Please send me SCA's fortnightly briefing:

March 25, 2009

Third Sector Interface

Scottish Govt. is developing its thinking on how it will in future interface with the Third Sector (including the community sector). They envisage a single portal at local authority level – which incorporates Councils of Voluntary Service, Volunteer Centres, community groups, social enterprises – the lot. Could be messy

Chairs and Chief Executives of Councils for Voluntary Service
Chairs and Chief Executives of Volunteers Centres
Chairs of Local Social Economy Partnerships
Chairs and Managers of Community Planning Partnerships

cc. CoSLA
BIG Lottery Fund
Evaluation Support Scotland

2 February 2009

Dear Colleague


1. I wrote on 21 October to the Chairs and Chief Executives of Volunteer Centres (VCs) and Council of Voluntary Services (CVSs) and chairs of Local Social Economy Partnerships (LSEPs) setting out what we saw as the main components for the infrastructure that we would support in future. (letter headed: The Funding of the Volunteer Centres and Councils for Voluntary Service 2008-2011).

2. This letter contains information about further developments:

Direct Funding
Monitoring and Evaluation
Technical Issues
Social enterprise partnerships


3. Much of the last few months has been spent discussing the overall proposition for third sector interfaces which we now judge has broad acceptance across Scotland. We now enter a phase where we start to examine the practical issues which need to be considered.

4. There is considerable interest across Scotland, especially from those planning interfaces, in how matters are being progressed. Some of the interest is in looking at the models now emerging; some is in building relationships with other parties and some is in understanding how your stakeholders might engage with the process. We would like to suggest that you produce a short report on the state of play in your area. Such a report should have the support of both the third sector partners in the proposed interface and of the CPP. We would make these reports available on the Scottish Government website so that they are accessible by a wide audience. May we ask that you prepare short, simple reports and return them to me by 18 February?


5. Although we have made clear that funding of the existing networks will end in March 2011, most people recognise that there is considerable benefit to third sector interests and the development of the single outcome agreements by community planning partnerships if the changes in prospect are made at the earliest opportunity. We suggest that it would be helpful to adopt the following milestones:

End March 2009: set out, as far as possible, the basic model of the interface to be set up in your area. Clearly, in many areas little detail can be given as discussions will have some way to go but stakeholders would find it helpful to have some idea of how you hope to progress the work. This may be the report referred to above although you may not yet be at a stage where the CPP has been involved.

March 2010: put in place the new arrangements to operate, at the very least, in pilot form for the year 2010-11.

April 2011: new funding arrangements come into operation. In advance of the next Spending Review, we have no information whatsoever on the likely level of that funding.

This timetable is not a formal requirement by the Scottish Government, merely a suggestion that these stages would be part of a reasonable process of transition.


6. In considering the form of your new interface, you should be clear that it is for the CPP and the interface to agree the arrangements together. The Scottish Government will not be the arbiter on responsibilities nor distribution of funds; these will be matters for partnership agreement with the CPP. However, while the interface is to be developed very much locally, to meet local needs and arrangements, our funding will require that the interfaces meet a minimum set of functions, likely to be:

• Support to voluntary organisations operating in the area, both local and those national organisations that deliver services at the local level
• Support to and promotion of volunteering
• Support and development of social enterprise
• Connection between the CPP and the third sector

In practice, this should be no different to the existing range of functions delivered under the “Thrive and Connect” plan for CsVS, and the current work of VCs and LSEPs, but with a stronger focus on the single outcome agreement as the key document for the CPP area.

Direct Funding

7. A number of areas already have third sector arrangements which are fully endorsed by their community planning partnerships as fully meeting the best ambitions for the third sector. In most cases (but not exclusively) these are areas where the third sector intermediary functions are delivered by a single body. As little or no change is in prospect in these areas, we would be willing to consider applications for direct funding by the Third Sector Division here (rather than via SCVO or VDS) and this funding would run from April this year. This would be in the nature of a pilot project, enabling partners to identify what might need to be considered elsewhere.

8. To do this, new grant letters would have to be issued to the interface body and a parallel reduction be made in the funds passed to SCVO and VDS for distribution. No reduction would be made in the grants awarded to SCVO and VDS for managing the relevant networks and providing associated services. SCVO and VDS will continue to offer their full range of services to interfaces that move to direct funding.

9. The main criterion for awarding direct funding would be evidence that the CPP recognised the interface as the primary conduit to and from the third sector. This could be an exchange of letters, a memorandum of agreement or similar to establish an equally-balanced agreement between partners. The grant awarded would be identical to the total sum already made available to the area via SCVO and VDS. Funding post-March 2011 would, of course, be dependent on the Spending Review and decisions of Ministers; of course, no guarantee can be given on future funding.

10. Please contact me if you would like to discuss the timing of moves to direct funding.


11. The process of change got underway in West Lothian well before even our original announcement as the VC and CVS jointly reviewed, with the CPP, how best to serve their communities. West Lothian Council and the Scottish Government have jointly funded a small research project to help the third sector in that area identify options. In the Scottish Government, we were interested to watch the process and to be able to use the work to assist others, identifying issues to be considered and the process of securing agreement. I should emphasise that the Scottish Government does not formally endorse the work done in West Lothian nor the very clear conclusions reached – not because we have any doubts but because this should be a matter for local decision. The final report on this work is attached and further copies may be downloaded from:


12. Formally, the interface would be accountable only to its board or other accountable structure. This means that the existing monitoring arrangements managed by SCVO and VDS would come to an end with the move to direct funding. While we could institute something similar, given that government funds are being used, we would be grateful for comment on two proposals:

Peer Review: we think that interfaces would find it helpful if their business were reviewed by their peers, perhaps one or two interfaces might review the performance against the business plan.

Turning the Tables: the contribution made by the interface to the delivery of the SOA might be suitable for using the Turning the Tables approach proposed by New Philanthropy Capital and discussed at the 2007 Funders Forum Conference

We have asked Evaluation Support Scotland to prepare a briefing paper on these ideas, and we might mount a small Chatham House seminar in the spring to guide its development.

Technical Issues

13. The discussions to date have identified some points of particular concern in some areas.

Pensions: Some concern has been expressed that if an organisation whose staff are in pensions run by the Pensions Trust were to change its structure, objectives or transfer its functions to another body then the Trust would seek some substantial payments – in a process called crystallization. Early discussions with the Pensions Trust suggest that it would be wise to discuss any change proposals with the Trust before taking any formal step, but the Trust confirms that in virtually all cases it should be possible for changes to be made without triggering financial penalties. The Pensions Trust can be contacted on: 0131 200 6160.

Property: We understand that some organisations own properties bought with grant aid where they believe that the grant conditions debar them from changing the form of their organisation. If you are in that position, we would like to hear about it as this will be an unintended consequence of the grant and we may be able to assist in discussions with the funder.

OSCR: Some people seem to feel that the rules around charities might be an obstacle to change. We will shortly be meeting OSCR, although we understand that it is unlikely that OSCR will see any significant difficulties. If you have any doubts in relation to your organisation’s circumstances, it would be as well to contact OSCR early.

If you come across any other matters which might impede the creation of your interface, we would very much like to know of them in case they impact more widely.

Social economy partnerships

14. The goal of local social economy partnerships (LSEPs) has been to support the growth of an enterprising third sector by improving co-ordination and networking, strengthening locally available support and unlocking market opportunities. At present LSEPs often work separately from CVSs and VCs. Their funding has been awarded through to a bidding process. However, the ethos of localism demands that we do not make decisions about such matters at the national level and we propose to move the future funding from a bidding system to one built into the rational distribution to the new interfaces. There is some difficulty as some areas have used the current funding to employ staff and there may be some feeling that a commitment exists to fund these posts for some further time. That limits the funds which can be distributed. We will make further proposals on this shortly but in the meantime would welcome views.

Supporting the change

15. The team here supporting this change process has changed in recent weeks as new tasks have to be addressed and people move on to other posts. However, we are keen to continue to provide you with good support. If you feel that would like to discuss matters further, members of the team are happy to meet you:

Dominique Petitqueux
0131 244 7977 Scottish Borders, East Lothian, Midlothian; West Lothian, Edinburgh, Fife, Perth and Kinross
Ruth Hutton
0141 305 4139 Clackmannanshire, Falkirk, Stirling, Glasgow, West Dunbartonshire, East Dunbartonshire, Renfrewshire, East Renfrewshire, Inverclyde
Mark Meiklejohn
0131 244 4048 Aberdeenshire; Aberdeen City, Angus, Dundee; Western Isles; Orkney, Shetland
Polly Chapman:
01463 663 918 Highland, Moray
Geoff Pearson
0131 244 5133 Dumfries and Galloway, Argyll and Bute; North Lanarkshire, South Lanarkshire, East Ayrshire, South Ayrshire, North Ayrshire

Yours sincerely