those in the European Union,

have ensured the continuation of this process (Rees, Mullins, and Bovaird 2012 ). In the

United Kingdom, the Conservative Government manifesto for 2015–2020 outlined policies

to encourage third sector delivery of services, including strengthening community rights and

generating greater opportunities in education (academies/schools) (Conservative Party 2015 ).

The Localism Act (Department for Communities and Local Government 2011 ) aimed to

devolve more decision-making powers to individuals, communities, and councils at a local

level. In addition, the 2012 Public Services (Social Value) Act (HM Government 2012 )

requires service commissioners in England and Wales to “have regard” to the social value

when buying services. The levels of contracts covered by the Public Services Act are lim-

ited but under review (Cabinet Office 2015 ), increasing the importance of the relationship

between local government and the third sector.

Accessing public funding may have required third sector organizations to adapt to the public

sector ’ s requirements (Thompson and Williams 2014 ), compromising their key attributes

and values (Harris 2010 ), particularly when competing against other organizations (Seo

2016 ). Garrow ( 2010 ) provides US evidence that the public sector benefits because there

is greater collaboration and concentration on fulfilling the local government ’ s needs. Simi-

larly, in the United Kingdom, the changing funding environment has been associated with

increased efficiency (Rees et al. 2012 ). However, greater contact and collaboration with the

public sector provides legitimacy and security (Garrow 2010 ).