The truth about the amount of government funding that gets eaten up in ‘admin’ is potentially embarrassing, so why doesn’t anyone ever ask about those costs? Jay Kennedy ponders.

It’s interesting how some policy debates and arguments which play out in one place don’t in another – where they obviously should. Sometimes it seems government and the voluntary sector can have a collective blind-spot on certain issues.

Consider how the Department for Culture Media and Sport is proposing to cap the Lottery’s admin costs at 5 per cent.

Or take those perennial debates about fundraising from the public – where a major factor for making a donation is supposedly ‘whether the full donation goes to the cause and how much is spent on admin costs’.

The thought occurred to me: What are the admin costs of government grants and contracts? I’ve never ever heard of that question even being asked. But I would wager they’re way higher than 5 per cent - if you properly account for all the real costs. In fact, I’d go so far as to say that if we knew the truth it would make the DCMS proposals potentially embarrassing.

Recently the Cabinet Office called for ideas from the voluntary sector about how government ‘can do more with less’.

In our response, we argue that the search for savings needs to be connected to the government’s drive to reduce bureaucracy and red tape. Government needs to think much harder about the cost / benefit of what we call ‘funding regulation’ – the systems and processes by which government funds the voluntary sector at all levels.

Funding can work better for everybody

The current financial climate brings pressure to cut programmes. What risks getting lost in the melee of organisational self-interest is that there are relatively simple ways to make the existing funding work better for everybody – not just for government, but for those doing the work on the ground.

We think the argument should be not just about what it is funded, and what that costs, but about how it is funded and what that costs.

So much information is required of funded organisations which has absolutely no discernable purpose. We wade through reams of application guidance and criteria to apply, and then produce reams of reports and monitoring data if we’ve been successful. All of this gets fed into the machine – and as far as we know it might as well be going into a furnace because often we hear nothing about it, except perhaps an acknowledgement that it has been received and the box has been ticked.
 
One thing we’ve been particularly focused on in our Great Giving campaign is the terms and conditions of government grants. Often they run to tens of pages and hundreds of clauses. Many of them unnecessary, unhelpful, unworkable, unintelligible. Contracts suffer from the same problem – a plethora of clauses which are often about government seeking to avoid or transfer risk.

All of this has a cost – it’s not just that all that paper which has to be printed and stored somewhere, but it costs man/womanpower. Lawyers are drafting this stuff. They aren’t cheap – even the government variety. Civil servants have to send the documents out, receive them, store them. Badly drafted and over-complicated agreements also can prove costly in any dispute that may arise.

And this doesn’t just cost the government directly, because it costs us - in time and energy which could be better spent doing other things. It actually makes every pound given in reality worth less than a pound. That ultimately costs the government in the end because its money isn’t being spent efficiently.