Key findings
• Organisations largest sources of funding were both government/statutory contracts, and grants from trusts and foundations.
• Criminal Justice Charities receive significantly less income from donations and legacies than All Charities, as well as less income from trading activities.
• Organisations sought funding from a range of sources, with grant funding applications most commonly made to charitable trusts and foundations, and bids for contracts most commonly made to the Ministry of Justice and HM Prison and Probation Service.
• About two-thirds of survey respondents delivered services under contract or sub-contract, and Criminal Justice Charities were found to deliver more services under government contract than All Charities.
• More than eight-in-ten survey respondents applied for a grant from a charitable trust or foundation, with just over half applying for a government grant.
• Criminal Justice Charities, on average, receive more government grants than All Charities.
• While charitable trusts and foundations described following the same funding processes as before, focus group participants described a reduction in the flexibility and speed seen during the height of the pandemic, and delays and cancellation in some commissioning processes, particularly from the government.
• Respondents were positive about their experiences of grant funding, particularly from charitable trusts and foundations, but slightly less so about government grants.
• Organisations were broadly negative about their experience of contract funding, which are almost always commissioned by the government or statutory bodies.
• While organisations reported stable or rising income from grants and contracts, this came at the same time as almost four-in-five reported rising running costs.
• Increased costs were attributed to factors including increased staff costs, travel costs, and freelancer rates, higher energy bills and rents, and multi-year contracts not adjusting for inflation.
• Organisations were broadly confident about their financial sustainability over the next two years, but
in focus groups, this was qualified by uncertainty as to what service delivery might look like
two years later.
Largest funding sources
Organisations reported that their largest sources of income were both government/statutory contracts (39%), and grants from trusts, foundations, or other charitable organisations (39%). The next largest source of income was government/statutory grants (10%).
For smaller organisations, with an annual income under £500,000, they were significantly more likely to see grants from trusts, foundations, or other charitable organisations as their largest income source (57%), followed by government/statutory contracts (24%). Conversely, organisations with an annual income over £500,000, were more likely to have government/statutory contracts as their largest funding source (49%), followed by grants from trusts, foundations, and other charitable organisations (29%). A similar proportion of both smaller and larger organisations said government grants were their largest source of funding (9% and 11% respectively).
The most common source of funding Welsh respondents was government/statutory contracts (35%), followed by grants from trusts, foundations, and other charitable organisations (30%), and then government/statutory grants (20%).
The Charity Commission gives data on income types for charities with an income over £500,000. Analysis of that data shows that Criminal Justice Charities receive significantly less income from donations and legacies than All Charities, as well as less income from trading activities. This highlights the importance of the funding made available to the voluntary sector from the government and other statutory bodies, and charitable trusts and foundations, in enabling the sector to provide its vital services.
Criminal Justice Charities also spend more of their money on charitable expenditure than All Charities, which includes the money spent delivering the charitable work the organisation was set up to do, including governance costs. For Criminal Justice Charities, charitable expenditure makes up 93% of their spending, while for All Charities, this makes up 89% of their spending. Criminal Justice Charities and All Charities both see about 7% of their spending used for raising funds.
Funding sources
We asked survey respondents about the number of funding applications they made in the 2022-23 financial year, and the proportion of those applications that were successful.
Organisations sought funding from a wide range of sources. For grant funding, applications were most often made to charitable trusts and foundations (71%), followed by the National Lottery (35%), Police and Crime Commissioners (28%), and the Ministry of Justice (25%).
Bids for contract were most often made to the Ministry of Justice (32%), followed by HM Prison and Probation Service (28%), individual prisons (18%), and local authorities (27%).
Bidding for contracts
In our survey, 65% of organisations said they delivered services under contract or sub-contract. Of those organisations with an income over £500,000, 73% reported delivering under contract or sub-contract, and of those with an income under £500,000, 55% were doing so. Compared to all respondents, a larger proportion of specialist women’s organisations were delivering services under contract or sub-contract (77%), while a smaller proportion of those operating in Wales were doing so (53%).
Just over one-in-five organisations (21%) delivering services under contract or sub-contract, applied for one contract, 38% applied for between two and five contracts, 10% for six to 10 contracts, and again, just over one-in-five (21%) for more than ten.
A quarter (26%) were successful in all applications, 31% successful on more than half. Only 4% of respondents said they were unsuccessful in all their bids for contracts.
Analysis of Charity Commission data also showed that Criminal Justice Charities deliver significantly more government contracts than All Charities. For Criminal Justice Charities with an income between £1 million and £10 million, the median number of contracts was three, compared to zero for All Charities. In addition, for charities with an income of over £10 million, the median number of contracts for Criminal Justice Charities is 31, compared to one for All Charities. For charities in the income bands below £1 million, the average number of government contacts was zero.
Applying for grants
Almost all respondents (84%) had applied for grants from charitable trusts and foundations in the last financial year: 39% for more than 10 grants, a quarter for between two and five grants, 18% applying for six to 10, and 2% for one grant in that year.
While organisations typically made more grant applications than contract bids, they generally experienced slightly lower levels of success with grants. Only 7% were successful in all grant applications, with 35% saying they were successful in more than half. However, only 4% of organisations said they were unsuccessful in all their grant applications.
Fewer organisations made applications for government grants: 54% reported applying for at least one such grant. This is also a smaller proportion of organisations than reported applying for at least one contract. Our survey saw 13% of respondents report applying for one government grant, 31% applying for between two and five government grants, 6% applying for six to 10 grants, and only 3% applying for more than 10.
Respondents reported more success applying for grants from government than from charitable trusts and foundations. A quarter were successful on all their applications, and 22% were successful on more than half of their applications. However, a slightly greater proportion of organisations were successful in none of their applications for a government grant (14%) compared to grants from charitable trust and foundations.
Analysis of Charity Commission data shows Criminal Justice Charities tended to be in receipt of more government grants than All Charities. For charities with an income between £500,000 and £1 million, the median number of government grants for both Criminal Justice Charities and All Charities was one. For charities with an income of between £1 million and £10 million, the median for Criminal Justice Charities was two, compared to one for All Charities, and for charities with an income of over £10 million, the median for Criminal Justice Charities was 13, compared to two for All Charities.
Experiences of commissioning processes
Focus groups participants felt the commissioning and funding landscape had returned to its pre-pandemic state, and the flexibility and responsiveness of funders and commissioners during the height of the pandemic had largely ended. Instead, they described a return to bureaucracy, demands on applicants, and slower application processing times.
‘One of the things that’s perhaps less good is that, in 2020-2021, funders were actually really flexible and we thought, oh, maybe this is the start of funders really getting it, that actually that’s what we need- find an organisation that you really support and then support it. Don’t put a whole load of conditionality around your funding. Instead, we’ve just gone back to business as usual.’
- Large organisation
‘One of the very interesting things is we’ve gone back to just such slow process whereas, during the pandemic, the time from application to grant was unbelievable.’
- Small organisation
As part of this return to pre-pandemic processes described by focus group participants, they also reported a decline in flexibility. Where some organisations described experiencing some flexibility from funders in the face of the rising cost of living, this tended to be where there was a strong existing relationship and organisations had been transparent about the need to adapt.
‘We’ve been fortunate where most contracts have had a 10% uplift. We have been very upfront and said that we need it to cover the costs, otherwise it will impact delivery and they’ve come up with it.’
- Large organisation
Some organisations suggested funders had taken longer to process applications and communicate outcomes compared to 2022 and had reversed the efficiency seen previously.
This was raised with the charitable funders in interview. They did not recognise this change in their own processes. It is worth noting the funders interviewed typically received applications for funding only by invitation, which likely reduces the volume of applications, compared to open calls. However, the interviewees did suggest other funders, particularly those who hold open calls for applications, might be experiencing challenges due to cost-of-living pressures on their organisation, fewer funders operating in the criminal justice sector increasing demand for those who are, and more applicants per grant in 2023.
‘Our decision-making timeline is the same that it’s always been in terms of the three-month turnaround time. From my understanding of other funders there has been a lot of funders really strategizing, looking at what they’re doing, how they’re doing it, some of them have closed to be able to do that and some of them are a small funding sector. So having some people close to do that has had a big impact. I think part of it is coming out of Covid and into the cost-of-living crisis. Some just don’t have as much money as they used to.’
- Funder
Focus group participants highlighted delays to commissioning or even the cancellation of awarded work. These organisations had been subject to commissioning processes that ran months behind schedule or were delayed, or sometimes cancelled, after the award of the contract. This primarily came from central government commissioners.
Over the last year and a half, we heard from many of our members expressing their frustrations about the significant delays experienced in the commissioning of the HMPPS probation grants for people from ethnic minority groups. The regional competitions launched on 21 September 2022, and as a result of additional financial governance required as part of the Government’s Efficiency and Savings review, announced in the 2022 Autumn statement, delays in the award of these grants were felt throughout 2023 and are still ongoing as of March 2024, at the point this research is published.
Disruption like this made it challenging for affected organisations to plan and budget in the short to medium term.
‘There’s one contract last year that wasn’t renewed until April, even though it started in April. And no confirmation of that. They’ve told me that won’t happen this year, but I still haven’t heard anything, and it runs out in March and if we make any redundancies, they’ve got to be done in the next few weeks, so that’s quite a tight deadline.’
- Large organisation
‘We’ve seen a lot of delayed commissioning and cancelled council procurements for the first time. So we work on the financial year, but thinking early 2023 we had several contracts that were just cancelled post bid going in. So we’ve put the resources in and then they just never went anywhere.’
- Large organisation
The government is a key funder for the sector: 39% identified government/statutory funding sources as their largest source of income, and a further 10% identifying government/statutory grants as their largest income source. Moreover, analysis of Charity Commission data of charities with an income over £10,000, shows that for Criminal Justice Charities, 7% receive government contract funding, compared to 4% of all charities who receive government contract funding, and the same proportion of Criminal Justice Charities as All Charities receive government grant funding (21%). Moreover, bigger Criminal Justice Charities typically receive a larger number of government contracts and government grants than All Charities of comparable size.
Given this reliance on funding from the government, it is essential that statutory commissioners operate efficient, timely, and proportionate commissioning processes. This will help to ensure the sector has the funding available to it to deliver high-quality services to support people in contact with the criminal justice system.
The relationship with funders or commissioners was felt to be defined by their role or organisation more than the nature of the funding opportunity and that a local, rather than national, organisation was more likely to be flexible. At an individual level, some contracts were felt to be more driven by key performance indicators than others, and so would be less accommodating of change. Whether there was a pre-existing relationship was also seen as a principal factor, with participants feeling that familiarity and long-standing working relationships led to greater co-operation and understanding.
‘Where we’ve got that personal relationship, where it’s a local, maybe local NHS or something like that, were you’ve got that relationship where they come out and have a look at the work you are doing, they can see the impact of the decisions they’re making, and therefore there’s that tiny bit more flexibility.’
- Large organisation
Funders described an approach to management that was adapted according to the needs of the organisation receiving the funding, rather than taking a blanket approach. Funders tended to assess the needs of the organisation they were working with and offer support based on this assessment. The support they most often provided included sharing helpful contacts, training, and ad hoc guidance.
‘Where we’ve got that personal relationship, where it’s a local, maybe local NHS or something like that, were you’ve got that relationship where they come out and have a look at the work you are doing, they can see the impact of the decisions they’re making, and therefore there’s that tiny bit more flexibility.’
- Large organisation
Funders described an approach to management that was adapted according to the needs of the organisation receiving the funding, rather than taking a blanket approach. Funders tended to assess the needs of the organisation they were working with and offer support based on this assessment. The support they most often provided included sharing helpful contacts, training, and ad hoc guidance.
‘Our approach to funding is we give unrestricted funding and we trust the organisation to make the best decisions about how to use that funding. In terms of contact with us, apart from needing to obviously tell us if there’s regulatory, legal issues that they have or malpractice, the contact is dependent on how much contact they want from us. For some organisations that means that we have very close contact, we speak to them a lot, they might want out support with things, others it might mean we give them the grant and we don’t talk to them again until they submit the report for the next year of funding.’
- Funder
Organisations' views on funding
Our survey asked organisations whether they agreed or disagreed with a series of statements with regards to their distinct types of funding. We asked organisations about their contract and sub-contract funding, and, for the first time, separately about their grant funding from charitable trust sand foundations and from government grants. Only those organisations who were in receipt of each kind of funding were asked the question about that funding type.
The statements organisations were asked (modified slightly to reflect the distinct kinds of funding) about each funding type were:
• There is clarity about how your organisation will be paid for the work delivered
• You are paid at the agreed time for your service(s)/Funders make grant payments at the agreed time
• The ethos/values between your organisation and the contracts/contractors or grants/funders are similar
• There is transparency around the refreshing or retendering/re-applying for the service(s) you deliver/grant(s) you receive
• The contract manager(s)/grant manager(s) have been flexible in adjusting the requirements and outcomes for contracts/grant funding
• The financial terms agreed for the contract(s)/in the grant(s) are sustainable
• The level of funding provided is adequate to deliver your service(s) to a high quality.
Contracts
Organisations were mostly positive about the process for contract payments: 75% agreed there is clarity about how services would be paid for the work delivered, and 53% agreed they are paid at the agreed time.
Organisations were more mixed with regards to the flexibility of contract managers, re-tendering processes, and shared ethos/values between them and the contract funder. On flexibility, 37% agreed contract managers had been flexible in adjusting requirements and outcomes, compared to 19% who disagreed and 43% who neither agreed nor disagreed. On retendering, 44% agreed that refreshing or retendering services is transparent, compared to 36% who disagreed. For the similarity in ethos/values between the organisation and contract funder, 48% agreed they were similar, while 25% disagreed.
However, 60% disagreed, and 18% strongly disagreed, that the level of funding was adequate to deliver high-quality services, compared to only 25% who agreed. Moreover, 52% disagreed the financial terms of contracts were sustainable, compared to just 30% who agreed.
We also asked survey respondents whether they achieved full cost recovery on the services they delivered under contract. Given most organisations disagreed the level of funding was adequate and the financial terms sustainable, it is unsurprising that 61% said they do not achieve full cost recovery on at least some of their contracts, and only one-in-four organisations said they recovered their costs on all their contracts. More than one-in-ten organisations (11%) said they did not achieve full cost recover on any of their contracts.
Organisations responded to this failure to achieve full cost recovery by subsidising the shortfall using their reserves (68%) or using money from other funding sources (60%), while 30% said they were reducing overhead costs, and just under a fifth of organisations (19%) said they were covering the shortfall by reducing or closing services.
In our research last year, we also found organisations were subsidising contracts through their reserves and other funding sources. While some organisations were able to build up additional reserves during the pandemic, it is important to remember that these are finite, and so contracts that do not fully cover the costs of providing services are not sustainable for the voluntary organisations delivering them.
Services commissioned by government or other statutory agencies, are affected by wider challenges around public service delivery. Recent research from the NCVO investigated the public services delivered by charities across all domains. Since April 2021, 44% of organisations in their sample had not received any increases in their income from government, and only 17% had seen increases in all or most of their government grants or contracts. Moreover, 40% reported that government grants and contracts never covered their true costs. With the voluntary sector working in criminal justice particularly reliant on government funding, these challenges are likely to have a disproportionate impact in the delivery of public services in criminal justice, and the health of the sector.
Grants from charitable trusts and foundations
Organisations were largely positive about their relationship with charitable trusts and foundations, and this funding type received the most positive responses from organisations overall. Similarly to contracts, payments were a focus for positivity with 88% agreeing, and 45% strongly agreeing, that there was clarity from funders about being paid for work, and 84% agreed, with 44% strongly agreed, that funders make payments at the agreed times.
There was also agreement around alignment on values between organisations and grant funders, and flexibility in the relationship with funders. We saw 88% of respondents agree (39% strongly agree) the ethos/values between their organisation and the grant funders are similar, and 76% agreeing, with 35% strongly agreeing, that grant managers have been flexible in adjusting requirements and outcomes for grant funding.
Respondents were least positive about the financial terms of their grants, although they were more positive than about contracts. A total of 67% of organisations agreed the grant funding awarded is adequate to deliver high-quality services, compared to 27% who disagreed; 69% agreed the financial terms of the grants were sustainable, compared to 15% who disagreed; and 70% agreed there is transparency around refreshing or re-applying or for the grants, compared to 29% who disagreed.
Government grants
Respondents were more favourable about government grants than contracts, but less positive than about grants from charitable trusts and foundations. Almost all agreed (75%) that there is clarity about payment for the work delivered, and 60% agreed funders make payments at the agreed times.
However, just 52% agreed that government grant funding is adequate to deliver their services to a high quality, compared to 36% who disagreed; 50% agreed government grant managers have been flexible in adjusting requirements and outcomes, compared to 13% who disagreed; and 41% agreed compared to 29% who disagreed that the financial terms of the grants are sustainable. Organisations were mixed about alignment with the values of government grant funders (50% agreed there was alignment compared to 23% who disagreed) and transparency around the reapplications process (46% agreed there was transparency compared to 20% who disagreed).
Income and cost of living
While our survey found that organisations reported either stable or rising income from grant and contract funding in 2022-23, this needs to be set against the wider economic landscape. Inflation across the 2022-23 financial year ranged from 9% to 11.1%, based on the Consumer Prices Index. While 48% said their income from grants and contract funding had increased, and 20% said it remained the same, this needs to be contrasted with both the inflation figures, and organisations’ responses regarding their operating costs in 2022-23. Moreover, 29% said their income from grants and contracts fell in 2022-23, compared to the previous year, with 11% saying it decreased significantly.
Nearly four-in-five (78%) organisations said their running costs rose in 2022-23, with just under half (47%) saying their costs rose significantly. Only 4% of respondents said their running costs decreased. This follows the findings of our 2022 research, where 75% of organisations said their running costs had risen, with 35% saying they had risen significantly. Along with the increasing number of new service users, and the rising levels of service user need, this raises questions as to the sustainability of the current delivery model: for how long can organisations continue to provide more for less?
How sustainable is ‘more for less’?
In the focus groups, all participants were affected by the rising cost of living. For large organisations, this was most commonly seen through increased staffing costs. All organisations had given a pay rise or one-off cost-of-living payment to staff, but none felt able to give a pay increase that matched inflation. Increasing rents and multi-year contracts not adjusting with inflation were also cited as causes for increased costs amongst larger organisations.
‘Staffing is by far and away far the biggest proportion, about 75%. We gave a not-in-line-with inflation pay increase, but still a significant pay increase and a cost-of-living payment to everyone below senior leadership team.’
- Large organisation
Small organisations outlined more varied causes for increased costs, including increased travel costs, higher payments to freelancers, and increased energy bills.
‘From a cost-of-living perspective, it’s more the impact on wages and payments to freelancers.’
- Small organisation
‘We’re noticing it around the travel costs and things that budgeted for have been used up perhaps earlier, or we’re getting close to that a lot sooner in the year than we thought.’
- Small organisation
The impacts of increased financial pressures differed between organisations, reflecting varying sizes and services. Many were planning to, or had already, cut or reduced some services. Others prioritised services with more reliable or sustainable funding. A few small organisations were exploring more partnership working, also reflecting the findings seen around the responses to increased service user need.
‘Prioritising projects where costs are covered so that the sort of impact on maybe taking less risk. It’s just that prioritising where there is money.’
- Small organisation
‘We’ve had to cut [our services] on the basis of not having as much money to spend.’
- Large organisation
While a few organisations had come away from the height of the pandemic with greater financial reserves, they were now drawing on these. These organisations had seen services paused during lockdowns alongside the availability of pandemic support funds, which had allowed them to build up greater financial reserves.
‘We were lucky through Covid and we had some good years. So we were operating above our reserves level, but the reality is that essentially we’re using our reserves to make up now.’
- Large organisation
Returning to that concern of 'more for less', it appears many are already beginning to make changes. Organisations prioritise more sustainably funded activity, or look to reduce services, with an impact on service delivery. This highlights the importance of unrestricted funding that enables organisations to deliver flexible and responsive services that meet the needs of their service users, rather than being forced to innovate or deliver less helpful services, because that is all for which funding is available.
Confidence in future financial sustainability
While there were challenges around the cost of living, criminal justice organisations were confident about their financial sustainability over the next two years. Nearly three-in-five organisations (58%) said they were confident about their financial sustainability. However, smaller organisations tended to be less confident about their sustainability than larger organisations. Nearly half of organisations with an income of £500,000 or less said they were confident, compared to 65% of organisations with an income of over £500,000.
When asked how they intended to secure long-term financial sustainability, survey respondents envisaged adapting their services, rather than making cuts. The most common planned actions were to develop new services (63%), expand existing services (57%), and deliver more services in partnership (54%). Despite this, jut under one-in-five (19%) organisations did plan to reduce or close services, and nearly one-in-ten envisaged making staff redundant.
However, various kinds of organisations were responding differently to become financially sustainable. Larger organisations frequently reported looking to develop new services (75%) and expand existing services (67%), as well as a large minority looking to reduce or close services (27%). For smaller organisations, 48% reported looking to developing new services, and 44% reported looking to expand existing services to become financially sustainable. In addition, 9% of smaller organisations said they were planning to reduce or close services (9%). Of the organisations operating in Wales, 18% said they planned to be making staff redundant (18%).
In the focus group discussion, organisations qualified some of the optimism seen in the survey. All participants felt they would still be delivering in services in two years, but they were unsure in what capacity they would be doing so. This reflected a sense that, while the financial outlook for organisations had improved from a year ago, there remained a large amount of uncertainty in the sector.
‘I’m very optimistic, but its uncertain times… I’m mindful that we must be able to be flexible and be able to pivot because it’s not easy and it feels quite tough, and I don’t see that changing for a while.’
- Small organisation
When funders were asked about their view on the health of the sector, they outlined concerns about capacity and resources. Funders felt the resources available to organisations were insufficient to enable them to meet the demand for their services. Funders working across other sectors, most commonly immigration, said they were facing similar pressures. One funder suggested there was resourcing in the criminal justice sector, but it was not directed to the places where voluntary organisations typically operated.
‘There’s been challenges with staffing and resources. Although conversely, there’s talk of capital investment, building new prisons. So if there’s funding available for that, we don’t need more prison spaces, we just need better upstream resources and post-prison resources to look more intensively at the reasons who people offending and repeat offending.’
- Funder
‘At our latest partner meeting we brought everyone together, it was like everybody was talking with one voice. The challenges they mentioned were similar. The challenge they faced of, “it’s Friday afternoon, I just want to log off, but people are calling me and I can’t just say no” … the root causes are very similar: the need is very high against the capacity to provide support.’
- Funder
The focus group discussions saw different actions highlighted to ensure financial sustainability to those in the survey. Focus group participants typically focussed on the pursuit of increasingly diverse funding, with organisations looking to expand and protect their revenue. For some, this meant applying for more and larger grants and contracts. A few were looking at more diverse funding sources to protect against an over-reliance on a sole source of funding. This included exploring more corporate funding. Pursuing more long-term, multi-year funding was also outlined by a few participants as a target to securing financial sustainability.
‘It’s probably the perennial need of more core funding, so our commission revenue often brings in enough to cover 90% of a project, before any overhead, so probably going to prioritise our core funding, probably going to prioritise bigger chunks of core funding as opposed to more laborious small ones.’
- Small organisation
‘We’re looking at diversifying our income to spread it out more. So we’ve got one women’s centre that’s funded by one funder, which is never very good, but it started us off. So now we’re looking to get multiple strands of funding to keep that going.’
- Large organisation
When focus group participants were asked what support they would welcome going forwards, they called for changes to funding application processes. They were currently felt to be too involved, complex, and demanding for organisations. Instead, they wanted these applications to be less resource intensive, so they did not place too much demand on their limited resources.
‘They all act completely differently. The way the information they want might be broadly the same, but how they want it is very different. They’ll tuck extra application forms inside an already lengthy application form for £1,000.’
- Small organisation
One large organisation also suggested more practical business support, such as help in developing digital infrastructure, would be beneficial.
‘We would value support with, which is not specific to the voluntary sector at all, the business side. So not so many years ago we used to have local business support structures, business link etc., which don’t exist any longer. So, we’re trying to do a piece of work now around our digital infrastructure and our digital development. We don’t know where to start with it, we haven’t got the expertise, so we need a critical friend or some guidance.’
- Large organisation
