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Is payment by results compatible with the big society?

So asks Philip Kirkpatrick in the latest edition of Third Sector.

The government wants organisations that work to attain social outcomes, such as reducing re-offending, getting the unemployed into work or delivering recovery from drug addiction, to be paid according to the results they achieve.

Kirkpatrick argues that if there is enough money to be made from payment-by-results contracts, large companies will sweep the board and many charities could be left without funding.

"Charities will need large amounts of capital to deliver services, before they are paid by the government according to the results they achieve. But charities, especially small local ones, do not have large war chests and face losing bids for contracts, and thus seeing their funding dry up."

He believes that "Charities will need large amounts of capital to deliver services, before they are paid by the government according to the results they achieve. But charities, especially small local ones, do not have large war chests and face losing bids for contracts, and thus seeing their funding dry up."

In the sector, we certainly seem to be experiencing the worst times in my memory and I think the sector may come out vastly different. Organisations will join together either in mergers or consortia and will prove to funders that they can deliver contracts.

I also think that products such as Social Impact Tracker can play their part in facilitating this.

Colin Harrison