Wednesday, 17 August 2022
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Wednesday, 17 August 2022

How can small charities succeed in competitive bidding for contracts?

An enormous part of any small charity manager’s work has to be spent on fundraising.  With the huge decline of unrestricted grants from the government for charities, there has been an increase in funding via contracts- not more money in total but having to go through a competitive bidding process.

This is much more onerous, including defining outcomes and receiving output-related funding. The process is very hard for small charities because they are often bidding against much larger charities and even giant private outsourcing companies, many of them foreign-owned.

Recently large charities such as the Shaw Trust and Catch 22 have gained contracts to expand, including those for Academy schools and pupil referral units. However, these organisations do have large contracting teams, but there are ways that small charities can succeed.

Some contracts are not worth winning; a few years ago, St Mungos, the homeless charity, gained a contract for delivering output-based employment support but felt the lead organisation – a private company- was creaming off the clients who would move swiftest into work, while passing on the hardest clients to work with, which would mean they would be paid peanuts (St Mungos do have an absolutely brilliant training programme of their own, though I am biased as I used to work there).

One case is worth examining in detail. A few years ago an environmental charity bid for a large five-year contract with a Government quango. The organisation was small with only eight staff and an income of £380k. A couple of years before, the charity had had to shed staff (without redundancies), when it lost a significant six-figure sponsorship. Its rivals for this contract were other charities but, more dangerously, an enormous outsourcing company, with a turnover in 2016 of £4,200 million, thousands of staff and numerous huge Government contracts and connexions. They even offered to bring the charity in as a junior partner, a proposition wisely rejected by the CEO. 

An enormous amount of documentation had to be completed, with the usual Government requirements covered in a 32-page document.  The CEO accomplished this systematically, even adding more to her submission than demanded (e.g. organisational charts). There was a two-stage process, with four organisations short-listed to go through to a final stage, including the giant outsourcing company. A high-standard presentation then had to be made.

One big advantage was that the charity had 180 affiliated groups and 8000 volunteers, with good local contacts. Another plus was that the charity had already worked successfully with the quango over many years, delivering similar services to that now being tendered. Through this, they had also built a good relationship with the technical specialist there. Several months after all this hard work, the charity eventually won the contract, valued at a large annual six figures and lasting five years, so definitely worth the effort.

The CEO had had the experience of bidding for Government grants before and knew that price was absolutely crucial, so their bid provided good value for money. On reflection, she felt that it was important for organisations not to subsidise their bids while being meticulous and determined in their bid preparation.

Obviously, most small charities have tiny staff and volunteer teams, and lack managers with bidding expertise. Sometimes Board members can do this work, but another way around is to employ a specialist fundraising consultant. Any bids must emphasise value for money and include a well-constructed budget, covering realistic delivery costs, reasonable management expenses and inflation. It is clear that charities do bring added value such as their volunteers’ time. 

The Social Value Act now requires commissioners to consider broader social, economic and environmental benefits to their area when making decisions. The Act shifted the goal posts, but not necessarily sufficiently. Charities should emphasise their local links and get their volunteers to lobby. Smaller charities can also bring something additional to a partnership bidding for contracts. 

Clearly, not all charities can bid for contracts successfully and must raise income in other ways, which I deal with in another article. However, as the former CEO said, “I see small organisations cowed by the prospect of preparing submissions like these but in reality, they are overcoming problems far more complicated just running the charity on a daily basis – it’s a question of self-belief.”

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