Charities have historically had a significant role in the delivery of public services and with recent drives for efficiency and quality, it is likely that this will increase.

Public service delivery can provide an opportunity to promote a charity’s mission and be a valuable source of revenue. If it is done well it can also raise the charity’s profile and enhance its reputation. But charities should be aware that public service provision has its own set of risks and challenges. Here are our top five tips for charities to remember:

Understand the commercial risk

Entry into any commercial arrangement carries a degree of risk and charities should ensure that these are identified and mitigated.

The charity will be required to enter into a contract with the public authority covering matters such as the liabilities that the charity is taking on, and what happens if there is a failure to deliver the services.

In the majority of public commissioning exercises, the contractual terms will have a very limited scope for negotiation, so that the public authority is maintaining a level playing field between bidders. It is important that the charity understands any contractual terms prior to submitting a bid, is comfortable that it understands the risks that it would be taking on, and that the allocation of risk is appropriate.

Understand the ask

It is essential the charity has a clear, objective and unambiguous understanding of the service to be provided, any measures of performance, and exactly how the commissioning process will operate.

Procurement programmes will generally include a time by which any requests for clarification should be raised, and if there is any uncertainty in the nature of the service to be commissioned, the procurement process, or the applicable terms and conditions, these should be raised at the appropriate point.

Deliver the ask

Any bid that a charity submits needs to be as clear and objective as possible, as it is likely to ultimately form part of the contractual arrangements.

The consequences of a public authority failing to run a proper procurement process can be significant. A public authority will try and ensure that it is being as objective and fair as possible. This is likely to include strict enforcement of the rules of the procurement process. Charities should ensure they have strictly adhered to the public body’s requirements. For example, a submission that is only seconds late, or a failure to submit all requested documentation, may well result in disqualification.

Regulatory compliance: guarding your independence and sticking to your mission

The charity should consider how it will comply with its broader regulatory requirements including, but not restricted to the following:

  • Any activities that a charity carries out must be within its objects and powers. The charity should also ensure that any activity contributes to its objects and mission
  • Although the public service to be delivered may be closely aligned with the charity’s charitable objects, a charity trustee must bear in mind that a trustee must act solely in the interests of the charity and should be comfortable that the delivery of public services will not fetter this
  • Trustees must make decisions in line with their duty of care and duty to act prudently

Know your value

Pricing is often a key consideration and it is vital that in considering the appropriate cost, the charity:

  • Understands the full cost of the charity’s provision of services
  • Recognises its scope to deliver and any limitations
  • Identifies any unique or distinctive qualities of the charity’s services

The charity should aim to recover all of its costs in providing the service unless it is in the charity’s interests to forgo full cost recovery, based on the interests of the charity and the needs of its beneficiaries.

Charities must consider a wide range of factors in undertaking the delivery of public services and compliance with wide ranging obligations can seem a fine balancing act. But, with appropriate preparation and due diligence, there is no reason why charities cannot have a successful role in the delivery of public services.