As Director of a small national organisation, I once attended a roundtable with a new government minister.
He introduced himself and told the 20 or so CEOs gathered for the meeting how much he valued the ‘Volunteer Sector’.
It was a sign of things to come.
Labour power, wages and reproduction
The voluntary sector delivers publicly-funded services, frequently using unpaid and underpaid labour. This labour is neither cheap nor free. It requires time, infrastructure and support, and often reproduces the very inequalities the sector seeks to address.
Increasingly, given the nature of market forces and ‘efficiency drives’, organisations face the dilemma of bidding for contracts that do not meet the true costs of delivery or, should they refuse such agreements, sacrificing their role, purpose, specialism and the relationships they have spent time developing.
In consequence, the sector participates in underfunded contractual arrangements and absorbs costs that statutory contracts do not cover.
Feminist scholars, building on Marx’s economic analysis, show how care work operates as a subsidy to capital.* The labour of sustaining families, communities and the workforce is systematically undervalued, disproportionately undertaken by women, and shaped by racial and class inequalities.
Through this lens, the commissioning, procurement and contracting relationship with the charity sector can be seen to mirror the theory of social reproduction and its impact on the worker: essential work is done but not fully paid for.
Patterns
To use another popular theory, the commissioning environment often reproduces a dynamic described by the Karpman Drama Triangle: a set of roles through which power is enacted and maintained.
- The commissioner enforces financial constraints and contractual terms (Persecutor)
- The organisation operates within those constraints with limited scope to change them (Victim)
- Boards and leadership absorb pressure to sustain services, staff and communities (Rescuer)
These roles are not fixed. They shift and rotate across the players. Organisations might resist, commissioners may compromise, boards may consider their options. Ultimately, however, the cycle is not broken.
For a sector that likes to portray itself as ‘trauma informed’, inclusive and values based, these types of relationships undermine the claim.
What matters is less the intent of individual actors, but the patterns, expectations and opportunities for negotiation. The system persists because it is continually reproduced.
Reporting is not enough
None of this is new.
Clinks has tracked this pattern for over a decade. Between 65 and 75 per cent of organisations have failed to achieve full cost recovery on statutory contracts every year since 2015 (the criminal justice arena is least likely). There are minor fluctuations – including a dip before Covid and a spike after – but the system returns to the same position.
Change requires collective pressure, not individual action
Individual organisations cannot be responsible for fixing this. The change must come from the commissioning design process.
Many voluntary sector organisations exist to support people experiencing poverty, exclusion and injustice. There is an irony in the fact that the terms on which they operate reproduce those same conditions at an organisational level: dependency, insecurity and constraint.
NCVO advises that organisations should decide whether to proceed with underfunded work. This is fine in principle. In practice, it is like telling a victim of abuse to ‘just leave’.
Competitive tendering, supply chains and prime provider models fragment the sector and reward compliance. Risk accumulates downward but reward does not. Small organisations are often bound to low, if any, yearly increments, enormous reporting requirements and heavy administrative burdens while any significant management fees, bonus or innovation is paid firstly to the Prime provider.
The trajectory is large corporate charities or major providers dominating regional contracts, or services moving fully ‘in-house’. Either way, small and specialist organisations disappear.
It’s all going to be ok because… bureaucracy
Recent changes to the Statement of Recommended Practice (SORP) introduce clearer requirements for recognising income from contracts. This may make deficits more visible, but it does nothing to shift the underlying dynamic. Commissioners are not bound by SORP.
A better formatted payslip does not raise wages. Tighter reporting does not fix poor commissioning.
Collective bargaining, stronger together
Competitive tendering isolates organisations and encourages bidding at the lowest price rather than the cost of quality services.
The mechanism that has historically shifted unequal exchanges is coordination. For the voluntary sector, this might include:
- coalitions of providers sharing real costs
- agreed minimum thresholds for cost recovery (a commitment to 25 per cent as standard)
- infrastructure bodies moving from documentation to coordinated demand
If infrastructure bodies are really to support small, specialist and local organisations in changing the underpayment embedded in contracting, they must be clearer and more consistent in their calls for action and their influence around collectivisation and public awareness, as well as the integrity, consistency and fairness of public sector contracting.
No panacea, but pressure and principles
The objective must be to demonstrate a commitment to the true cost and the true value of the work, provision and service delivered by voluntary sector organisations.
Even with coordination, some organisations will continue to participate in poorly designed contracts. Rather than blaming or criticising individual organisations for this ‘choice’, maybe we can work together to create the conditions in which they can do something else.
If the sector claims to support communities to build agency, develop confidence and improve their relationships and health, we must be able to do these things ourselves.
* Key contributors to social reproduction theory include Silvia Federici, Nancy Fraser, Tithi Bhattacharya and Lise Vogel, who extend Marxist analysis to account for unpaid and underpaid care work as foundational to the reproduction of labour power.
