The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB.
Programme for Government proposal: Transparent voluntary sector funding
Our proposals for the Programme for Government 2023/2024 cover three areas:
- Delivering Fair Funding by 2026
- Transparent voluntary sector funding
- Charity regulation for a modern voluntary sector.
This paper focuses on bringing transparency to Scottish Government’s funding of the sector, which is essential for everyone’s understanding of Scottish Government’s investment in the voluntary sector. Fiscal transparency would enable voluntary organisations, civil servants, scrutiny bodies, and others, to better understand Scottish Government decisions, funding flows, and budget changes, and to engage with government on their potential impacts.
About Scotland’s voluntary sector
Scotland’s voluntary sector plays a central role in achieving the three policy priorities discussed by the First Minister’s in the Policy Prospectus, New leadership - A fresh start.
Tackling poverty and protecting people from harm
Voluntary organisations provide practical and emotional lifelines for people and communities when times are tough (e.g. foodbanks), and support them on their journey out of poverty (e.g. access to benefits). Our sector supports people into work, and helps them to stay there; campaigns against the root causes of poverty; and encourages individuals and communities to improve their lives.
A Fair, Green and Growing Economy
With a turnover of £8.6billion, Scotland's voluntary sector is a major economic actor. Our sector plays a central role in local economies, including employing over 135,000 across Scotland - 5% of the Scotland’s workforce. The sector plays a key role in keeping people economically active by providing employability support, mental health support, and wider support for people, families, and communities, such as childcare. Voluntary organisations also bring added value to the economy by working with Scotland’s 1.2 million committed volunteers and by bringing fundraised income into vital areas, from service provision to environmental and medical research.
Prioritising our public services
Without the voluntary sector, our public services would be significantly diminished. Through direct provision of public services in areas like social care and youthwork, or working with communities to keep people active, engaged, and healthy in a way that prevents them from needing to access statutory services, Scotland’s voluntary organisations are a vital part of our public service infrastructure. Our sector also adds value to Scotland’s local and national systems by bringing access to fundraised income and volunteer time that is not be available to other actors.
By committing to the actions described in this paper, the Programme for Government can support Scotland’s voluntary sector to continue to make a significant contribution to achieving the aims set out in the Scottish Government’s policy prospectus, including commitments to progress Fairer Funding, implement multi-year funding deals, embed Fair Work principles, reduce child poverty, build a wellbeing economy, improve transparency, and deliver efficient and effective public services. The Scottish voluntary sector is an employer, a partner, and a vital social and economic actor central to the Scottish Government’s ambitions to become a fairer and more equal society.
Summary of proposals
Our proposals for the 2023/2024 Programme for Government cover three areas:
- Delivering Fair Funding by 2026
- Transparent voluntary sector funding
- Charity regulation for a modern voluntary sector
This paper focuses on bringing transparency to Scottish Government’s funding of the sector, which is essential for everyone’s understanding of Scottish Government’s investment in the voluntary sector. Fiscal transparency would enable voluntary organisations, civil servants, scrutiny bodies, and others, to better understand Scottish Government decisions, funding flows, and budget changes, and to engage with government on their potential impacts.
Summary
Access to transparent data is essential for voluntary organisations, civil servants, and scrutiny bodies, such as Audit Scotland and the Scottish Parliament, to understand how funding flows from the Scottish Government to voluntary organisations. Transparent data can also support voluntary organisations and others to assess the positive, negative, or neutral impact of spending decisions on both the sector and the people and communities our sector works with.
To enable a better understanding of spending decisions and assess their impact, in the Programme for Government the Scottish Government should commit to:
| 1. Publish awards to the 360Giving data standard including basic identifier core fields such as recipient name, organisation, and charity number. |
| 2. Publish annual awards data to the 360Giving platform. |
| 3. As an interim measure, include all significant spend, not just amounts over £25,000, in the monthly reports the government currently publishes and improve categories to ensure data is useful and accessible. |
| 4. Collect information across all government departments and produce a breakdown of Scottish Government funding to the voluntary sector by department and budget line. |
| 5. Calculate and publish the Scottish Government’s total direct funding of voluntary organisations from grants and contracts. |
| 6. Within this data, Scottish Government should record Fair Funding progress by collecting and publishing what proportion of grants and contracts are: Delivered on a multi-year basis. Include annual uplifts. Accommodate payment of the real Living Wage, including annual increases to this rate. Communicate funding intentions at least three months in advance and make payments no later than the first day of the new financial year. |
Introduction
As financial pressures intensify, understanding Scottish Government spending decisions becomes increasingly important.
In the policy prospectus, New leadership - A fresh start, the First Minister recognised that transparency must underpin delivery to ensure that Scottish Government can be held to account. Similarly, the Scottish Government’s Medium-Term Financial Strategy recognises that fiscal openness and transparency are important enablers of fiscal sustainability and commits to transparency in both how government manages public finances and through wider work with civil society in Scotland’s Open Government Partnership National Action Plans.
Access to transparent data is essential for voluntary organisations to understand how funding flows from Scottish Government to the voluntary sector, and to assess the positive, negative, or neutral impact of these decisions both on the sector and the people and communities our sector works with.
Without the tools to measure Fair Funding criteria or budget increases and decreases, it is difficult for anyone, including government, to understand the financial decisions made by government and their impact.
Departments across government also take different approaches to voluntary sector funding. Funding transparency would help to shine a light on this, and encourage the consistent approach needed for a Fair Funding environment.
The problem
SCVO welcomes the commitment from Shirley-Anne Somerville MSP, Cabinet Secretary for Social Justice, in the Scottish Government’s policy prospectus New leadership - A fresh start, to progress Fairer Funding arrangements and explore options to implement multi-year funding deals. These commitments complement commitments from the previous Minister for Social Justice, Housing and Local Government, Shona Robison MSP, who recognised that the importance of multi-year funding and the need to monitor“ progress across the fairer funding principles, including multiyear funding”. To measure the extent to which these changes are implemented, however, greater transparency about Scottish Government funding of the sector is needed.
Within the Scottish Government it is increasingly recognised that the current presentation of fiscal information is not accessible or presented in a way that meets most users' needs. Through the Scottish Exchequer: fiscal transparency discovery report and the Open Government Action Plan (2021-25) the Scottish Government has committed to improving financial transparency, including enabling users to “follow the money”. This work recognises voluntary organisations as potential users of fiscal data and work with the sector should continue to identify the actions needed to ensure fiscal data is transparent and accessible and reveals the extent to which the Scottish Government is delivering the Fairer Funding principles needed to support a sustainable voluntary sector.
The Scottish Exchequer recognises that current fiscal information is fragmented, generally inaccessible, and complex. As a result of this complexity, Ministers and civil servants regularly use SCVO’s estimates to highlight the scale of government funding for the voluntary sector - an estimated £480m a year. Official figures are not available from the Scottish Government, a significant gap in the Scottish Government's understanding of funding flows to the voluntary sector. Neither is data on Fair Funding criteria, such as how much funding is delivered on a multi-year basis or includes uplifts, collected.
As an example, the Scottish Government’s Resource Spending Review suggests the Third Sector Budget line will increase by £5m in 2026-27. Beyond this figure, the data available reveals very little about this increase or how it may benefit organisations in the sector. The implications of a £800,000 cut in the same budget line in the 2022-23 Scottish Budget were also unclear with no breakdown of how this funding flowed to the sector. More recently, in the Spring Statement the UK Chancellor, Jeremy Hunt, announced over £100 million to support charities and community organisations in England with rising costs, resulting in a Barnett Consequential of around £10 million. Without an explicit commitment, it will be difficult for the voluntary sector to assess if this funding is passed on to the sector in Scotland and the impacts of any additional investment.
Like organisations across the sector, the Social Justice and Social Security Committee have stressed that better data collection is needed to help target new and existing social justice policies and that data sharing needs to be improved to anticipate service delivery needs.
Similarly, as the Scottish Exchequer has recognised, access to information would support SCVO, voluntary and other organisations, and Parliament and Government, to understand the impact of Scottish Government decisions on the sector and the communities we work with. The Programme for Government should build on their fiscal transparency commitments to ensure they are fully realised and include voluntary sector funding.
The solution
Fiscal transparency would enable a better understanding of Scottish Government spending decisions, highlight any actions taken by Scottish Government to mitigate risk, reveal successful interventions, and encourage engagement with decision-makers.
SCVO welcomes the commitments in the Scottish Budget 2023/24 to increase transparency around public finances and recognises that fiscal transparency is central to many Scottish Government work programmes. It is essential that voluntary sector funding is included in this work.
Currently, the Scottish Government publishes monthly reports on government spend over £25,000. These reports provide useful information on amount, grant recipient and department. There is, however, no easy way to “follow the money” such as, the amount awarded to each recipient over a year, disaggregate how much goes to the voluntary sector, the private sector, and the public sector, and there is no additional information on grant length. Improvements to the way grant data is recorded and published would reveal both the amount of funding that flows to the sector and make the current data easier to assess.
Publishing grant data in accessible formats is key to increasing transparency and accountability. The UK Government for example is “committed to increasing transparency, enabling taxpayers to hold the state to account both on how their money is being spent and how decisions are made which affect their lives.” To meet its commitment to transparency, the Cabinet Office publishes a Government Grants Register and grants data on the 360Giving platform, ensuring that published awards data meet the 360Giving data standard.
The Scottish Government could build real value into the data they currently publish and allow users to quickly drill down into the charitable and voluntary sector data by mirroring the Cabinet Office model, which ensures that data meet the 360Giving data standard, including basic identifier core fields such as, recipient name, organisation, and charity number. This recommendation has previously been made by the Social Renewal Advisory Board’s Third Sector Circle, who called for Scottish Government funding of the voluntary sector “across all Scottish Government departments and local government to be published on the “360Giving platform”. The Scottish Government emergency Covid grants awarded in 2020-2022 have already been published to 360Giving by SCVO, increasing the transparency of these awards.
Adopting the 360Giving data standard would also facilitate publishing awards to the 360Giving platform making the data more accessible and allowing Scottish Government awards to be viewed as part of the bigger picture that includes UK Government grants, lottery grants, and independent grant funders.
To enable colleagues across the voluntary sector and more broadly to understand spending decisions and assess their impact in the Programme for Government the Scottish Government should commit to:
| 1. Publishing awards to the 360Giving data standard including basic identifier core fields such as recipient name, organisation, and charity number. |
| 2. Publishing annual awards data to the 360Giving platform. |
| 3. As an interim measure, including all significant spend, not just amounts over £25,000, in the monthly reports the government currently publishes and improve categories to ensure data is useful and accessible. |
| 4. Collecting information across all government departments and produce a breakdown of Scottish Government funding to the voluntary sector by department and budget line. |
| 5. Calculating and publishing the Scottish Government’s total direct funding of voluntary organisations from grants and contracts. |
| 6. Within this data, Scottish Government should record Fair Funding progress by collecting and publishing what proportion of grants and contracts are: Delivered on a multi-year basis. Include annual uplifts. Accommodate payment of the real Living Wage, including annual increases to this rate. Communicate funding intentions at least three months in advance and make payments no later than the first day of the new financial year. |
Addressing the significant gap in the Scottish Government's understanding of how funding flows to the voluntary sector is essential for spending in current and future Scottish Budgets to be identified, tracked, and understood.
Transparent, accessible data would also highlight the Scottish Government’s significant investment in voluntary organisations while enhancing the sector’s understanding of spending decisions, the processes behind them, and the extent to which Fair Funding criteria are met.
Achieving the National Outcomes and Strategic Priorities
The Scottish Exchequer has recognised that there is a need for the better integration of fiscal transparency information including the ability to group and assess fiscal information by key categories and themes such as the components of the National Performance Framework (NPF), equalities, and human rights themes to both reveal trends and account for portfolio changes.
Similarly, in last year’s Scottish Budget the Scottish Government recognised and accepted the Finance and Public Administration Committee’s call for greater fiscal transparency in the Budget process and to establish clearer links between spending priorities and National Outcomes.
Better use of the NPF should be encouraged with more visibility of how National Outcomes feed through Scottish budget allocations to the Scottish voluntary sector. Both the Finance and Public Administration Committee and the Social Justice and Social Security Committee have highlighted the need for greater transparency during pre-budget scrutiny. Without greater transparency it is difficult to assess the extent to which Scottish Government’s investment in the voluntary sector contributes to achieving the National Outcomes and the impact of any changes to this investment. Open data would encourage a ‘golden thread’ between Scotland’s National Outcomes and delivery, in this case by the voluntary sector. Operating transparently is also a key value within the NPF.
Greater transparency in Scottish Government funding flowing to the voluntary sector would also enable SCVO and colleagues across the sector as well as scrutiny bodies such as Audit Scotland and parliamentary committees, to consider areas where the Scottish Government could improve funding models and work with the government to find solutions. In the current challenging financial context providing the right information at the right time to the right organisations will enable the Scottish Government to collaborate more effectively with the sector on solutions based on expertise, experience, and evidence.
Complementing other policies
As has been discussed, work is underway to improve the accessibility of and engagement with fiscal data. Experts in the Scottish Exchequer are involved in this work, which covers public spending, procurement, fiscal transparency, and the budget. Enhancing the accessibility of information relating to the Scottish Government’s voluntary sector funding fits with the government’s existing commitment to budget improvement, its Fiscal Transparency Programme – including a Fiscal Portal, its development of a Procurement Management Information Platform, and its commitment to achieve Fairer Funding by 2026. To ensure joined up practical solutions the Third Sector Unit and the Scottish Exchequer should work together on these projects.
The Scottish Exchequer: fiscal transparency discovery report recognises that a fuller understanding of how public finances are managed and more productive discussions with citizens and stakeholders will lead to more effective polices, improved outcomes, better targeted resource allocations, and improved input to government policies. In response, the Scottish Government has recognised that the current presentation of fiscal information is not easily accessible and does not meet the needs of most users. The government is commitment to financial transparency, including improving the presentation and accessibility of its fiscal information and enabling better understanding and scrutiny for a range of users, through Scotland's third Open Government Action Plan (2021-25). Improving transparency around voluntary sector funding would complement these aims and should be included.
Transparency, participation, and accountability are also interdependent elements central to a rights-based budget process. Last year the Social Justice and Social Security Committee concluded that a lack of transparency impacted their pre-budget scrutiny work, making it more challenging. The Committee asked the Scottish Government what steps it will take to address the information deficit, improve budget scrutiny, and to demonstrate where participation impacts on decision making. Our calls align with these asks.
Evidence that this policy will lead to change
As the Open Government Action Plan, Scottish Exchequer, Finance and Public Administration Committee, and Social Justice and Social Security Committee recognise, greater transparency around fiscal systems has significant benefits for all stakeholders, including the civil servants executing ministerial directions, citizens, scrutiny bodies such as parliament, and organisations and groups in the voluntary, public, and private sectors.
Scotland’s involvement in the global Open Government Partnership (OGP) also recognises the need for governments to continually strengthen and challenge themselves on transparency, participation, and accountability, especially through enabling civil society. The Scottish Exchequer: fiscal transparency discovery report, outlines in detail the benefits of fiscal transparency in Scotland.
Who will this policy support?
Valuing the Third Sector: Looking ahead to the Scottish Government’s Draft Budget 2020-21, the most recent comprehensive inquiry into the role of Scotland’s voluntary sector by the Scottish Parliament, recognised the ‘third sector as a key partner in delivering national equalities and human rights outcomes, and that public bodies need to be held accountable for their spending decisions.’
The inquiry concluded that ‘the Scottish Government has stated the third sector has a vital role to play in progressing and realising the Scottish Government’s ambitions for people and communities across Scotland. Amongst other third sector priorities, the Scottish Government has committed to maximising the impact of the sector in reducing inequality, working with communities to tackle tough social issues at source.’
Funding transparency will support the voluntary sector’s vital work with people and communities across Scotland.
Since this inquiry was published by the former Equality and Human Rights Committee, the voluntary sector has supported people and communities across Scotland through the pandemic and the cost-of-living crisis. A sustainable voluntary sector is needed to recover from these crises while offering Fair Work, supporting volunteers, meeting demand, and delivering quality outcomes. Transparent and accessible financial data is also required to collaborate to achieve the Fair Funding needed for a sustainable voluntary sector.
Measuring impact
The Open Government Action Plan, Scottish Exchequer, and parliamentary committees are all likely to measure the extent and impact of this work. Ultimately this work will be measured by the volume and quality of fiscal information and the extent to which a diverse range of stakeholders can access and engage with fiscal data leading better decision-making processes and quality outcomes for people and communities across Scotland.
Cost
The Scottish Exchequer: Fiscal transparency discovery report, has highlighted that to progress towards fiscal transparency will require investment over many years. This programme has already been committed to. Including investment in the voluntary sector within the scope of this fiscal transparency project and other programmes to improve funding transparency will support this work and avoid duplication in the future.
Other actions, such as uploading all funding to the voluntary sector on the 360Giving platform, may encounter a cost in terms of learning and development, such as providing thorough guidance to civil servants, and engaging the voluntary sector.
