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The “Blairing” of the Edges Third Sector and the Third Way Barriers to the Fulfilment of Expectations of and from Voluntary Sector Organisations Under a New Labour Government

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The “Blairing” of the Edges
Third Sector and the Third Way
Barriers to the fulfilment of expectations of and from voluntary sector organisations under a New Labour government

Dissertation for MSc
Voluntary Sector Policy & Administration (SA475)
June 2000
Department of Social Policy
London School of Economics & Political Science


Voluntary organisations as a vehicle for volunteering, for active citizenship and for a healthier, civil society have become an important of New Labour’s thinking. The voluntary sector is also identified as a vehicle through which government priorities may be more effectively addressed in particular, measures to address social exclusion[1]. This dissertation considers the current state of the relationship between the voluntary sector and the Government and seeks to identify barriers to the fulfilment of this political vision in the context of one Department’s work.[2]

The study discusses the findings in the light of the emerging thinking on the Third Way and the substantial body of work on contracting - the medium through which much of the relationship is conducted in the case of the DfEE.

Whereas there is an apparent willingness to consider measures to overcome recognised barriers, there appears to be confusion about the extent to which goal deflection may have damaged the legitimacy of voluntary sector organisations. There is therefore uncertainty about which part of the voluntary sector (service delivery organisations, the community sector or social entrepreneurs) is best placed to provide a vehicle through which way Third Way aspirations can be achieved, if indeed they can be.

Table of Contents

Chapter One Introduction 4

Chapter Two Methodology 7

Chapter Three Context / Literature Review 9 New Labour - Third Way 9 Definitions 10 Voluntary Sector 10 Community and Associations 11 Social Economy 13 Social Entrepreneurs 13 Public Funding and the Voluntary Sector 14

Chapter Four Findings 16 Department for Education and Employment 16 Responses 17 Voluntary Organisations 20 Responses 20 Others 21 Responses 21

Chapter Five Discussion 23 Issues 23 Corporatism 24

Chapter Six Conclusion 26 Third Way or same old way? 26 References 28 Appendix 1 Interviewees 30 Appendix 1 Themes explored through questioning: 32


“There is a need … to find new ways of fruitful co-operation between public authorities and voluntary agencies”. - Beveridge[3],
Fifty years after Beveridge wrote those words, a new administration took power in the UK . Soon after taking office the Prime Minister had not only made important speeches emphasising the importance of the voluntary sector[4] and social entrepreneurs, he had also published a pamphlet - The Third Way, in which he stated “`enabling’ government strengthens civil society rather than weakening it,… the state, voluntary sector and individuals working together. New Labour’s task is to strengthen the range and quality of such partnerships.”
In spite of government intentions as described by Beveridge in his book on Voluntary Action, it wasn’t until the latter quarter of the last century that there was a resurgence in interest in the voluntary sector in the UK. The Voluntary Sector in the UK, (Kendall & Knapp, 1996). This resurgence they suggest, happened for three reasons:
1 dissatisfaction with the status quo
2 support for pluralism and diversity
3 pursuit of political and ideological goals

The bi-partisan nature of the support for the voluntary sector reflected different political and ideological values (Kendall & Knapp, 1996). On the political right was a desire to “roll back the frontiers of the state” (W. Hague) on the left, there was initially a desire by Labour controlled local government to both address diversity and increase the size of their political base in opposition to a Conservative central government. (Kendall & Knapp, 1996).

New Labour had different objectives. At a conference on the Third Sector, Third Way[5] G Mulgan described the centre left as being founded “in values of mutual responsibility and self-help, …values which derive probably more from Christian traditions than any other. This gives the British Left and Centre Left an historic link with the voluntary or third sector.” He went on to explain that the Third Way argument around the voluntary sector is a “set of legal, fiscal and cultural frameworks which harnesses millions of people’s desires to connect, care and contribute to the common good”.

Within the voluntary sector there have been expressions of concern about a changing relationship with government, a move towards “implementing the current agenda rather than shaping it” (J. Unwin 1999[6]).

Issues around contracting remain as complex and difficult as ever in spite of New Labour’s assertion that there “are a series of attempts to streamline and rationalise funding mechanisms so that voluntary organisations are not held hostage to bureaucratic red tape and duplicate arrangements”. (Mulgan, 1999).

I have undertaken this study for several reasons. I have worked to develop a voluntary organisation committed to community economic development and done so in spite of the many disadvantages that are a consequence of the rise of the contract culture (Smith & Lipsky, 1993).

This growth over a ten year period has offered an opportunity to observe, with growing concern, what seemed to be a lack of understanding of the consequences of measures being imposed by civil servants and their agents seeking to implement Government decisions.
Secondly, the apparent blurring (or as some have put it, `Blairing’) of the edges between public, private and voluntary sectors seems fertile ground in which to explore the significance and practical application of Third Way thinking in the relationship between Billis’ three overlapping worlds (1993).
New Labour itself has posed the question: “What are the terms on which there can be partnerships and relationships of mutual benefit?” (Mulgan, 1999) . In the absence of much literature about the Third Way and the third sector, I am keen to explore how such mutual benefit might be achieved.


Verbal explanations were offered for the purposes of the interview. Interviewees were told that the research was to enable a review of the relationship between the voluntary sector and the DfEE with a view to identifying problems and enhancing the scope and scale of the involvement.

In the absence of a central hypotheses to test, careful consideration was given to whether a quantitative approach would be appropriate. However, with three groupings to be interviewed, conducting a large scale survey was both impractical and perhaps unlikely to produce more significant results than a qualitative approach. A qualitative approach has distinct merits, in particular the opportunity it affords to discover the unexpected (Bryman, 1988).

Given the role of the civil service in developing and implementing policy on behalf of the Government of the day, it was deemed important to explore “what is important to individuals as well as their interpretations of the environments in which they work”. (Bryman, 1989). The qualitative approach was therefore chosen and loosely structured interviews were undertaken face to face with selected individuals both within the DfEE, local and national voluntary organisations whose activity falls within the remit of the DfEE as well as intermediary agencies / individuals who play a role in facilitating / regulating the work of voluntary sector organisations.

Interviewees were selected on the basis of their responsibilities (civil servants) or experience (voluntary organisations and intermediaries / funding agencies. Interviews lasted between 30 minutes and two hours. All interviewees were asked to consider the same broad themes (see Appendix)

In one case (Voluntary Sector Organisation X), both the Chief executive and the Operations Manager were interviewed together. This did not present any particular problems and actually worked quite well as The Operations Manager had only been in post for four months and was therefore able to take a fresh look at the issues the Chief Executive had been dealing with for over ten years.

Written material was made available in some cases (information about individual voluntary organisations interviewed). Other documentation analysed included all 18 Policy Action Team Reports and the DfEE Departmental work programme and objectives.

Context / Literature Review

This chapter seeks to place the study in context , to analyse some of the relevant literature and to explain its relevance. I have attempted to explore relevant definitions concepts and theories which might help analyse the interview findings.

Smith & Lipsky (1993) describe the individual as choosing whether to engage in voluntary action on the basis of a cost benefit analysis which is influenced by a number of factors including:

a) Historical precedent

b) Anticipated reactions

c) Regime characteristics - They cite (Esping Anderson) here arguing that voluntary organisations under a liberal-welfare state regime fulfil three functions:

• supplement government provision

• reinforce prevailing government policy emphasising work norms, self-sufficiency and markets and

• as a vehicle for pushing expanded government provision.

The politics of New Labour and its emerging Third Way ideology are important because according to Smith & Lipsky (1993) “role of politics and the design of dominant political institutions (are) important factors in determining the nature of the voluntary sector.”

a New Labour - Third Way

The Third Way was described (Mulgan, 1999) as providing a framework in which the relationship between government and the voluntary sector would change. This change covers seven areas:
1 Policy making has been increasingly opened up to the sector
2 The foundation of the relationship is changing - the Government & Voluntary Sector compact providing a new basis for the relationship
3 A new partnership model with joint policy making
4 Increased government support for the Social Economy (integrating social end economic policy wherever possible
5 Developing Social Capital - enabling and supporting community organisations
6 Modernising charitable giving and

7 Supporting volunteering (described as being “the most important aspect of the Government’s relationship with the voluntary sector” )

b Definitions

The literature defining the voluntary sector is particularly relevant as it is clear that the term voluntary sector has been used within government loosely to describe different types of organisational form with sometimes confusing consequences. The problem described by Lohmann (1992) "is not that we lack a paradigm … it is that we have too many".

i Voluntary Sector

Salamon & Anheier (1992) define the voluntary or "third sector" as:

• Formal - they have some institutional arrangement that formalise their activities

• Private - not part of government

• Non-profit distributing -

• Self-governing - they control their own affairs

• Voluntary - there is some voluntary (unpaid, un-coerced) involvement in either management and control or "in the actual conduct of it's activities" - (Salamon & Anheier, 1992).

This has been criticised as being too broad. Campbell (1999) describes the definition as having particular problems in a European context because it excludes a large part of what he describes as the “`social economy’ of co-operatives and mutual organisations”. This is important given that the social economy is one of the seven planks in the framework for the new relationship between the sector and Government under the Third Way (Mulgan, 1999).

Campbell cites work being done across Europe and an emerging “set of criteria for identifying Third System organisations:

• Responsive to unmet needs not met by the public or private sectors

• Self organisation and management

• Community oriented and community based

• `Not for profit’ in the sense of no (re) distribution of profit

• Draw upon the `gift’ economy, including volunteer work.”

ii Community and Associations

Voluntary sector organisations have been described as manifestations of community - Robert Bellah, cited by Smith & Lipsky “` a community is a group of people who are socially interdependent, who participate together in discussion and decision making, and who share certain practices that both define the community and are nurtured by it.’

Nonprofit organisations, in this definition, are tangible, significant manifestations of community”. However, Smith & Lipsky argue that although community and neighbourhood may overlap but are not the same. Community is a) self-identifying; b) fuelled by voluntary action - such organisations may be stronger because they are comparatively autonomous, they enjoy a special form of legitimacy because they derive from free association c) “important because it is in their midst that our most deeply held values are expressed… d) self-conscious collectivities of shared sentiment e) enable participation - through trusteeship, as volunteers, donations.

It is especially important to distinguish between the unorganised groups that are occasionally described as `community groups’ or associations. Such organisations tend to be small groupings of people who "draw a boundary between themselves and others in order to meet … some problem, to 'do something'" - Billis (1993a) cited in Harris (1995).

Associations may well determine to remain small and informal (Harris, 1995) but they often grow into quite substantial voluntary organisations and can have a significant impact on policy makers as they are occasionally seen as having greater legitimacy in representing public views because they are grass roots organisations. A view echoed by Billis (1993b) and Lohmann (1992) cited by Harris (1995) who restated their views "that it is voluntary associations which constitute the authentic 'roots' or 'core' of the nonprofit sector".

Billis' approach reflects the huge range of organisational complexity within the voluntary sector, it also reflects the difficulties for easy definition posed by the degree of ambiguity to be found. Billis (1989), Marshall (1996) and Adil Najam all make reference to the ambiguity and blurred boundaries between both the many different sub-categories of organisation that make up the sector and indeed, between the sectors as do several others.

Marshall (1996) identifies one common feature that all have, they serve as mediators between the individual and the state, both holding society together and lubricating it for social change, "the voluntary sector provides the marketplace for negotiating social values and social relationships". Smith & Lipsky (1993) also describe voluntary organisations as mediating institutions, “providing services outside the mandates and force of law implicit in government programs…community organisation is prior to government provision of service, coexists with public service provision, and plays a social role that cannot fully be taken over by government”.

This discussion of community, association and more formal voluntary organisation is important primarily because of perceptions of legitimacy which influence government response to the voluntary sector (see findings below).

iii Social Economy

The various `failure theories’ (voluntary failure - Salamon, market failure - Weisbrod and contract - Hansmann) and the responses to them are relevant to understanding the social economy, social entrepreneurs and the links with voluntary action. The importance of the social economy to New Labour is reflected in the emphasis on community economic development and the role of social entrepreneurs as described in the work of the Policy Action Teams and in various speeches by leading members of New Labour.

The social economy has been described as being “characterised by its independence from the public and private sectors but connected to both. ...At its core it includes hundreds of local voluntary organisations, social and community enterprises…” (Patel, Carter & Parkinson, 2000). They go on to describe the social economy as “improving access to services through a more creative mix of public, private and voluntary activity and investment.”


v Social Entrepreneurs

Marshall’s market place is also where social entrepreneurs operate and this term, whilst describing individuals, is important because such individuals operate in an organisational context. Social entrepreneurs have been described as:

• "Pathbreaker(s) with a powerful new idea, who combines visionary and real-world problem-solving creativity, who has a strong ethical fiber, and who is 'totally possessed' by his or her vision for change" (Bornstein, 1998);

• "People who attempt to take innovative approaches to social and other issues, most often with the use of traditional business skills applied in order to achieve some type of social goal" (The Roberts Enterprise Development Fund), "";

• "Pioneers (who) are discovering that entrepreneurship can help them simultaneously meet community needs and become more financially self-sufficient" (The National Center for Social Entrepreneurs,"; and

• "Nonprofit executives who pay increasing attention to market forces without losing sight of their underlying missions" (Boschee, 1998).

• "private people willing to put their organizational and entrepreneurial skills to work helping others rather than making money”. Forbes, September 1998.

Social Entrepreneurs are neither new, nor exclusive to voluntary and community (or associational) organisations. They can also be found in public sector agencies (Leadbeater). Such individuals have also been described as civic entrepreneurs. The need to try and draw a distinction between the two illustrates the blurred edges between the sectors.

c Public Funding and the Voluntary Sector

“In theory, government funding of nonprofit agencies is a mechanism for marrying two visions of the welfare state: promoting community interests, citizen participation in service delivery, and fellowship through voluntary action, while guaranteeing a minimum level of service regardless of income and social status”. (Smith & Lipsky, 1993).

Public funding, a significant part of voluntary sector income, has grown. The National Council for Voluntary Organisations estimates that up to 28% of all voluntary sector income is in the form of government grants and contracts. Kendall & Knapp (1996), demonstrate the importance of central government funding (particularly in housing and special employment programmes) and of local authority funding (especially on social care issues).

The rise of contracting as a vehicle for allocating public funding and the associated advantages and problems have been well documented by Kramer (1979, 1985,1994), Kramer & Grossman (1987), Gronbjerg (1993), Judge (1982), Smith & Lipsky (1993) and others.

The focus usually rests on the disadvantages. Smith & Lipsky state that
“Contracting also alters the boundaries between communities and markets. …the requirements of the contracting process such as bidding, cost justifications, and demonstrations of good financial management shift the attention of the agency towards concern about costs and the efficient internal allocation of resources. As a result, non-profit contract agencies move away from a primary concern with the individual client to efficient utilisation of resources. … As nonprofit service providers are forced to be more business-like, they become more rule bound and more intent on the bottom line of fiscal health at the expense of responsiveness.” They describe contracting as having the following consequences:
1 Government intervention into affairs of nonprofit agencies
2 A shift from informal care systems to formal care systems
3 Greater homogeneity of services
4 A diminishing role for trustees and
5 Financial destabilisation of organisations
The Resource Dependency theory suggested by Romo is one that is held quite powerfully amongst civil servant interviewees (see below) as is the concern about goal deflection.

Yet, Gronbjerg suggests that the advantages outweigh the disadvantages. Judge (1982) describes the Purchase of Social Care as posing little threat to the autonomy of organisations. Perry 6 & Kendall describe 5 myths that are associated with contracting - that:

• Contracts differ from grants

• Contracts mark a shift in government policy

• Contracts threaten the voluntary sector ethos

• Contracts introduce commercialism and under Contracts , managers need new skills.


This chapter summarises the data collected through interviews illustrated with quotes where appropriate. Responses to all but the first question are grouped under the categories for interviewees - DfEE, Voluntary Organisations and Others.

Understanding of political objectives - The Third Way

All the respondents recognised that New Labour had signalled clearly its intent to work with the voluntary sector. Evidence was cited of how this was being put into practice via membership of various steering groups, task forces, Policy Action Teams etc. However, only one interviewee demonstrated any awareness or understanding of what Third Way thinking was or how it might relate to the voluntary sector.

a Department for Education and Employment

There is no data available for an accurate assessment of the scale of the engagement between the voluntary sector and the DfEE. The principal areas of engagement are:

• Childcare

• Supplementary Schools / Special Needs provision

• Disability

• Employment & Training Initiatives -

f) Mainstream (through franchised Further Education Funding Council resources via FE colleges),

g) Employment Service programmes (New Deal), Training and Enterprise Council funded programmes, and

h) European Social Fund support (£73 million of European Union funds per annum are distributed to voluntary organisations).

It is estimated that in excess of £200 million per annum is made available via the DfEE principally through contracts.

i Responses

Civil servants other than a very senior Director General (perhaps influenced by the knowledge that the interviewer is from a voluntary sector organisation) were markedly reluctant to make a qualitative judgement . about whether government engagement with the sector is a good thing. The engagement was recognised as inevitable and, as one interviewee stated “It is irrelevant, if No. 10 wants engagement then it is going to happen”.

One interviewee who had been a member of a Policy Action Team stated that there were possible difficulties over the selection of people from the voluntary sector to participate in the various task forces etc. that had been established. “Was it just those with the loudest voices who were picked? We certainly had no way of making any assessment about the potential value of any contributions”.

Descriptions of the current levels of engagement varied. One interviewee explained that “We are dependent on the voluntary sector, we cannot achieve our objectives without them”. In that particular case it was explained that services delivered on behalf of the Department were primarily through contracting with private sector agencies but that formal consultation arrangements had produced useful responses and the sector was “best placed to work with some of the most socially excluded”.

Another respondent reported that there had been an understanding right at the start of the development of a new national strategy that the voluntary sector was essential both to the development of the strategy and to its subsequent delivery. The Division responsible therefore set out to work with specialist infrastructure organisations. A clear expectation was communicated to staff that they should go out into the field in order to develop their understanding of the voluntary sector and its operating environment.

In one other area of activity there was practically no engagement reported even though voluntary organisations existed that had the same or similar overall objectives to the Division.

There was a recognition of the tendency “to work in silos” and not even develop awareness of what else might have an impact on a particular policy area within the same Department let alone from other Government Departments. There was consensus over the view that Government needed to acquire appropriate expertise no suggestions about how this might be done other than through recruiting specialist skills.

Several problems were reported with the engagement:

• The absence of “a street map for finding the way” around the sector - identifying who’s who and who does what.

• Variable quality - there was the widely held view that quality was too variable and that it was up to the sector to address the issue in the first instance.

• There were concerns voiced about free-lance consultants preying on voluntary organisations that had difficulty in developing tenders to bid for services.

• Concern was also expressed about the “predatory behaviour” of some organisations that “expected to do it all”. One interviewee reported a conversation with a representative of a large national voluntary organisation during which it was suggested that there was no point trying to work with small organisations.

Funding - There was a recognition that competition through tenders was at best a flawed process but was better than any other method for allocating contracts. No one demonstrated any awareness of the practical difficulties involved in managing contracts (see Lipsky & Smith, 1993 for analysis of complex administration, cashflow difficulties etc.)

One senior manager expressed the view that the sector was in grave danger where it became dependent on the public purse given the propensity of government policy to shift funding priorities from time to time. The manager in question recalled with horror the impact of the cessation of a programme in the 1980’s which “many small, local voluntary organisations, had become highly dependent upon”. There was a recognition that government designed programmes which organisations contracted to deliver.

One interviewee pointed out that the disparities in resource availability amongst voluntary organisations could not be sustained in the long term. The interviewee pointed out the asset base (estimated at £30 billion) that was held by comparatively few organisations - rarely those that were primarily engaged in addressing government priorities.

All the interviewees indicated some difficulty in understanding the concept of the social entrepreneur other than that these might be charismatic, community leaders who got things done.

There were differing views about the potential role of community organisations and some vague comments made about the need to “get to the real community”, to avoid the “usual suspects” who were defined as established voluntary organisations. This contrasts with concern that the community lacked the skills to engage effectively.

Only two interviewees knew about the compact between government and voluntary sector even though it had been signed by the Prime Minister several months earlier.

b Voluntary Organisations

Voluntary organisations selected for interview were chosen on the basis of the scale of engagement with the Department and the extent of personal experience in delivering education, vocational training and employment initiatives within voluntary sector organisations. Two organisations were large voluntary sector training providers with multi-million pound budgets. One was substantially smaller. Two organisations operated as specialist umbrella groups - one nationally and one regionally.

i Responses

All interviewees regarded voluntary sector engagement with government as inevitable. They welcomed the increasing interest and attention being paid to the voluntary sector by government but expressed concern that this was not yet translating itself into changes in practice - one interviewee made the comment that we are being “consulted to death” and are in danger of spending far too much time offering views and opinions. The interviewee went on to stress the need for improvements in dialogue.

Government expectations of the sector were viewed as being unreasonable and based on an ill-thought out desire to reduce costs above all. Two interviewees mentioned the absence of a level playing field, stating that whilst they were effectively competing with FE colleges in providing education and training they not only could not achieve the same economies of scale but they also did not have the equal access to funding. One interviewee reported that government funds specifically allocated for improving access to higher education were almost exclusively utilised by FE colleges even though the voluntary strength in education was precisely facilitating access for those that either chose not or felt unable to take advantage of college-based provision.

There was an acceptance that competition based resource allocation was here to stay but the hope was expressed that some of the worst effects of competition might be mitigated.

Interviewees recognised the difficulties that civil servants had with finding there way around the sector but offered no views on how this might be facilitated.

There was an acknowledgement that established voluntary organisations needed to work more effectively in support of community groups.

There was recognition of the importance of quality but no one identified the opportunity for the sector to collectively address this before Government imposed additional quality measures other than those already built into contracts.

There was general awareness of the Government voluntary sector compact but no view that it would or even could make any substantial difference. One interviewee described it as “window dressing”.

c Others

A broad mix of `others’ were selected for interview. A chief executive of a funding agency, a special adviser to a funding agency, a senior officer in a quango that (amongst other things) supports a network of voluntary organisations, an owner manager of a specialist consultancy that does extensive work for both central and local government on regeneration issues, an academic involved in research on behalf the European Union, central government and the new Regional Development Agencies.

i Responses

The views from this group reflected much of what has been described above. Significant differences were as follows:

Several interviewees thought there was a very real danger of Government in its eagerness to address New Labour’s priorities and in recognition of its own weaknesses, might “bleed the voluntary sector of all its best talent”. ( There are a growing number of secondments / recruitment s into the civil service from the sector). The need for specialist skills within government was acknowledged but, as one interviewee suggested, “we need high quality specialised training and development available to the sector and to government”.

There was a greater understanding of social entrepreneurship, described by one interviewee as being “essential to the effective delivery of the social inclusion agenda”.

He role of voluntary sector infrastructure organisations was identified as an issue by several interviewees, one of whom described it as being in crises.

One interviewee devoted considerable time to discussing what she perceived to be a lack of accountability within the sector, but acknowledged that it was indeed complex not amenable to resolution through a standard approach. The same individual went on to describe the necessary trade off between flexiblity and accountability that “both sides would have to come to terms with”.

There was a high level of awareness of the Government & Voluntary Sector compact and optimism rather than expectation that it could form a basis for improvements in the relationship between Government and sector.


a Issues

The interviewees identified several issues that represent significant barriers to the achievement of the new relationship between Government and the voluntary sector described by Mulgan (1999) as being the hallmark of the Third Way.

a. Knowledge and understanding of the voluntary sector within government is patchy, and essential to an effective working relationship. The day to day complexity of managing a service delivery agency which, if dependent on contract income is to all intents and purposes a small business is only appreciated by a few within the voluntary sector let alone those outside of it.

This affects not just the ability of government to identify suitable partners for particular needs but also the possible impact of policy on voluntary organisations

Resolution through the acquisition of expertise could so weaken the sector as to damage its ability to work effectively in partnership with government. “In a sense, the costs of training public administrators is now being borne partially by nonprofit agencies, which in turn are funded by the state” (Smith &Lipsky, 1993)

b. Capacity in both Government and Voluntary Sector needs to be enhanced in order to achieve shared objectives. Even with enhanced capacity (which can only be built over time) there iare still doubts about the ability of the sector to meet what one interviewee described as “perhaps unreasonably high expectations”.

c. There is insufficient co -ordination of Government activity that impacts on the sector within the Department and insufficient “joined-upness” across Government.

d. Existing arrangements for financial support rely excessively on contracting arrangements which may weaken those organisations engaged in delivering priority services (see Lipsky & Smith, 1993) and may exclude those community groups and associations whose participation is essential to the achievement of social inclusion.

e. Incorporation of the sector is identified as a risk and raises questions about the role of the sector. What role for advocacy organisations when they are being asked to deliver services designed by a government which has already identified the same concerns and designed its own responses?

b Corporatism

Perhaps the biggest risk to the achievement of expectations is the danger of mutual dependence and consequent corporatism.

Smith & Lipsky (1993), describe the Government and voluntary sector as being mutually dependent, they “co-produce” social services. Mutual dependence blurs the lines between public and private sectors and produces corporatist politics of the contract regime - public officials and sector leaders - the key actors join together in a bargaining relationship. Smith and Lipsky argue that they may even exchange personnel between the two sectors (for experience and connections).
“Corporatism would make service providers more powerful but also constrain their advocacy”. Claus Offe is cited as stating that there are 4 parts to the corporatist approach including:

a. “the extent to which the resources of an organisation are supplied by the state”

b. “the extent to which interested organisations are licensed, recognised, and invited to assume a role in legislation, policy planning and implementation”

The corporatist approach Smith & Lipsky argue arises out of an effort to to avoid the “disadvantages of unregulated competition” which are a consequence of the use of the market model. Corporatism helps bring about “a more robust state service sector. The state builds upon the capacity of nonprofit organisations to invent and administer programs”.
“The material interests of nonprofits under contracting tend to reduce the ideological character of political advocacy and shift it to technical issues relating to rates, funding levels and regulations.”
“This explains the paradox of agencies gaining political strength while at the same time becoming more vulnerable to government influence.” - another characteristic of corporatist arrangements.


a Third Way or same old way?

There is clearly little understanding let alone consensus about what the Third Way might mean for the voluntary sector. Glennerster (at the Third Way, Third Sector conference, June 1999) suggested that “New Labour seems to have no distinctive role for the voluntary sector. There is no clear notion of what are its comparative advantages. Much the same was true, for different reasons, of the Conservative Government..” So, is the Third Way empty rhetoric or the same old way?

The collective view of all the interviewees suggests that although there is perhaps, as in Glennerster’s view, no “clear role”, there are nonetheless expectations of a role that looks likely to grow in scale. There is a concern that the Third Way might mask a reduction in state engagement, a withdrawal by the state from public provision, an abdication of currently accepted social welfare responsibilities.

The emerging thinking around the social economy and the role of social entrepreneurs, does offer some potential for the translation of Third Way thinking into practical application. However, whether this would still be recognisable as voluntary action as distinct from private and public sector activity is questionable.

Lack of clarity within government about the differing roles and strengths of community leadership, community groups, and voluntary organisations raises barriers to progress and the current., corporatist approach to the relationship between the government and the voluntary sector offers the potential for the maintenance of the status quo.

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| | |Paper2 |Policy Studies |
|Smith SR & Lipsky M |(1993) |Nonprofits For Hire |Harvard University Press |
|Taylor M |(1995) |Community Work & The State: The Changing Context of UK |Zed Books |
| | |Practice | |
|Thake S |1995 |Staying the Course: The role and structures of community |York Publishing Services |
| | |regeneration organisations | |
|Thalhuber Jim | |The definition of a social entrepreneur, The National Center |The Int. Centre for Social|
| | |for Social Entrepreneurs |Entrepreneurs website: |
| | | |http://www.socialentrepren|
| | | | |
|Unwin J |1999 |Speaking Truth to Power - a discussion poaper on the voluntary|Baring Foundation |
| | |sector’s relationship with Government | |
|Various |1999 |Policy Action team Reports (1-18) |SEU |
|Young D | |Emerging Themes in Nonprofit Leadership & Management | |

c Appendix 1

Interviews were held with 30 people selected from the voluntary sector, government and other agencies with significant voluntary sector links. Voluntary sector organisations selected all had significant involvement with the Department for Education and Employment. Government representatives were all senior civil servants with policy and / or service delivery responsibilities with significance for voluntary sector organisations or Special Advisers (political appointments).

| |Voluntary Sector | |
| |Voluntary Sector Organisation X |Chief Executive |
| |Voluntary Sector Organisation X |Operations Manager |
| |Voluntary Sector Organisation Y |Chief Executive |
| |Voluntary Sector Organisation Z |Chief Executive |
| |National Voluntary Sector Umbrella Organisation (Youth) |Policy Officer |
| |National Specialist Voluntary Sector Infrastructure |Director |
| |Organisation | |
| |Regional Specialist Voluntary Sector Infrastructure |Chair (same as 3 above) |
| |Organisation | |
| |National Training Organisation (NTO) |Chair |
| |Other | |
| |Funding Agency X |Chief Executive |
| |Funding Agency Y |Consultant / Advisor |
| |Academic Researcher |Leeds Metropolitan University |
| |Further Education College |Principal |
| |Consultancy Firm |Chief Executive / Policy Analyst |
| |Charity Commission |Commissioner |
| |Commission for Racial Equality |(Board Level) |

| |Government | |
| |Department for Education & Employment |Regeneration / Regions |
| | |Employment Policy |
| | |Employment Service |
| | |Childcare |
| | |Equalities |
| | |European Union |
| | |Schools |
| | |Volunteering |
| | |Post 16 (Learning Skills Councils) |
| |The Treasury |Public Services Directorate |
| |The Home Office |Active Citizens Unit |
| |Dept. for Environment & The Regions |New Deal for Communities Unit |
| |Cabinet Office |Social Exclusion Unit |
| |Prime Minister’s Office |No 10 Policy Unit |
| |Local Authority X |Chief Executive |
| |Local Authority Y |Assistant Chief Executive |

All interviews were loosely structured and lasted between 30 minutes and two hours.

d Appendix 1
Themes explored through questioning:

Understanding of political objectives - The Third Way

Whether voluntary sector engagement with Government is a good thing.

Government expectations of voluntary sector

How sector is currently engaged:

• Grants

• Contracts

• Consultation arrangements

Problems with engagement

9. Mapping - Did they know who was who and who did what in a) voluntary sector b) government


Social Enterpreneurs

Quality assurance

13. How to develop knowledge and understanding of sector.

14. Knowledge of Government / Voluntary Sector compact - Home Office /NCVO (deliberately kept to the end so as not to undermine confidence in


[1] Various Policy Action Team reports on behalf of the Social Exclusion Unit

[2] The Department for Education & Employment is estimated to spend over £200 million through voluntary organisations each year.

[3] Voluntary Action, Beveridge, 1948

[4] Speeches on visit to Southwark Housing Estate, 1998 and Annual conference of NCVO, January 1999.

[5] Held at LSE, June 1999.

[6] Discussion paper based on conference organised by the Baring Foundation…...

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