A good cause foundation

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The Culture Secretary wants radical thinking to shape the future of lottery funding. Stephen Bubb applies some to the forthcoming merger

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There is an assumption that lottery money has to be distributed by a government agency. Why? When the lottery was established the government decided to set up a National Lottery Charities Board as a non-departmental public body (NDPB or quango, as they are popularly known). The New Opportunities Fund, set up four years later, was also formed as a NDPB. Now that these two bodies are to merge there is a good case for examining the precise legal form the new organisation should take. Culture Secretary, Tessa Jowell, has promised an open consultation on the forthcoming white paper. This will be a good opportunity to lobby for an organisation that is firmly placed within the independent, not-for-profit sector.

There is now a vigorous political and academic debate about the need for new organisational forms for public services. The government finds the possibility of new forms of ownership appealing, as, for example, with Foundation Hospitals. The work of the Public Management Foundation has shown that problems in delivery can be related to the structural features of organisations. Its publication Public Interest: New Models for Delivering Public Services argues that there is a need for:

• organisational autonomy
• structures that are accountable to users and the public
• flexibility to operate systems that motivate and incentivise.

NDPBs bring with them distinct disadvantages. They are saddled with a range of bureaucratic arrangements that stem from the civil service way of doing things. The culture is risk-averse because of the strong audit and public accounts committee culture that permeates these bodies. They get tied into civil service salary and benefit arrangements and have to follow administrative procedures that are good for the wider civil service but not good for a cost-effective and fleet-of-foot organisation. The government itself has recognised the disadvantages of the NDPB format. Within DCMS a number of formerNDPBs have been re-constituted as independent foundations. Historic Royal Palaces is a prime example of a body that was part of government but re-established as a charitable foundation. Its chief executive (an Acevo member) is very clear that freedom from bureaucratic control is a prime cause of that organisation’s return to profitability. The recently established Social Care Institute of Excellence was formed as a limited company with charitable status. There are plenty of precedents around for independent bodies distributing government funds, such as the Arts Council, the British Council, Central Council for Nursing, and the Further Education Development Agency.

So why not establish the new organisa-tion as the ‘Good Cause Foundation’? This would certainly be popular; a recent YouGov opinion poll showed that 74% of the public wanted lottery money to be distributed independently. Much of the criticism of NOF has been about its perceived lack of independence from government direction, and concerns about additionally. However it would be wrong, and unrealistic, to argue that the new organisation should be completely ‘independent’ of government. It is entirely legitimate for an elected government to have a say over the broad remit for good cause distribution. This could be accommodated through a legal structure that gave the government the ability to lay down broad direction to the new organisation in the way it distributed money, and some involvement in governance.

The new body could be given charitable form with, for example:

• the ability for the Secretary of State to make nominations to the foundation board’s trustee positions
• the ability for the Secretary of State to give broad directions on what outcomes she expects from the distribution of good cause money
• an annual report to Parliament.

An independent foundation would gain strength from its ability to establish staffing and organisational forms that are more akin to commercial or not-for-profit organisations than the civil service. The particular legal form would protect the body from interference or influence on individual grant-making decisions and strengthen the public’s confidence that good cause money was being administered in an independent and fair fashion. An alternative legal form might be to make use of the new ‘community interest company’ legal provisions likely to feature in the Queen’s speech. This would mean that the organisation would be registered as a company and operate within the context of the private sector while ensuring a ‘return’ to its stakeholders, ie lottery players. The return might come in the shape of direct involvement in decisions about some good cause funding, and/or higher-profile reporting of spending. This would help underline the body’s accountable to the players and communities.

One advantage of both these arrangements might be to establish a better link between distributor, Camelot and players. The public has sometimes been critical of the way money is spent and the lack of involvement by the punters. Either legal form could be amenable to a much closer link between player and distributor. After all, the key link is between distributor, lottery and player rather than a link between a government department and NDPB.

It is widely agreed that there are far too many quangos and that their hybrid form seems to combine bureaucratic inefficiency with lack of accountability. So let’s not assume that the new body has to be a quango, and argue for an organisation that is independent of government structure.

Tessa Jowell has argued that the reforms of lottery distribution are a good way of reinvigorating the lottery. A good cause foundation at the heart of the reforms would be one important way to aid that process.

Stephen Bubb is the chief executive of Acevo, the Association of Chief Executives of Voluntary Organisations