Charity assessment: December Barnardo s SUMMARY. Analyst: Belinda Vernon. The case for donations. Risks. Assessment on NPC grading grid

Transcription

1 Charity assessment: December 2009 Analyst: Belinda Vernon Barnardo s SUMMARY Barnardo s vision is that the lives of all children should be free from poverty, abuse and discrimination. It provides a wide range of services for children and families such as fostering and adoption, family day centres, services for disabled children and young carers, as well as projects tackling more specific problems such as substance misuse and sexual exploitation of children. Most of these projects are funded or partly funded by statutory authorities. Barnardo s uses its extensive experience to influence government policy to bring about better long-term outcomes for children. The charity places great emphasis on the importance of evaluating outcomes which should improve quality and impact even further. Under the leadership of Martin Narey, Barnardo s is going from strength to strength, with an ambition to be the most influential and respected children s charity in the UK by 2010, providing unbeatable quality and value for money. The main challenge for Barnardo s is to maintain its income against a background of much tighter government spending and falling legacy income. The case for donations Although only 22% of funding is from voluntary donations, NPC thinks these funds make a real difference. They enable the charity to pilot new services for which there is currently no statutory funding, and to influence government policy. Voluntary funds are also used to enhance the services provided under statutory contracts to improve outcomes (eg, providing special play equipment for children with particular needs). However, occasionally the charity will use voluntary funds to subsidise a government contract if it feels the service is particularly important, but the government is unwilling to pay the full cost of provision. In spite of this, NPC s view is that funders can be confident that their funds will be used wisely to provide much-needed services which directly lead to better outcomes for vulnerable children. Risks The main risks are financial. The high dependence on statutory contracts means that Barnardo s is exposed to lower government spending and potentially tougher competition. This could put pressure on reserves and limit the organisation s ability to reduce a very large pension liability. Another potential issue would arise if Martin Narey were to leave. He has made a big impact on the charity and it would be a challenge to find an equally dynamic replacement. Assessment on NPC grading grid Area of analysis Grade Comment Activities Excellent Targets the most vulnerable children and develops new services. Leverages knowledge through campaigning and influencing government policy. Results Good Unique measurement system captures data across the whole organisation. Some projects could gather even better data. Leadership Excellent Inspiring leader supported by strong management team and staff. Clear vision and strategy with measurable targets. People and resources Good Good quality staff supported by volunteers. Potential for more collaboration. Finances Good Ambitious income targets but high pension liability. Robust financial management processes including efficiency targets. Ambition Good Very ambitious in some respects (eg, reputation and quality) but unlikely to grow much. New Philanthropy Capital, 3 Downstream, 1 London Bridge, London, SE1 9BG Tel Fax info@philanthropycapital.org Website A company limited by guarantee. Registered in England and Wales No Registered address as above.

2 History, vision and purpose Barnardo s was established by Dr Thomas Barnardo in Its initial purpose was to provide homes for the large numbers of destitute children in London. However, evacuations during WWII led to a belief that children were better off staying with their families and so Barnardo s shifted its emphasis from residential care towards providing help to keep families together. This shift accelerated in the 1960s in line with a series of social changes such as the availability of contraception. This led to the closure of the last traditional-style residential home in 1989, although residential facilities are still provided for special groups such as disabled children. Since then, the charity has developed a whole range of new services aimed at supporting vulnerable children and families. Today it has a very broad purpose: to help the most vulnerable children transform their lives and fulfil their potential. Barnardo s is now one of the largest charities focused on child welfare in the UK the others being Action for Children, the NSPCC, Save the Children and The Children s Society The need and response of Barnardo s Because Barnardo s purpose is to help all vulnerable children, it works with children and families who have many different needs. These include children: without a safe home or who are homeless; who might have mental health problems or are disabled; or who act as carers themselves for a parent or sibling. Barnardo s also helps children who are hard to reach, such as those suffering from substance misuse, who are sexually abused or exploited, or who are in trouble with the law. In helping these children, the charity provides services aimed at both prevention and intervention. Barnardo s also aims to improve child welfare more generally in order to prevent problems occurring. This includes tackling child poverty, and ensuring the perspectives of children are taken into account in government policy and practice. The need for these less direct activities is easily demonstrated. For example, according to Barnardo s, 3.9 million children live in poverty in the UK, which damages their life chances. Similarly, a report by UNICEF in 2007 into children s well-being ranked the UK at the bottom of a list of 18 rich countries. Results Barnardo s has a very positive attitude to measuring results which seems to permeate the whole organisation. For all projects, the charity collects a mixture of hard data and anecdotal evidence to assess the outcomes of the children and young people it works with. More recently Barnardo s has implemented a common system for measuring outcomes across all its projects, which will provide a wealth of information on both an individual and aggregate basis. Key facts m, y/e March Income Expenditure Reserves (months) Staff (FTE) n/a 4,090 4,207 4,492 Volunteers (approx) 12,000 11,000 11,000 12,600 Chief executive: Martin Narey (2005); Chair: Geoffrey Barnett (2001) 2

3 ANALYSIS Activities Overview Barnardo s delivers services to children through nearly 400 independent projects across the UK. The projects fall within one of ten Barnardo s service categories and offer a wide variety of services such as fostering and adoption, support for young carers, day centres for vulnerable families, projects tackling sexual exploitation of children and substance misuse, and counselling for young offenders. Most of the projects are funded by service delivery contracts for a statutory authority, but some fill gaps left by lack of government provision. The charity also has significant influence with government. It uses the knowledge gained from projects to identify where changes in policy and practice would lead to better outcomes for children. A prominent example of this is Martin Narey s leadership of the Campaign to End Child Poverty in the UK. Barnardo s also uses its experience of working directly with children to identify gaps in provision, such as helping children who have been sexually exploited. Table 1 at the end of the section maps the ten service categories plus the influencing work against three possible stages of intervention in helping vulnerable children prevention, intervention and recovery. This shows the wide range of services offered by Barnardo s, and demonstrates that the charity is engaged in all stages of intervention. Assessment Barnardo s provides a broad range of services targeted at our most vulnerable children, including those with very challenging behaviours (eg, young offenders). Many services are funded by government contracts, which, whilst enabling the charity to do more than if it only relied on voluntary funding, may reflect government priorities more than Barnardo s priorities. Having said that, Barnardo s uses its extensive knowledge to identify emerging needs of children and has used voluntary funds to pilot and develop services to tackle those needs (eg, sexual exploitation of children). Under Martin Narey, the charity has also begun to use its knowledge and size to strengthen its influence with government through which it can leverage its impact. Scope and fit to priority needs Barnardo s range of activities is extremely broad, partly reflecting the charity s all-encompassing vision and purpose, but also the diverse service delivery requirements of statutory authorities. The statutory nature of these services is a clear indication of their need, being provided primarily for the most vulnerable children in our society. However, the provision of such a wide range of services through so many (nearly 400) independent projects, results in a lack of cohesion amongst the various services, and it is unclear whether the range of activities is the best one for the charity to achieve its vision in the most effective way. The increased effort into campaigning and influencing government is a positive move for Barnardo s and an area which until recently was rather neglected. The charity s brand, reputation, size and direct knowledge are now being used to exert significant influence on government provision and attitudes of the general public towards children. This is one way in which Barnardo s can use its scale and reputation to achieve lasting improvements where many smaller charities cannot. Ability to adapt and innovate Over the years Barnardo s has made a significant shift away from providing residential care for children. The charity continues to evolve today, as it develops new services and builds a higher profile with both government and the general public which will enable it to maximise its impact. Of the many projects NPC has visited, every one has been of the highest standard and often superior to similar services from other providers. Although Barnardo s has a strict policy that each project must stand on its own two feet financially, it often chooses to allocate voluntary funds to enhance those services in ways 3

4 that improve outcomes for children. The charity s target is that, overall, services should be funded 87% by statutory income and 13% by voluntary income. It has also led the way in piloting new services. An outstanding example is the development of services for children who have been sexually exploited. Barnardo s now has 19 projects spread across the UK (with plans for more), which now receive about half their funding from government. Following on from this work, it is now starting to see how to help children who are trafficked to the UK, many of whom become sexually exploited. Synergies Barnardo s effectively uses its reach and brand name to create a greater impact than simply the impact achieved by its many individual projects. It achieves this in several ways. At the level of individual projects, the regional structure helps each project to have a strong local presence, whilst also benefiting from the support and reputation of a larger national organisation. Barnardo s is also able to use the wide experience gained from its many local projects to influence government policy, and to identify gaps in provision. This is achieved by virtue of the breadth of activities and Barnardo s reputation as a leading authority on children s welfare. NPC s experience suggests it is much more difficult for a small organisation to have such influence. This influence continues to grow due to the charity s emphasis on research and a culture of learning. Barnardo s also generates efficiency savings by virtue of its size. It has a small central function which provides support services such as IT, HR, and accounting to all its projects. This allows each project to operate as a local service whilst also benefiting from systems and support offered by a large professional organisation. The charity is looking for ways to reduce the cost of these services as a percentage of total costs, and has incorporated cost reduction targets into its business plan. There is also a significant opportunity to achieve synergies by sharing knowledge and best practice between similar services. However, we are not sure that Barnardo s is yet realising its full potential here, due to a regional organisation structure and a policy that each project is treated independently. The charity has set up Business Development Teams for certain services to try to improve coordination. We know this has worked well for sexual exploitation projects, but we do not have much detail of how it is working in other areas. We expect that the newly implemented outcomes measurement system will enhance working amongst similar projects in many ways. In the past, Barnardo s published reports on what works, but little has been published for some time. This is a pity as it would seem to be a way of encouraging the development of best practice and disseminating that knowledge to other organisations working in similar fields. There may also be opportunities to achieve more through closer partnerships with other organisations working in the same field. This could be in the form of closer cooperation with the other large children s charities to influence government, or could be through direct support of small charities which focus on a particular area. Risks to activities The main risks to activities stem from the reliance on contracts for provision of statutory services. There are two sources of risk. The first is that the services provided by the charity are determined by government priorities, not Barnardo s priorities. This could mean that the charity does not do some things which are important to achieving its vision or does not reach the children who may have been forgotten or under-represented by government spending priorities. However, its approach is a practical one and still allows the charity to develop new services and campaign for a better deal for children. The second risk is a financial one, in that a significant change in government policy or reduction in public spending on children s services would reduce the number of projects. This could lead to Barnardo s being tempted to chase pots of government money although there is no evidence of this having happened so far. 4

5 Table 1: Activity triangle Level of intervention Activity Stage of intervention Prevention Intervention Recovery Family support - family group conferencing, childcare, parenting, short breaks, young carers etc Safeguarding and protection - missing children, court advisory services Family placement - fostering & adoption, special guardianship, short breaks Residential care - short breaks/respite for children with life-threatening illness Education, vocational training and support - classes, skills development Individuals, families and communities Advocacy, rights & community inclusion - advocacy & rights, access support Health care - support, advice, advocacy, for children with emotional and mental health needs, substance misuse, sexual exploitation, young runaways Social care support - residential schools, leisure activities for children with special needs, leaving care services etc Youth justice - parenting and carer support, counselling for young offenders Community development - befriending, counselling, activities in schools Influencing, lobbying & campaigning Public education & campaigns Influence policy and practice Share information and knowledge with other service providers 5

6 Results Overview Barnardo s is a long-established charity with significant voluntary donations. It is therefore in a strong position to measure results. For a charity with such a broad vision and wide range of activities, results can be measured at two levels. One is at the level of individual projects and activities, the other is progress made towards their longer-term vision of improving lives for children which is also influenced by the achievements of other organisations. Assessment Barnardo s is committed to measuring results. Results achieved by projects are generally very good although could be improved further with more hard evidence. The implementation of a common system for capturing data on children s outcomes across all services is ambitious. It will provide a wealth of information across all projects which can be used to improve services even further. Results culture An outstanding characteristic of Barnardo s is the importance it places on results. This seems to permeate all levels of the organisation and features heavily in published literature and conversations with both management and project staff. Almost all projects now have business plans with targets and outcomes measures. The charity uses this outcomes data to provide solid evidence in support of its lobbying and campaigning work which helps to boost its reputation with government. But Barnardo s has gone even further than measuring outcomes at a project level. It has invested heavily in developing an organisation-wide common system for recording outcomes data for each and every project. The system comprises about 150 different types of outcomes grouped under Barnardo s nine key outcomes measures and the outcomes measures set by the four UK nations. Each project decides which outcomes measures are relevant to them and records data against them. Data can then be aggregated and analysed in a host of different ways. Although it is early days, the potential is clear to see. Not only will it enable Barnardo s to paint a complete picture of the difference it is making to children s lives, but it will also enable Barnardo s to interrogate the data in a way that helps it to improve services for children. For example, outcomes across projects can be compared for girls and boys or for different ethnic groups. Barnardo s only implemented this system in late 2009 and will continue to develop it over time. The greatest challenges are probably to ensure that the data is of the highest quality and to find a balance between allowing flexibility of measurement to accommodate the different types of services, and standardisation in order to be able to compare data. Nevertheless, this is a particularly exciting development which NPC will follow with great interest. Specific evidence Although the culture of results is very strong, we think the organisation has some way to go before every project systematically collates really good outcomes data and uses that data to improve services. However, there are very few charities that do this today and Barnardo s is well placed to lead the way, especially now that it has a common system for recording data. The current focus seems to be on outcomes of individuals based on a mixture of anecdotal and sometimes hard data. The measures used vary between projects, depending on the nature of the service and the requirements of the funder. For example, projects which deliver statutory services often produce an annual report setting out the contribution the service has made to the outcomes targets set by the regional authority (in England, this would be the six target outcomes of Every Child Matters). We have been impressed by the focus placed on individuals and Barnardo s commitment to measuring the progress of these children. However, we have not yet seen much evidence of this data being collated and 6

7 used to identify where services could be improved. The common outcome framework currently being implemented across the whole organisation should help this significantly. These comments are based on results data from only a handful of projects (listed below) plus several annual reports of projects. Project Level of analysis by NPC Comment on results data Sexual exploitation services (UK wide) Marlborough Road Project (Cardiff) Child mental health Indigo (London) Services for disabled young people Peepul Family Resource Centre (London) Therapeutic services for families & looked after children Heshima Family Support Centre (London) Social work & community support Black Country Wheels (Stourbridge) Alternative education (mechanics) for teenagers excluded from school Albion Court (Nuneaton) Remand fostering service for young offenders * Goodman Strengths and Difficulties Questionnaire Wider sector impact Full analysis (updated December 2008) Project visit plus analysis (July 2008) Project visit (Jan 2008) Project visit (April 2008) Project visit (April 2008) Project visit (June 2009) Project visit (June 2009) Detailed case notes kept on each child. Comprehensive evaluation of ten services ( ) showed significant reduction in risks associated with sexual exploitation. Common evaluation framework implemented for all projects in April High demand for services plus strong anecdotal evidence. Starting to collect more systematic evidence using baseline data and Richter scale. Monitor progress against individual action plans, plus anecdotal evidence. Collects outputs & outcomes data for local authority funder. Uses standardised measures such as SDQ *. Social work collects individual outcomes data, but community support relies on anecdotal feedback. High demand. Good data on attendees and leaving destinations. As with other similar services, long-term outcomes not known. One of the few projects which the courts trust as a valid alternative to custody. Re-offending rates whilst in care are known, but longterm outcomes not known. The impact that Barnardo s has on children s lives goes beyond its direct services for children. The main way is through influencing government for better policy and practice. It also shares experience and knowledge with other service providers, but could probably do more of this. We also think the charity could benefit from developing a clear rationale for its scope of services to ensure it supports activities which are critical to achieving its vision. These ideas are expanded below. Under Martin Narey, Barnardo s has significantly strengthened its influencing work. The best known example is the Campaign to End Child Poverty which is a coalition of children s charities chaired, until recently, by Martin Narey. The campaign helped persuade the government to spend 1bn on ending child poverty in Ending child poverty has been maintained as a key government priority, to the extent that the government is 7

8 considering making it a legal government obligation rather than just an aspiration. However, this will have largely been driven by political considerations. Other significant initiatives include: lobbying on the Education and Skills Bill to improve provision for year olds; publishing a report on children in trouble (Locking up or giving up); several changes in legislation and policy for children in care as a result of the Barnardo s report Failed by the System; and persuading the government not to introduce Sarah s Law which would have led to public disclosure about the whereabouts of convicted adult sex offenders released on license. All these reports and campaigns are based on solid research or direct experience, and many have costed recommendations attached. A second way in which Barnardo s improves the performance of the whole children s sector, is by promoting the discipline of using evidence to improve services. Through a subsidiary social enterprise (Training, Learning, Consulting) Barnardo s offers training on measurement systems, mainly to local authority employees. However, NPC has not looked at this service so cannot comment on its success or quality. The broad range of services also offers an opportunity to disseminate information and knowledge about how to improve children s lives to other service providers. Barnardo s used to do this by publishing reports on what works based on research and evidence of results. However, it appears that reports have not been published for several years, suggesting that this initiative has tailed off, which is disappointing. One area which we think would make Barnardo s even more effective would be if it strengthened the linkages between its various services and each was clearly linked to achieving Barnardo s goals. This would ensure that the charity is doing the right things and that it was lobbying for or supporting other service providers which were critical to achieving those goals. The End Child Poverty campaign is obviously directly aligned to Barnardo s vision that children should be free of poverty, but is it enough and are there similar initiatives that could help achieve the vision that children are also free of abuse and discrimination? Risks to results At an individual project level, Barnardo s seems to believe that measuring results is really important and that services should be based on evidence of what works. In many cases, results are impressive, but, as with many charities, the practice sometimes lags behind the rhetoric, with outcomes being measured in mainly anecdotal terms and reported to satisfy funders rather than to improve services. A big challenge for Barnardo s is to collate those results in a meaningful way, which can be used to compare, and thereby improve, services. The recently implemented common system for measuring results should enable Barnardo s to meet this challenge. At a broader level, there is a risk is that whilst Barnardo s plays a significant part in helping the most vulnerable children, it is less successful at achieving its long term vision that children are free from poverty, abuse and discrimination. We think this risk could be reduced by developing better cohesion between services, each linked to Barnardo s long-term vision, together with an assessment of any gaps in provision. 8

9 Leadership Overview Barnardo s is governed by a Council of 15 members which meets every two months. Council members are appointed for a three-year term and are eligible for re-election by the members of the charity. The Council is supported by a number of sub-committees to deal with particular issues. The organisation is structured around six departments: children s services, policy and research, fundraising, communications, people and corporate resources. The largest is children s services which is organised into six English regions plus the three nations of Scotland, Wales and Northern Ireland. This structure helps projects to develop strong local links and a close understanding of variations in policy and commissioning across the UK. However, the disadvantage is that it creates barriers between projects in different parts of the UK. Barnardo s has tried to overcome these barriers by setting up Business Development Teams and informal sharing of knowledge through the intranet. Assessment Barnardo s leadership team is excellent. The chief executive, Martin Narey has set a clear vision and strategy for the charity which seems to have given the charity a new lease of life. He is ably supported by a first class management team, which is intent on supporting vulnerable children in the best possible ways. Our only criticism is that the charity could provide better public information about its work and achievements. Management Barnardo s has a very impressive management team led by chief executive, Martin Narey. Since coming to Barnardo s in 2005, he seems to have re-invigorated the charity, bringing greater clarity of vision and purpose, placing much emphasis on measuring outcomes and raising its aspirations. Three areas stand out in particular. The first is the boost he has given to the policy and influencing work, based on experience and evidence of direct services for children and their families. The second is the priority he has placed on measuring outcomes to improve performance and ensure that projects are based on evidence of what works. The third is the ambition he has set for Barnardo s which is to be the most influential and respected children s charity in the UK by Under his leadership, income grew by 11% in the three years from NPC has found the charity to be particularly helpful and open in providing information to enable us to carry out this assessment. However, the information it provides to the public could be improved. Using Intelligent Giving s assessment of transparency, Barnardo s scores 63% which is average for the largest 500 charities in the UK. The organisation scores well on providing information about its governance, administration and organisation, but provides little discussion of its direct services for children or the difference it has made for children. This is disappointing given all the good work that Barnardo s does. Vision and strategy Under Martin Narey, the charity undertook a strategic review which led to a clearer vision and strategy. The charity s vision is that the lives of all children should be free from poverty, abuse and discrimination. The charity s purpose is therefore to help the most vulnerable children transform their lives and fulfil their potential. The vision is supported by the now familiar strap line Believe in children. Barnardo s is guided by six strategic aims. Each aim is supported by annual targets, exceeded in 2007/2008: 1. Moving from good to great by improving the effectiveness of services to children and young people. 2. Making Barnardo s influencing work more effective. 3. Revitalising Barnardo s brand and image. 4. Implementing fresh strategies for participation and volunteering. 5. Improving the cost effectiveness of support functions both at Head Office and locally. 6. Increasing the net return from fundraising. 9

10 We believe these aims correctly reflect what Barnardo s should focus on. We particularly welcome the importance placed on improving the effectiveness of services and influencing work, especially given Barnardo s recognition of the importance of outcomes measurement. The aim to revitalise the brand image addresses an historic weakness in the organisation and should enable Barnardo s to achieve even greater impact. The dual aims focusing on efficiency and fundraising, reflect the organisation s businesslike approach, which is essential to win government contracts in a competitive environment. Governance NPC has not carried out a detailed assessment of governance but we did interview the chair of the Council, Geoffrey Barnet, in July 2008, and have had follow-up discussions with Barnardo s about governance. Barnardo s is governed by the Members of Council who are the trustees of the charity. New Members of Council are identified through open advertisement and are formally elected by members of the charity at the AGM. Members of Council serve a term of three years after which they may put themselves forward for reelection. There are currently 15 Members of Council but the charity plans to reduce this number over the next few years to around 13. The Council meets fairly frequently (every two months) with an average attendance rate of 85% over the past year. One of those meetings is a two-day residential which provides the trustees with an opportunity to discuss selected strategic matters in particular depth. The charity aims to recruit trustees to ensure an appropriate range of skills and diversity. It does this by assessing requirements, creating a detailed role and person specification and targeting its recruitment message appropriately. However, NPC cannot comment on the current range of skills. The governance structure is comprehensive, including various committees such as audit and compliance, remuneration, nomination and investment committees. The Council is also supported by three committees in Scotland, Northern Ireland and Wales to ensure the charity responds to differences in local policy, and a family placement scrutiny committee to advise on the significant fostering and adoption work of the charity. In addition, the council receives detailed information and advice from a Corporate Audit and Inspection Unit on internal controls and risks. This unit carries out announced and unannounced inspections of many aspects of Barnardo s work in order to assess progress made against Barnardo s strategic aims and to provide a statement of internal controls to Council. The Unit also compiles the risk register. NPC has been told that Barnardo s Council regularly evaluates its own performance and that of each of its members and the chair. The last review was undertaken in November Periodically, Council undertakes a more in-depth review of its structure and performance. This was last undertaken in Setting priorities Barnardo s seems to have a sensible balance across its different activities. The vast majority of expenditure (76%) goes on direct services for children, although the charity also spends 4% (approximately 10m) on research and influencing government policy and practice. However, it is not clear to NPC that one type of direct service is a higher priority than any another. This could be because the spending on different services is influenced by local authority priorities and budgets, but it leaves a lack of clarity over the future direction of the organisation. We also think there could be greater clarity over the priority for voluntary funding. There are many different calls on these funds all valid and important but it is not clear which areas are the most important. For example, in the event of a fall in voluntary income, would Barnardo s reduce spending on established projects or cut back on new developments? Risks to leadership NPC does not see any major risks to Barnardo s leadership. However, it would be a significant blow if Martin Narey were to leave, as he seems to have given the charity a new lease of life setting a clear direction supported by ambitious targets. His knowledge and experience of government and the way he has used this to boost Barnardo s influencing work would be particularly missed. 10

11 People and resources Overview Barnardo s employs over 4,000 (full-time equivalent) staff and is supported by over 12,000 volunteers. The charity has its head office in east London, but has over 400 projects right across the UK. Assessment NPC has been highly impressed with the quality and commitment of Barnardo s staff at all the projects we have visited. This quality is reflected by the high regard in which Barnardo s is held. The charity seems to have good management systems in place and is increasingly making more of its strong reputation. NPC is aware that the charity wishes to redevelop its head office, but has not assessed the implications of this. Staff NPC s impression from visiting projects is that the staff at Barnardo s are excellent. They appear to be well trained, motivated, and committed to and knowledgeable about the organisation. Barnardo s claims that it can attract the best staff, and although we cannot verify this, the reasoning is credible. In comparison with local authorities, Barnardo s believes that its working conditions are better staff are not under the same level of pressure as local authority staff, and they can work directly with children and families, rather than refer them on as is often the case for statutory staff. In comparison with other service providers, Barnardo s claims that it can offer staff the security, reputation and professionalism that smaller organisations find difficult. However, as with any charity providing services on fixed-term statutory contracts, security and pay are restricted. Barnardo s carried out a staff survey in 2006 and again in The overwhelming message is that staff are proud of working for Barnardo s although there are areas which need to be improved. Staff turnover is about the average for the country at 18%. Part of the turnover is inevitable due to the high number of fixed-term statutory contracts, so the figure should be regarded positively. Barnardo s also tells us that the turnover on voluntary-funded projects is much lower at 11%, which would be comparable with other large children s charities. Leverage of resources NPC s view is that Barnardo s achieves good leverage of its resources and will improve further in the future. Leverage is achieved in three main ways. The first is by persuading government to put resources into new services which Barnardo s has piloted and developed. An excellent example are the services for children who have been sexually exploited which now receive more than half their funding from government. The second is through Barnardo s work to influence government based on solid evidence gained from services. This can lead to better conditions for many groups of vulnerable children. Examples include many improvements in legislation and policy for children in care. Barnardo s used a combination of its direct experience, research data and case studies to produce a report on children in care (Failed by the System). This led to working groups being established, followed by active lobbying before culminating in changes to legislation. Between 2007 and 2010 the charity aims to influence at least 20 changes in legislation or government policy. Barnardo s has obviously strengthened its position with government over the last few years, and NPC is confident that this is not limited to the Labour government. The charity should therefore continue to play an important influencing role even if there were to be a change in government in The third way that Barnardo s leverages its resources is through volunteers. The charity currently enjoys support from over 12,000 volunteers and aims to increase this number by 5% each year including an increase 11

12 of 5% by younger volunteers. Volunteers are generally used to provide support to paid staff at the project level and to raise funds. The charity also enjoys the support of professional skilled volunteers to deliver services. The one area in which NPC has not seen much evidence of leverage is through other charities although we sense that there is more collaboration on influencing and we understand that Barnardo s is sharing its approach to measurement with some other children s charities. There may be an opportunity to achieve even greater impact by working either with small niche organisations or by collaborating more closely with the other large children s charities. Risks associated with people and other resources Barnardo s relies heavily on the quality of its staff, and the ability to recruit and retain good staff is key its success. There is no reason to suppose that this will become more difficult but it depends on Barnardo s ability to provide the quality of work, security and rewards that good employees look for. The plans to undertake a major redevelopment on the head office site will inevitably give rise to some financial and practical risks. A thorough review of affordability and risk mitigation will be carried out by Barnardo s Council in early 2010 before a decision is taken on whether to proceed with the development. 12

13 Finance Overview Barnardo s is one of the largest charities in the UK, receiving an income of 214m in 2008/2009. This was similar to the previous year, sustaining the growth made since Nearly 60% of the total income is in the form of contracts to provide services for children on behalf of statutory authorities. The charity spends 80% of its total income on charitable activities, 94% of which is for direct services for children. The charity plans to continue to grow its statutory income by 13% for 2009/2010 and is forecasting some growth in trading income. However, other sources of income are expected to decline, including a fall in voluntary income of 10%, resulting in overall growth of 5% for the year. This would be a good outcome in the current economic environment. Summary financial statements Income and expenditure y/e March, a 2007a 2008a 2009a forecast Incoming Fees and grants for services provided 106, , , , ,572 Trading income 23,399 25,407 27,280 30,594 33,476 Voluntary income 45,083 41,325 50,961 47,140 42,403 Investment income 4,097 4,333 5,084 5,155 2,265 Other (eg property sales) 13,911 9,659 12,713 4,529 3,779 Total incoming resources 193, , , , ,495 of which statutory (%) Expenditure Charitable activities 153, , , ,343* 176,700* Trading expenditure 21,845 23,442 25,459 26,627 27,600 Costs of raising voluntary income 10,402 9,687 10,489 10,527 11,213 Governance 1,513 1,373 1,292 1, Other (investment, property sales) 5,277 1,445 4,147 2,114 10,453 Total expenditure 192, , , , ,024 Net incoming/(outgoing) resources for the year Source: Accounts, forecasts from Barnardo s * excludes pensions finance charge of 1.6m, 938 (3,738) 9,892 2,289 (1,529) Income Barnardo s receives about 60% of its total income in the form of fees and grants for services provided. The amount has grown at about 5% pa for the last two years and the charity plans to continue this trend, expecting this proportion to reach about 64% in This is a tough challenge in the current economic environment, especially as competition for work could well increase. By comparison, the underlying level of voluntary income fell in 2009 and is expected to fall further in the current financial year. Nearly 50% of the total voluntary income (in both years) was made up by legacy income. Such heavy reliance on legacy income is obviously a risk but one which Barnardo s recognises. It is looking for ways to secure additional income streams to offset this volatility in legacy income, but it is not easy in today s environment. At some point the income derived from property sales will also slow down. 13

14 Expenditure In both 2008 and 2009 Barnardo s spent nearly 80% of its total expenditure on charitable activities, of which about 94% was on direct services for children. The bulk of the remaining 20% expenditure was the cost of generating trading income and voluntary donations. The table below gives a more detailed breakdown of expenditure on charitable activities. This shows that the vast majority is for direct services for children many of which are delivered against service delivery contracts saw a reversal of the declining expenditure on childcare research and education, which was pleasing, especially given Barnardo s desire to ensure its services and influencing work are based on evidence of what works. Expenditure on charitable activities y/e March, a 2006a 2007a 2008a 2009a Services 148, , , , ,788 Informing the public 4,749 5,498 5,443 6,222 7,345 Childcare research and education 2,522 2,202 2,098 2,010 2,210 Total 155, , , , ,343 Source: Accounts Balance sheet Balance Sheet y/e March, a 2006a 2007a 2008a 2009a Assets Tangible assets 42,712 38,753 37,934 36,852 36,849 Investments 53,602 66,996 76,423 67,199 56,927 Current assets 35,146 34,465 29,458 38,283 35,045 Liabilities Current liabilities (22,490) (22,332) (26,090) (31,265) (29,710) Long term pension liability (68,200) (61,200) (56,600) (47,800) (63,200) Net current assets 12,646 12,133 3,368 7,018 5,335 Net assets 40,770 56,682 61,125 63,269 35,911 Funds Restricted funds 24,865 26,576 26,387 24,894 21,361 Unrestricted funds * 15,905 30,106 34,738 38,375 14,550 Total funds 40,770 56,682 61,125 63,269 35,911 Reserves (months)** * unrestricted funds are calculated after allowing for the pension liability ** reserves calculated as net current assets plus liquid investments as a percentage of total expenditure Tangible assets have declined steadily, in line with the property disposal programme. Investments, which in 2008 accounted for about two thirds of total fixed assets, were hit by the weakness in equity markets. In spite of this fall, investments still account for about 60% of total fixed assets. A weak feature of the balance sheet is the very large pension liability which increased by 32% to over 63m in This is disappointing given the measures that were put in place in 2007 to reduce the liability, but not surprising. The crisis in financial markets combined with low inflation rates and an ageing population have left many organisations in the same situation. Nevertheless, it must be tackled as a matter of priority. 14

15 Assessment In spite of the challenging environment, Barnardo s maintained its income level in 2009 and expects to increase it in This strength is built on an ability to grow its statutory and trading income in the face of falling voluntary donations and volatile legacy income. Whilst reserves came under pressure in 2009 due to declining asset values, the greater worry is the burden of the pension liability. This is likely to remain a feature for several years, but should be managed through the proposed pension recovery plan. Voluntary donations will continue to play a vital role in providing excellent support to vulnerable children and ensure that new services can be developed and that government policy reflects the needs of vulnerable children. Financial security Sources of income The broad geographical coverage and wide range of activities means that Barnardo s has reasonably diverse sources of income. However, the heavy reliance on statutory fees for services exposes Barnardo s to reduced spending by government authorities, which could be quite severe in the next few years. The challenge to grow this type of income will probably be exacerbated by increased competition for contracts. Even if Barnardo s manages to grow this income (as it is forecasting), it will not be easy and relies on the charity s winning increasingly competitive contracts. Legacy income, which currently makes up nearly half the voluntary income, is also unpredictable. Legacy giving is often linked to property values and equities, which means that legacy income for Barnardo s may fall. However, given a fundraising ratio of around four times (for every 1 invested in fundraising, the charity receives 4 in donations), Barnardo s should be able to replace some of this income with other types of voluntary donations, especially as it strengthens its brand image. Any fall in income will force Barnardo s to decide whether to withdraw from providing certain services. Whilst this is not desirable, it does allow a degree of flexibility providing some financial protection to the organisation as a whole. Reserves and balance sheet By NPC s calculation, 2009 reserves represented about 3.5 months spending, down from 4.3 months in This level of reserves is adequate and may well pick up in 2010 if asset values are higher than they were in March Barnardo s breaks down its reserves into three categories: a general reserve, a fixed asset reserve and a working capital reserve. In 2009, reserves were adequate to cover all these requirements. A significant concern is the deficit in the pension scheme. The deficit has arisen due to a combination of external factors including market values, life expectancy and long-term inflation, which have also affected other organisations pension schemes. Barnardo s has been planning for some time how to respond to this deficit and is currently (January 2010) consulting staff on a plan that requires it and its employees to find an additional 76m over the next 20 years. This action is taken into account in the current business plan and the charity believes that, given this long period, the pension recovery plan will not impact on its work with children. Efficiency Improving efficiency is one of Barnardo s six strategic objectives. Its target is to reduce the costs of the head office support functions to 15% of total expenditure by 2009/2010. We understand that overheads in 2006 amounted to about 18% of total expenditure (which would equate to 16% in 2009 if the spend on overheads was unchanged). The target therefore seems to reflect an aim to maintain costs at about constant levels, whilst increasing income, rather than reducing costs. Discussions with management have suggested that Barnardo s is often not the lowest cost bidder for contracts and therefore, if it wants the contract, it sometimes has to subsidise it with voluntary funds. However, we do not think Barnardo s is necessarily more expensive because it is less efficient. Our project visits suggest that it is more because Barnardo s offers a better service and invests more in areas such as 15

16 staff training and evaluation that other service providers. Barnardo s typical funding ratio for contracted services is 87% statutory income and 13% voluntary income. In the past, part of this voluntary income could have been regarded as a subsidy, but NPC is confident that it is now being used to enhance services to improve outcomes for children and measure those outcomes properly. NPC has not been able to analyse the cost per user of the main services. Although this type of data is often useful, it is most useful when analysing a particular type of service in detail. Role of voluntary donations Although voluntary donations account for less than a quarter of total income, they play a vital role in enabling Barnardo s to help vulnerable children. These funds allow Barnardo s to provide services that are not funded by statutory authorities, develop and pilot new services, enhance statutory services in ways that make a real difference to children, conduct research into children s needs, and enable Barnardo s to influence government policy and practice. Voluntary donations also enable Barnardo s to measure the outcomes of its work. Although voluntary funds are essential to Barnardo s work, NPC would like to see greater clarity and consistency about how these funds are used. For example, it seems that Barnardo s sets priorities at a corporate level, but that voluntary funds are distributed at a regional level and used as the regions see fit. NPC has not seen any reconciliation between the top-down priorities and the actual use of funds. The table below provides an indication of how net non-statutory income is allocated (net non-statutory income is made up of net voluntary income, net trading income, and net income from property disposals and investments). It shows that about 75% (65% in 2008) of this income ( 37.2m) is spent on direct services, the rest going on influencing work, research, governance and to reduce the pension liability. This 37.2m of voluntary expenditure represents 23% of the total expenditure on direct services, with the rest coming from statutory contracts. Reconciliation of income and usage of non-statutory funds (2008/2009),000 % Income Net voluntary income 36, Net trading income 3,967 8 Net income from property sales 4,157 8 Net income from investments 5, Total non-statutory income 49, Expenditure Informing the public 7, Research/education 2,210 5 Governance 1,393 2 Pension provision 1,600 3 Direct services# 37, Total 49, Source: Accounts 2008/2009 # balancing figure Opportunities for donors By giving to Barnardo s, donors can make a real difference to the lives of vulnerable children. Without voluntary funds, Barnardo s would be limited to providing only the level of service required by statutory authorities. It would not be able to provide the extra care that can make all the difference. It would also not be able to conduct research or develop and pilot new services such as the projects to help children who have been sexually exploited. Its ability to measure outcomes and use data to improve services would also be 16