The English Compact - an overseas example

There are commitments by both sides. The Compact includes principles such as recognising that groups are independent and have the right to campaign. The principles underpin the five codes of practice - on Black and minority ethnic sector, community groups, funding, consultation, and volunteering.

The Compact and its codes apply to:

• central government departments, including government offices for the regions
• executive non-departmental public bodies, which have a relationship with the voluntary and community sector
• a range of organisations in the voluntary and community sector.

The Funding and Procurement Code sets out a framework for the financial relationship between the voluntary and community sector and Government and sets out undertakings for both sides.

It emphasises the following principles that should apply at all stages of the financial relationship:

• Focus on outcomes - the achievement of outcomes should be used as a key indicator of the success of funding.
• Simplicity and proportionality - processes should be as simple as possible and in proportion to the amount of money involved.
• Consistency and co-ordination - funders and purchasers should endeavour to join up or standardise parts of the funding or procurement chain to minimise burdens on organisations and ensure a focus on delivery.
• Timeliness - allowing time for planning, decision-making and action so they have real effect.
• Transparency and accountability - allowing informed decisions about spending priorities to be made, and for both government and the sector to learn from previous work.
• Discussion and dialogue - this helps build trust and can identify and overcome problems before they impact on the delivery of outcomes.
• Empathy - understanding each other's needs and requirements should help avoid problems and help achieve outcomes.

The income provided annually by the British Government to the voluntary and community sector is divided almost equally between grants (strategic and project) and purchases (including contracts). This income helps the sector play a full role in society, including:

• using their expertise to inform and implement government policy
• promoting equality and social cohesion, reducing poverty and improving quality of life
• building social capital, which includes developing, supporting and empowering service users, volunteers and communities
• providing opportunities for voluntary action and enabling individuals to participate in public life
• devising cost-effective solutions to intractable social problems
• identifying new needs and better ways of meeting existing needs, including risk-bearing innovation and pioneering models for different or specialised services
• providing high quality services complementary or additional to public services
• delivering public services on behalf of Government and public sector bodies, often in a less bureaucratic but more responsive and cost-effective way than other sectors.

The British Government is committed to establishing and maintaining best practice in funding the voluntary and community sector. The Government undertakes to:

• provide opportunities for the voluntary and community sector to contribute to programme design
• ask for information on application forms that is relevant to deciding who will receive funding or be awarded the contract
• discuss risks upfront and place responsibility with the public sector body or voluntary and community organisation best able to handle them
• respect the independence of the sector
• recognise it is legitimate for voluntary and community organisations to include the relevant element of overhead costs in their estimates for providing a particular service
• with public procurement, avoid seeking information about management fees and overheads
• make payments in advance of expenditure (where appropriate and necessary) in order to achieve better value for money
• be proportionate in monitoring requirements and focus on outcomes
• consider joining up or standardising monitoring requirements
• give enough notice of the end of grants or contracts.

The voluntary and community sector recognises its responsibilities to the funding body and to the public. The sector undertakes to:

• respect confidentiality and to be clear about who they represent and how they came to those views when consulted on programme design
• make sure that they are eligible when applying for grants
• have clear lines of accountability, especially with joint bids
• agree terms for delivery at the outset and be aware of the risks for which they are responsible
• have good systems in place to manage finances and funded projects, and account for them
• be honest and transparent in reporting
• plan in good time for different situations to reduce any potential negative impact on both beneficiaries and the organisation if funding ends.