Policy paper

2010 to 2015 government policy: social enterprise

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/making-it-easier-to-set-up-and-run-a-charity-social-enterprise-or-voluntary-organisation. Current policies can be found at the GOV.UK policies list.

Issue

Charities, social enterprises and voluntary organisations (also known as the voluntary, community and social enterprise (VCSE) sector) exist to help others, often helping people to improve their lives and communities. A vibrant civil society can also make a big contribution to economic growth and better public services.

These organisations are sometimes frustrated by red tape or other problems, or because they don’t have the support they need to do their work.

We want to make it easier to set up and run a charity, social enterprise or voluntary organisation, and for organisations to get the help and support they need to grow and be able to carry out more of their important work.

Actions

We are removing red tape and improving regulation by:

• dealing with barriers and bureaucracy identified through the Red Tape Challenge and the Unshackling good neighbours report
• introducing a new legal structure for charities - the Charitable Incorporated Organisation (CIO) - that will make it easier to set up and run a charity
• putting Lord Hodgson’s recommendations from his review of the Charities Act 2006 into action

We are improving the support available to VCSE organisations by:

• increasing the number of volunteers, supporters, and partners involved with the sector and helping them to adapt to new challenges through the Transforming Local Infrastructure Programme, the Strategic Partners Fund and the Advice Services Transition Fund
• raising awareness of the Compact across government
• helping charities and social enterprises find funding and finance by supporting the Funding Central and Contracts Finder portals

We will help the VCSE sector grow its skills and leadership talent, and manage new opportunities and risks better by:

• supporting Dame Mary Marsh’s review of VCSE skills and leadership – which reported in spring 2013
• running Commercial Skills Masterclasses in 2013 - with the help of the VCSE sector and private sector - to help VCSE organisations develop useful commercial skills
• working with partners to support the sector’s digital capability
• encouraging VCSE organisations to take advantage of community rights - helping communities take greater control of their local area

We have extended an exception (allowing some religious charities not to register with the Charity Commission) until 31 March 2021. This will give the charities and the Charity Commission time to prepare as all charities move towards consistent regulation.

Background

The Office for Civil Society was created to support and strengthen the varied range of organisations that make up civil society. Its long term strategy is built around 3 goals:

• make it easier to run a charity, social enterprise or voluntary organisation
• get more resources into the sector and strengthen its independence and resilience
• make it easier for civil society organisations to do business with the state

These were set out in Building a stronger civil society: a strategy for voluntary and community groups, charities and social enterprises, published in 2010.

The coalition programme for government included the government’s plans for reform and set out how government intends to give communities more power and encourage people to take an active role in their communities.

Who we’ve consulted

In May 2012, the Civil Society Red Tape Challenge put 3 questions to the public and civil society organisations (CSOs) about what they think will make it easier to be able to run or be involved in a civil society organisation:

• is there red tape that stops you giving your time or money?
• if you run a civil society organisation are there rules and regulations that stop you making it more successful?
• should it be easier to invest in social ventures?

The Civil Society Red Tape Challenge was open to answers and suggestions from May to mid-September 2012. We are now taking action to tackle the existing rules and regulations that are getting in the way of civil society organisations.

Bills and legislation

The Charities Act 2011 provides the legal and regulatory framework for charities in England and Wales and combines previous charity legislation. The act covers important rules, such as the definition of a charity, the requirement of charities to register with the Charity Commission, and how to prepare and submit annual accounts and reports.

The Charities Act 1992 and Charities Act 2006 contain some important rules on fundraising.

Who we’re working with

As representatives of a broad cross-section of civil society organisations, the Office for Civil Society Strategic Partners help their members understand and benefit from new opportunities arising from the government’s localism, open public services and giving agendas.

The Office for Civil Society Strategic Partners programme funds 8 VCSE sector partners to:

• represent the sector to government
• support partners so they can become independent of government funding
• support the development of a stronger civil society by running training and development activities, contributing to policy development, and working with civil society organisations

We are providing around £8.2 million in funding over the 4 year programme. The largest portion is given in the first year with the amount decreasing each year.

There are 8 strategic partners:

• Association of Chief Executives of Voluntary Organisations (ACEVO), in partnership with Euclid Network and New Philanthropy Capital (NPC)
• National Council of Voluntary Organisations (NCVO) - including Volunteering England
• National Association for Voluntary and Community Action (NAVCA)
• Locality
• UK Community Foundations (UKCF) in partnership with Association of Charitable Foundations (ACF)
• Institute of Fundraising
• Social Entrepreneurship Partnership (School for Social Entrepreneurs, UnLtd, CAN, Plunkett Foundation and Social Firms UK)
• Social Enterprise UK in partnership with Co-operatives UK

There are 3 main features to the commitments the strategic partners made as part of the programme:

1. Continued representation of the sector to government and vice-versa, including providing visits and events for ministers and officials – a main requirement of the programme

2. Office for Civil Society (OCS) Priority Themes – these are a small number of cross-cutting themes that the Strategic Partners work together on and share expertise, with an aim to achieve better results for the sector

3. Partners’ specific offer to the Office for Civil Society – these activities were included in their original bids to join the programme and, in many cases, involve their core activities and help support the programme’s objectives eg NCVO’s Third Sector Almanac

Appendix 1: the Compact

This was a supporting detail page of the main policy document.

The Compact is the agreement between government and the voluntary and community sector (often referred to as civil society) which sets out a way of working that improves their relationship and gives mutual benefits. It looks at areas such as involvement in policy design, service design and implementation, funding plans, promoting equality and increasing independence.

It was originally launched in 1998, making the current compact the third version. The latest version was published in December 2010, due to developments in policy that took place because of the change in government and the resulting legislative programmes. It is also included in a number of cross-government actions such as the Cabinet Office’s Procurement Guide, and the Code of Practice on Consultation.

Every government department is signed up to the Compact, with the Office for Civil Society overseeing how it’s put into use across government. Every government department should also have an identified officer responsible for making sure the Compact’s principles are at the centre of all relevant activities.

Most areas in England also have a Local Compact, which changes the Compact’s principles to reflect local need. Local Compacts may cover different local government areas, and might be set up in district, county and regional Compacts. Different partners will have developed and signed up to their Local Compact, and can include councils, health and social care organisations, police, fire, and housing.

Communities are able to benefit from greater involvement in policy design, improved reach and understanding, better commissioning and procurement, and stronger support for the voluntary and community sector by following the principles set up in a Local Compact.

The Compact is accompanied by an accountability and transparency guide, which outlines steps the voluntary sector organisations and others can take at national and local level if Compact principles are not followed.

Compact Voice

Compact Voice represents the voluntary and community sector on the Compact. Compact Voice jointly signed the national Compact and negotiated its content on behalf of the voluntary and community sector, based on the views and opinions of their members.

Compact Voice’s board includes representatives from support organisations such as the National Association for Voluntary and Community Action (NAVCA), National Council for Voluntary Organisations (NCVO), Association of Chief Executives of Voluntary Organisations (ACEVO) and others. A full list of board members is available on the Compact Voice website.

The organisation provides information, training, and support and advice to both sectors on better ways to work when in partnership - nationally and locally – and represents the voluntary and community sector’s interests to government, helping to support the principles of the Compact.

Find more information about Compact Voice’s work and the resources available, including a number of case studies about its use

Appendix 2: cutting red tape

This was a supporting detail page of the main policy document.

We set up the Civil Society Red Tape Task Force in August 2010. In May 2011, the Civil Society Red Tape Task Force made 17 recommendations to government on cutting the red tape involved in civil society organisations (CSOs).

The progress government has made on those recommendations can be seen in the publication ‘Unshackling good neighbours – one year on’.

‘Making it easier to set up and run a charity, social enterprise or voluntary organisation: progress update’ provides a summary of the government’s progress in cutting red tape for civil society organisations.

Appendix 3: Charitable Incorporated Organisation - a new structure for charities

This was a supporting detail page of the main policy document.

Most charities currently exist as either trusts or unincorporated associations, but these structures give their volunteer trustees a legal responsibility for any debts the charity creates. To protect trustees from this responsibility, charities previously had to register as a company – a process that can be too expensive or complicated for some small and medium-sized charities.

Charitable Incorporated Organisations (CIOs) are a new legal form for charities that stops a charity’s trustees being responsible for its debts. The final legislation passed at the end of 2012, making it possible for new organisations to register as a CIO from January 2013. CIOs are registered through and regulated by the Charity Commission for England and Wales.

Appendix 4: Advice Services Transition Fund

This was a supporting detail page of the main policy document.

The Big Lottery Fund launched the Advice Services Transition Fund in October 2012 and the assessment process for this fund is now complete. Around £68 million is being awarded to 228 partnerships in England. The Cabinet Office is supporting BIG’s programme by contributing half of the funding.

Alongside the launch of the fund, the government also published a review of the not-for-profit social welfare advice sector.

The fund welcomed applications from partnerships of local not-for-profit advice providers who were able to come together and show new ways of working that will improve local services.

Partnerships had to:

• reflect the needs of the people and communities in their local areas
• include providers of welfare benefits and debt, housing and employment advice
• show that they have plans in place to improve efficiency, adaptability and quality of service over the long term

Grants of between £50,000 and £350,000 are being awarded to successful partnerships, to be spent over 2 years. The fund will support advice providers in more than 220 English second tier local authority areas, with around 1,500 frontline organisations benefiting through membership of a funded partnership.

Appendix 5: Lord Hodgson’s review of the Charities Act 2006

This was a supporting detail page of the main policy document.

In July 2012, Lord Hodgson published his review Trusted and independent: giving charity back to charities - review of the Charities Act 2006’. His report had over 100 recommendations to “give greater freedom to charities and their trustees, encourage the development of social investment and lead to a greater degree of public participation”.

In December 2012, Nick Hurd, Minister for Civil Society, published an initial response to Lord Hogdson’s recommendations.

The Public Administration Select Committee (PASC) carried out its own enquiry into the regulation of charities and reported in June 2013.

We carefully considered both reviews and listened to feedback from charities before publishing the government’s response to both reports on 5 September 2013.

We are also taking forward several recommendations as part of the Law Commission’s charity project, which began earlier in 2013.

The government will report on progress in implementing the recommendations that were accepted in 2014.

Appendix 6: Dame Mary Marsh – Social Sector Skills & Leadership Review

This was a supporting detail page of the main policy document.

In October 2012 Nick Hurd, Minister for Civil Society, asked Dame Mary Marsh to lead a review into leadership and skills in the voluntary, community and social enterprise sector.

Dame Mary brought together important and influential people in the sector and from business to look at the challenges and opportunities faced by the sector and how these could be dealt with effectively. The aims of the review were to:

• gather and review new and existing evidence of the sector’s most important skills/leadership needs
• gather and review evidence of how effectively current support is meeting these needs
• consider whether or not current initiatives are reaching enough organisations and performing well enough
• look at how the sector may be held back by not fulfilling identified areas of need
• recommend ways the sector can make effective changes in order to improve and maintain its skills and leadership capability, and how these recommendations can be put into action

The findings of the review and the thinking it generated were published in spring 2013 on the Leading Social website. The government is working with the sector to build on Dame Mary’s findings by implementing key recommendations.

Appendix 7: helping civil society organisations develop useful commercial skills

This was a supporting detail page of the main policy document.

We are working with private sector providers and civil society organisations to run a series of ‘commercial masterclass’ workshops. These are designed to help civil society organisations gain practical commercial skills, especially around commissioning and obtaining services. Masterclasses will take place until the end of March 2014.

These complement the work of the Commissioning Academy which aims to help commissioners deliver more efficient and effective public services.

The classes help show civil society organisations how to:

• identify opportunities
• write successful bids for services
• adjust to the changing processes of bidding to run a service
• work together as 1 group (eg by creating a consortium) in order to run a project successfully, or consider subcontracting/being subcontracted
• develop negotiation skills

The government first announced the intention of running masterclasses in Making it easier for civil society organisations to work with the state: progress update.

Appendix 8: Transforming Local Infrastructure

This was a supporting detail page of the main policy document.

The Transforming Local Infrastructure programme, which ended in September 2013, aimed to completely change the local support provided to civil society organisations, by ensuring that:

• civil society organisations could access a wider range of high quality support, networking opportunities and opportunities to gain volunteers
• there is stronger local leadership for civil society organisations, contributing to better partnerships with local businesses and the local government

Funding from the programme mostly helped local and volunteering infrastructure organisations (organisations helping charities to achieve their aims) make big changes to how they work. This meant that they could develop and become quick to react to challenges, capable, and less dependent on government or National Lottery funding.

We aimed to help organisations:

• combine and work together – saving money and becoming more effective by sharing assets and services
• redesign services to meet the changing needs of groups and communities, so they are valued and supported locally
• build networks of support with other groups, local businesses and local government

Big Fund - the part of the Big Lottery Fund that distributes non-Lottery funding on behalf of other organisations - administered the programme. In early 2012 a total of £30 million was shared between 74 organisations across England.

See a full list of successful applicants.

We are now looking at how to share the learning from this programme, including offering workshops for any interested infrastructure organisation.