What does the budget mean for the voluntary sector?

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Cathy Pharoah analyses our 'crash diet' budget

Cathy Pharoah is professor of charity funding at Cass Business School. KnowHow asked her for her reaction to the June 2010 budget, her thoughts on Big Society, and what she would do if she were chancellor for the day.

1) What was your initial reaction to our new chancellor's first budget? And was it 'unavoidable'?

Everyone has to live within their means, but I guess it’s about whether you try to lose weight on a crash diet or take a longer-term approach, easing the pain, and possibly building a better long-term basis for your eating.

The harshness of the budget may create a lot of additional costs which the new government has not taken into account: for example, the costs of a young generation lost to unemployment, increased mental health problems and issues like domestic violence because of unemployment. The loss of housing benefit can force people to move causing them to lose the social networks and family ties that sustain life when you are poor.

It’s a very difficult balance to keep the green shoots of hope and economic recovery going.

2) What parts of the budget will have the most impact on people working in the non profit sector?

The budget will have a pretty wide effect on the voluntary sector, both in direct and indirect ways.

Aside from the obvious impact of national cuts and the effect that increased levels of unemployment will have on donations, cuts to local authority budgets will effect the sector in a number of areas:

• potential reductions to the sector's grants
• possible cutting back on funds for specialist services, for example, children with special educational needs, ethnic minority groups or those with particular disabilities - essentially this means those who suffer most are hit hardest
  
• greater demand on voluntary sector resources due to unmet needs arising in the population because of increased poverty (unemployment, cuts to housing benefit and so on)
  
• development work involving research and the piloting of new projects are another likely target.

3) If you were chancellor for a day - what would you do?

I would like to have seen the banks pay a harsher penalty for causing the debt crisis and to see moves to develop something like a ‘Robin Hood’ tax, but without the complexity of current proposals.

4) Do you think the government appreciates the impact of cutting benefits, in terms of the increase in need for support from the non profit sector?

I suspect that the impact of cutting benefits (including housing benefit) might be much greater than the government has fully realised. Of course, there were anomalies and abuses, but that does not justify radical, across-the-board corrective action.

There is also a danger that voluntary action may erupt in ways the government does not anticipate. In other words we could see much more evidence of campaigning, protests and public unrest on the steps of Parliament.

5) What is your opinion of the Big Society? Did you see any consideration of the government's vision of the Big Society in the new budget?

The Big Society is a complex notion: voluntary action has always been an important part of society, and hugely significant in the way that people help themselves, their families and communities when they are in need. There are many examples amongst migrant and refugee communities particularly. This is probably not something the government can actually sponsor through notions such as Big Society.

A harsh environment might ultimately generate more competitive and individualistic approaches which is unfortunately quite the opposite of the altruistic community spirit they are promoting.

Essentially the budget will mean that people have to become more entrepreneurial, and at the same time they will need to share more, but I’m not sure that there is anything in the budget that will really inspire a new sense of communitarianism, or encourage the crossing of social divides so that the more well-off help the less well-off. It is possible that promised future measures to support future giving might help.

Similarly, there is nothing contained in the budget to encourage charities of all shapes and sizes to help each other at this time.

6) Does your research on philanthropic giving present any reason for charities to be optimistic about such donation in the hard times they are facing?

Yes, because people’s support for philanthropic causes often goes very deep, and it’s not something they’ll give up lightly:being a member of associations that do something you believe is  valuable; making legacies to causes you think are important for the future; providing finance for institutions such as arts and culture which you love; giving money for health research and care in illnesses which those near you have suffered from – all this will continue, though people may have a bit less to donate.

However, I think it will be difficult to get people to support causes and issues that they think the government should provide, for example, child and family poverty in the UK.