Does it matter if a charity gets it’s money from the government?

I read something which surprised me in the Guardian today:

Some of the biggest and most famous charity brands are now all but dependent on the state. These include Barnardo’s (78% of annual income), NCH (88%) and Leonard Cheshire (88%) … the National Family and Parenting Institute (97% state funded) … Even conservative estimates show that the sector now derives 38% of its funding from statutory sources, compared with 35% from individuals, which means that the state is now the biggest “donor” to charities.

This surprised me – I hadn’t really thought about the influence that the government has over some of the country’s biggest charities. But now I think about it, we receive a little under half of our funding from the Millennium Volunteers programme – a government programme. As our largest source of funding, it is perhaps inevitable that the programme’s objectives and priorities influence our work.

Is this a bad thing? Does it matter if a charity is funded from government sources, rather than members of the public? Nick Seddon, a research fellow at Civitas, makes an interesting argument that it does:

Politicians are beginning to define what charity is: it’s what the government will pay for…

and even refers to some charities as “charitable quangos”.

The case against is made by Martin Narey, the chief executive of Barnados. He questions some of the figures used in Seddon’s article, and argues that the behaviour of charities such as Barnados demonstrates that charities are able to take money from the goverment while challenging them and even criticizing them when necessary.

I think ultimately government funding of charities has been a postive thing – charities are becoming an effective and innovative provider of some important community services. That said, some of Seddon’s ideas such as classifying charities by the amount of state funding they receive don’t sound like a bad idea – transparency in charity finances can only be a good thing.

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