A Guide to the Welsh Third Sector

(Pic : Barnardo's)

I'm going to guess most people reading this know what the Third Sector is as it's been in and out of the headlines – directly and indirectly – for many years, having become a friendlier face of private involvement in public services and alternative to top-down state planning.

You're going to hear a lot more about it in future as the Third Sector was a key beneficiary of EU funding. Before those discussions happen, it's worth going over what the Third Sector is, why it's come to prominence in Wales and why its role in Welsh politics will likely come under closer scrutiny in the fallout from Brexit.

What is the "Third Sector"?

The Third Sector - also called the voluntary, social or quinary sector – consists of private organisations that provide services for "the public benefit" instead of making profits. This includes registered charities, advocacy groups, faith-based organisations and community enterprises. They come in different sizes; the biggest organisations – like Oxfam and Cancer Research UK - may have annual turnovers in the hundreds of millions of pounds.

Regardless of size, Third Sector bodies still have to remain solvent like any other business, fund advertising and sometimes pay full-time staff. However, the vast bulk of staff will be volunteers – whether they're retired, looking for something to add to their CVs or believe in a cause that's personally affected them.

The Welsh Council of Voluntary Action (WCVA) is the umbrella organisation for the Third Sector, providing services up to and including loans and the recruitment of full-time staff. Most local authorities have their own umbrella organisations that carry out a similar role, mainly to recruit and place volunteers.

In 2014 it was estimated 931,000 people in Wales were involved in some sort of voluntary activity, while there are estimated to be ~2,500 Third Sector organisations operating in Wales. Some of the biggest (or the ones you hear about most often) include:

• Tenovus – Cancer.
• Gofal – Mental health advocacy.
• Welsh Women's Aid – Domestic violence (nominally against women) & violence against children; part of the wider Violence Against Women Action Group.
• The Bevan Foundation – Think tank and advocacy organisation focusing on social justice.
• Institute of Welsh Affairs – Think tank.
• Cymdeithas yr Iaith Gymraeg – Welsh language campaign.
• The Wallich – Homelessness.
• Ty Hafan – Palliative/End of life care for children.
• Wales Air Ambulance – Self-explanatory.
• Pan-UK charities with autonomous/semi-autonomous Welsh branches – Oxfam, Barnardo's, Shelter, Age UK, Sustrans, Mind, RNIB, RSPCA, National Autistic Society, Friends of the Earth etc.
• Pan-UK charities without Welsh branches – National Trust, Cancer Research UK, Dog's Trust, Greenpeace, Prince of Wales Trust, Royal British Legion, Help for Heroes etc.

Despite being (mostly) not-for-profit, housing associations aren't considered part of the Third Sector, neither are public agencies spun out from central government (like the Land Registry) or other commercial not-for-profit/not-for-dividend companies like Dwr Cymru.

To be properly considered a part of the Third Sector there has to be a charitable, voluntary or civic goodwill motivation.

What does the Third Sector do?

(Pic : BBC)

Firstly, there are advocacy services. They lobby politicians on behalf of service users (who are often minority groups, ill or marginalised), run public awareness campaigns and fundraising drives, or commission research into their area of expertise to better inform decision-makers and the public about an issue.

Next, there are policy campaigns. Many Third Sector organisations either want changes to the law to benefit people who are affected by the issue they were set up to address, or they want extra/protected funding for specific services. A cancer charity might campaign for use of an experimental drug or treatment on the NHS, for example.

Some third sector organisations might run services on behalf of a community – homeless shelters, stores and pubs, leisure services or job training schemes, for example. They'll sometimes campaign for public funding or extra donations to keep those services going, particularly if the service users are vulnerable or the funding situation is precarious.

In some cases they might carry out or fund scientific/quantitative research into climate change or diseases, while think tanks research public policy generally and help politicians see things from perspectives that they might not have considered.

How is the Third Sector funded?

The Welsh Government publishes an annual report on its relationship with the Third Sector, the latest for 2014-15 published in March 2016 (pdf) and includes funding details. Broadly-speaking, the Third Sector gets it's funding from a mix of:

• Traditional business practices, with profits re-invested (social enterprise i.e charity shops).
• Charitable donations, bequeathments (donations in a will) and sponsorships.
• Tax breaks.
• National Lottery "good cause" grants.
• Direct and indirect public funding (Welsh and local government grants, procurement contracts, local health boards etc).
• EU funding (particularly the European Social Fund).

There's a code of practice for the Third Sector  (pdf) governing how civil servants and ministers should approach funding it. In addition to procurement opportunities, the Welsh Government offers:

• "Strategic core funding" - offered to Third Sector organisations which are working towards a government objective.
• "Project funding" – to cover the costs of a specific project or scheme for a certain amount of time.
• "Start-up funding" – to enable a new organisation to establish itself or grow.

Not all Third Sector organisations receive public funds, while only the smallest organisations survive on charitable donations alone.

According to the 2014-15 report, the Welsh Government provided £290.45million in direct funding/grants and procurement opportunities (worth £71.45million in 2014-15 alone) to the Third Sector. This doesn't include direct payments provided via other public bodies like local councils or local health boards.

To put that in perspective, this lower-end estimate for Third Sector funding is £120million more than the Welsh Government subsidy for the Wales & Borders Rail franchise, which is used by about 31million passengers a year.

The Welsh Government publishes a separate report on how they manage the grants, the latest dated 2015 (pdf). This report says the Third Sector received £11million in EU grants via the Wales European Funding Office (WEFO).

Over the course of a 5-year Assembly term the total funding adds up to at least £1.5billion. When all sources of public funding are added I wouldn't be surprised if it's closer to £2billion.

The Third Sector's Relationship with Government

The Welsh Government established a Third Sector Partnership Council to discuss matters that affect both the sector and the government. Welsh cabinet ministers also hold semi-regular meetings with key representatives and networks in relation to various projects and schemes; the minutes of these meetings are recorded.

It's safe to say the relationship between Cathays Park and the Third Sector is "close". Indeed, the Welsh Government consider the Third Sector to be "fulfilling a crucial role....which is distinct from the state and private sectors" when it comes to reducing poverty, promoting both equality and diversity and reducing social exclusion.

The key question is: has it worked? I don't know. There's very little empirical evidence out there on the effectiveness of the Third Sector.

Charities have always been around, but voluntary bodies running public and community services has largely come about as a result of local authorities and central government budgets being tightened, and some departments – particularly adult social services, youth services and housing – being cut back. They're essentially providing services that would otherwise have been provided by the state or commercial private companies.

It's normally spun as a "Big Society" or "social enterprise"; a "friendly" version of privatisation because of the not-for-profit angle and the fact services are mainly (but not exclusively) run by volunteers who, conveniently, don't get paid. In Bridgend alone, leisure and cultural services (like libraries) are now run by not-for-profit charitable trusts - Halo Leisure and Awen Cultural Trust respectively.

Of course, it's not true that all Third Sector posts are voluntary. There's a plethora of "volunteer co-ordinators", directors and managers who, in some cases, earn £60-70,000+ a year. Many administrators and fundraisers, particularly street fundraisers (aka. chuggers), are paid too. Trustees are sometimes eligible for expenses. So  assumptions that the Third Sector is "voluntary" needs a re-think.

Third Sector : National Assembly Lobbying

(Pic : charitytoday.co.uk)

• See also : Lobbyists and Cross-Party Groups under the microscope

If you want to advocate in Wales, change policy or get extra funding for your cause, you need access to Assembly Members.

To do that effectively, an organisation either hires their own internal lobbyists – professionals whose job it is influence decisions (the biggest charities can often afford to do so) - or you pay a lobbying/public affairs/political consultancy company to do it for you. If lobbied successfully, AMs will ask relevant questions in the Senedd chamber and continue to press the Welsh Government to make desired changes.

Two of the more prominent lobbying firms active in Cardiff Bay are Positif Politics (run by one of the leading talking heads of the Welsh commentariat, Daran Hill) and Deryn Consulting (set up by former Plaid Cymru AM Nerys Evans and former Labour special adviser Cathy Owens; recently recruiting former Plaid Cymru chief executive, Rhuanedd Richards).

There are other, more informal, ways to lobby or network: seminars, sponsored events/exhibitions on the Assembly estate, charity dinners/galas/events, award ceremonies and launching a petition.

Another common method is getting AMs to establish a Cross-party Group (CPG) dedicated to an issue or cause. CPGs meet every couple of months and invite guest speakers and experts to discuss whatever it is the group was set up for. Where the groups relate to an illness or social problem, the relevant Third Sector organisations are almost always involved. As AMs aren't allowed to be paid or gifted in order to do anything, these informal and indirect methods of lobbying are the next best thing.

None of this is out of the ordinary and it's a sign of a healthy political culture - AMs shouldn't be criticised at all here because they simply can't avoid it and ultimately some good will come of it. There hasn't been a major lobbying scandal in Wales to date, but it's not as if lobbyists are working out of the kindness of their hearts; they ultimately get paid to do it somehow and that money could well be recycled public funds or charitable donations from the public that may or may not be money well spent.

In cases where a Third Sector body that already receives core funding from the Welsh Government is lobbying for extra funds, taxpayers and donors could be paying to, essentially, lobby themselves.

Deryn's Nerys Evans found herself in a spot of bother here recently – that doesn't mean she's done anything wrong despite sounding incredibly dodgy, but as I'll come to shortly the Bay's revolving doors (usually, but obviously not exclusively, taken advantage of by Labour) makes these contradictions impossible to avoid and, if abused, provides avenues for corruption.

The Assembly's Standards Committee are considering a(nother) review of lobbying, which will be discussed at their meeting next week.


Third Sector : The Controversies

Lots of public money + poor governance + lack of oversight + appeals to emotion
= oh bollocks.
(Pic : ITV)

"Third Sector" is often understood to mean "charity" which in turn often means "good cause". Therefore, the Third Sector is viewed as being "a force for good" - advocating or working on behalf of the sick, downtrodden and less fortunate, staffed by civic-minded volunteers. In many respects that's true, but....

A lack of scrutiny due to appeals to emotion - If you criticise the Third Sector, the logic is you must oppose their "cause" too. Politicians don't want to be seen to piss on anyone's chips, especially a "charity", and that risks making them seem gullible. During the AWEMA scandal it was revealed Welsh Government ministers and civil servants were reluctant to intervene in what were corrupt practices because they were terrified of being accused of racism. Likewise, anyone who questions women's charities is a sexist/misogynist – as was insinuated in the fall out from the "bullying" of AMs during the passage of the Domestic Violence Act. Anyone in England speaking out against Kids Company wanted to see children thrown out onto the street etc. It had nothing to do with being taken in by a Pied Piper, of course.

Logrolling – Politicians and charities mutually back-slapping each other. Politicians get to look caring and compassionate to boost their profiles and get good PR – particularly if they have a public image problem. The charity gets influential friends who will speak out on their behalf and raise otherwise marginal issues to the mainstream. It often works – Camila Batmanghelidjh's long-standing cosiness with the UK Government being an example - but politicians are elected to work for and represent the public at large. There's a danger Third Sector lobbying might take up too much of an AM's time and turn them into glorified NGO workers whether they want to be or not. The more serious problem is that in cases where Third Sector organisations are overly reliant on Welsh Government core funding, it could well make them less likely to criticise the government despite relevant policy failures because they don't want to bite the hand that feeds them.

The Revolving Door – Related to logrolling; ex-politicians, senior candidates, special advisers and other senior political figures "miraculously" finding themselves full-time jobs in the Third Sector, or tied to it as lobbyists, trustees, think tank wonks or commissioners when leaving office (even during office for some). You could say it's simply a dedication to public service and there's a logic to campaigning bodies employing people who know how politics works. You can also call it nepotism or making a good living from (mainly) charitable donations and public funds without the accountability. Nobody seems as concerned about former or current politicians working in/for/with the Third Sector as they are those working as private lobbyists or sitting on company boards. Ultimately they want the same thing: money, PR and influence.

They don't have to succeed - One of the real problems that's developed in Wales since devolution is the "grants culture" where money is dished out by central government with very few formal expectations on either delivery or governance standards, or done in such a way that it's difficult to monitor. As I said earlier there's very little evidence on the effectiveness of the Third Sector, what various projects have actually achieved, or whether the amount of public money going to the sector is proportionate to the number of positive outcomes.

Duplication, Empire Building & Inefficiency – There's roughly one Third Sector organisation in Wales for every 1,240 people. In a local authority the size of Bridgend, that equates to 112 separate organisations (in reality, 300 different organisations advertised voluntary opportunities in Bridgend during 2014-15 – pdf). When AWEMA folded, four or five other racial equality charities (out of at least 20 across Wales) stepped in to cover them, even though the ethnic minority population of Wales is just 4.4% and heavily concentrated in the three southern cities. Wouldn't it be better for service users, and to ensure more money went on services instead of administration, to have a single big one with clout?

Some vocal critics of the Third Sector would go much, much further than I have and not without good reason either – Jac o' the North for instance – but the time's coming for serious questions to be asked.

Farmers, universities and the Third Sector are all going to be scrambling to ensure the cash they previously received from EU programmes and general public funds will be maintained by the Welsh and UK governments.

We know what farmers and universities do and how successful they are. We can't say the same thing of the Third Sector.

As public confidence in the charitable sector has hit new lows, and fundraising techniques criticised, we deserve a proper inquiry into the Third Sector, its relationship with government and Assembly Members, what good practice should be replicated across Wales, whether it's always the best vehicle for "outsourced" public service delivery or, indeed, the impact of austerity and whether any of these services should've been outsourced at all.