Alternative governance mla
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An overview of models for alternative governance. Jo Woolley, MLA
![Structure of discussion 0 …………………………………… . Tuesday, 27 th July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley 2. Comparative assessment 3 models of devolution ,[object Object],[object Object],3. Final thoughts](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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Alternative governance mla
- 1. Models of devolved delivery for museums, libraries & archives …………………………………… . June, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
- 15. 2. The devolution spectrum Characteristics : Highly regulated Public benefit Fiscal exemptions Sector/policy/value driven Characteristics : Highly regulated Public benefit Fiscal exemptions Sector/policy/value driven Devolution spectrum Philanthropic Enterprising Investment Trusts * CIOs * CCLG * CCLS * IPS * CIC * CBT/CLT * CIC * CLG * LLP * CLS Characteristics Highly regulated Public benefit Fiscal exemptions Sector / policy / value driven Lightly/non regulated Private benefit Earning capacity Market driven …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Charity Commun ity business Cooperative/Mutual Private business
- 20. Final thoughts Any questions? Devolution is an option open to any service With the right plan in place there is no reason to suppose that any service – single or joint, high or low performing, museum library or archive – could not successfully devolve. There is more than one devolution model Devolution is a strategic response to more than one political imperative - sector improvement, economic recovery, Big Society. Different devolution models will support different outcomes. Selection should be based on local need and appropriateness rather than what has worked elsewhere.
- 21. 3.2 Planning a model (1/2) Assets protected Public benefit led Financial strengths Organisational strengths • Supports philanthropy • Supports enterprise • Tax exemptions • Restricted reserves • Inward investment • Long term budget • Profit driven • High efficiency savings • Supports enterprise • Supports philanthropy • Supports investment • NNDR exemptions • High efficiency savings • Unrestricted reserves • Applicable to single and joint services • Competitive • Works with strategic commissioning • Can support community delivery • Supports single service • Can support collaborations • Supports public private partnerships • Highly market responsive • Directly accountable to govt • Protects sector specialism • Supports fixed standards & delivery • Highly flexible Philanthropic Community owned Direct delivery Investment model Market strengths • Protects sector specialism • Empowers leadership & mission • Supports accreditation and standards • Applicable to joint services • Drives collaboration & partnership • Private sector appeal • Highly market responsive • Enables cross discipline working • Empowers leadership & mission • Highly flexible Secure funding stream BUT • Unsustainable • Short term annual funding • Inward investment driven • Inefficient • lacks economies of scale Policy led Outcomes driven Private management Community management Assets transferred Performance driven User focussed BUT: • Static model, limited growth prospects • Limited capacity for rapid response • Limited integration with other services/ local priorities - single service Specialist, centralised accountability and often high standard BUT: • Least productive • Limited flex • Lack of capacity Assets protected Public benefit led Financial strengths Organisational strengths • Supports philanthropy • Supports enterprise • Tax exemptions • Restricted reserves • Inward investment • Long term budget • Profit driven • High efficiency savings • Supports enterprise • Supports philanthropy • Supports investment • NNDR exemptions • High efficiency savings • Unrestricted reserves • Applicable to single and joint services • Competitive • Works with strategic commissioning • Can support community delivery • Supports single service • Can support collaborations • Supports public private partnerships • Highly market responsive • Directly accountable to govt • Protects sector specialism • Supports fixed standards & delivery • Highly flexible Philanthropic Community owned Direct delivery Investment model Market strengths • Protects sector specialism • Empowers leadership & mission • Supports accreditation and standards • Applicable to joint services • Drives collaboration & partnership • Private sector appeal • Highly market responsive • Enables cross discipline working • Empowers leadership & mission • Highly flexible Secure funding stream BUT • Unsustainable • Short term annual funding • Inward investment driven • Inefficient • lacks economies of scale Policy led Outcomes driven Private management Community management Assets transferred Performance driven User focussed BUT: • Static model, limited growth prospects • Limited capacity for rapid response • Limited integration with other services/ local priorities - single service Specialist, centralised accountability and often high standard BUT: • Least productive • Limited flex • Lack of capacity Financial strengths Organisational strengths • Supports philanthropy • Supports enterprise • Tax exemptions • Restricted reserves • Inward investment • Long term budget • Profit driven • High efficiency savings • Supports enterprise • Supports philanthropy • Supports investment • NNDR exemptions • High efficiency savings • Unrestricted reserves • Applicable to single and joint services • Competitive • Works with strategic commissioning • Can support community delivery • Supports single service • Can support collaborations • Supports public private partnerships • Highly market responsive • Directly accountable to govt • Protects sector specialism • Supports fixed standards & delivery • Highly flexible Philanthropic Community owned Direct delivery Investment model Market strengths • Protects sector specialism • Empowers leadership & mission • Supports accreditation and standards • Applicable to joint services • Drives collaboration & partnership • Private sector appeal • Highly market responsive • Enables cross discipline working • Empowers leadership & mission • Highly flexible Secure funding stream BUT • Unsustainable • Short term annual funding • Inward investment driven • Inefficient • lacks economies of scale Policy led Outcomes driven Private management Community management Assets transferred Performance driven User focussed BUT: • Static model, limited growth prospects • Limited capacity for rapid response • Limited integration with other services/ local priorities - single service Specialist, centralised accountability and often high standard BUT: • Least productive • Limited flex • Lack of capacity …………………………………… . Tuesday, April 7, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
Notes de l'éditeur
- Broad introduction to the devolution opportunity for museums, libraries and archives - Aware that your interest will primarily be in libraries, but many people here today will have multiple services to consider, and this is an area where the museums sector has learning and experience that will be useful to others.
- Start by looking at the range of models applicable to museums, libraries and archives Then we’ll drill that down and spend the bulk of the presentation on a comparison of groups of devolution models and their characteristics Before finishing, if we have time, on some of the key considerations
- A devolution scenario could see a library operating as An independent charity In partnership with the private sector As a social enterprise
- We’ve come across a number of motivations for devolving
- Sustainability is a key strength associated with devolution. It is considered that devolved models are more likely to be able to achieve financial sustainability because they are able to Become more efficient – to exploit tax benefits and lower operating costs Diversify their income sources Exploit their assets
- But as well as financial sustainability, devolution can help the sector deliver social change – which is why devolution has occupied the news recently. Each of the different models contribute differently to economic regeneration, community empowerment, and the Big Society.
- To summarise, the opportunity of devolution is to achieve social change as well as financial change. To achieve more impact with less money
- Next stage of this presentation will assess the three groups identified by the spectrum- By sector uptake Capacity for achieving organisational growth, scale & impact By financial implications of models
- Fundamentals Umbrella term for delivery of services by a non profit distributing organisation for public benefit Models include CCLG, CIO, Unincorporated trust Charitable model is the devolution format most common to cultural services Scale Because they can create complex subsidiary structures charities offer the greatest potential to exploit full range of market opportunity – philanthropy, investment, enterprise For this reason although they are suited to joint services the model is particularly applicable to single services Devolution linked to asset transfer is pivotal to single-service success ££ NNDR relief not exclusive to charities - so should not be determining factor in a choice
- The High sector take up probably linked to cultural sector’s traditional philanthropic support base (CAF Charity Trends reports) Philanthropy requires time, skill and INVESTMENT to build competitive offer CAF report has shown that UK giving has declined by 11% with recession - PIC reports have also shown a 2 year decline Regional conversion traditionally low - not necessarily a market strength Big culture change especially for libraries and archives The greater number of single services charities in an area, the greater likelihood there is of individual growth slowing as regional philanthropy peaks For this reason can’t rely on philanthropy alone; a growth strategy would need to adopt enterprise activity and investment partnerships In planning your operation you need to be aware that Grant funding can - because it requires satisfaction of grant conditions as well as user needs Growth also constrained by restrictions on borrowing against assets or holding ‘significant’ unrestricted reserves Trading subsidiaries required for enterprise not always cost effective for single charities and need careful management to ensure strategic integration. Danger that separate governance, reporting & auditing requirements can create distance & limit capacity to really deliver – impacting on potential for scale Most organisations chose charitable status have yet capitalise on the key fiscal advantage - create development & fundraising, capitalise on gift aid
- I use the term Investment to describe legal forms that enable private sector organisations to invest in the sector for return Involvement of the private sector generates efficiency - increased productivity at value for money 1997-2007 public sector productivity declined by 3.4% - against a private sector rise of 27.9% Structure works well for single or joint services CIC ltd shares embeds equitable status of joint services at governance level, and unites investment opportunity with social & ethical mission of sector Possibility of greater or speedier market responsiveness than other models given private sector capacity for BMI and product innovation Capacity to bring significant additional investment to restore deteriorating assets It’s unique strength is its capacity to guarantee long term, year on year funding or budget projections, rather than limit a service to the short-termist planning enforced by annual budgets.
- Because of the profit motivator, unless significant market demand Use assumes that growth constraints - statutory, free accessibility, target users - preventing an independent model from earning income through philanthropy or enterprise Offset in the CIClimited by shares format where because profit is capped it is in the interests of the investor to maximise net returns for little investment Great model for efficiency but offers least opportunity for making the service financially sustainable Private benefit puts off philanthropy Greater challenges in asset transfer (or moving towards community ownership model) because involvement of private sector limits capacity for transfers without strong clawbacks Over time the model sees public subsidy maintained whilst private investment is likely to be offset by gross profit
- I use the term community enterprise to describe legal forms that actively embed entrepreneurialism at the heart of a business There’s been virtually no take up of these models to date within the cultural sector, but they’ve seen startling growth in the wider third sector, where Uniquely flexible governance formats for developing stake-holding collaborative partnership - appeal to local authorities driving Total Place or localist agendas Efficiencies rooted in cost effective operation to maximise profit and reduction of margins through employment of volunteers to reduce margins Nuffield Trust research quoted in The Ownership State High versatility for exploiting full market opportunity to generate financial sustainability – philanthropy, private investment as well as income generation Models tend to use asset development and generate significant economic impact within deprived areas 350 CDTs in UK owning £550m assets and generating £135m of £260m turnover through enterprise – 42% rely on earned income as over 50% financial model Devolving to existing enterprise offers greater savings through reduced set up costs
- Scale Managing diversity – where running a service requires community participation it is possible that sections of the community or workforce are excluded from participation
- To help rationalise the range of legal formats I’ve grouped the models against a spectrum of characteristics. Whichever model or combination of models is used, there are benefits and risks. We’ll now assess these in greater detail
- Next stage of this presentation will assess the three groups identified by the spectrum- By sector uptake Capacity for achieving organisational growth, scale & impact By financial implications of models
- Wanted to draw attention to the fact that It’s common for devolution to be thought of simply in terms of joint or single service devolution, but the range of potential options is actually a bit more diversified than that.
- In terms of financial sustainability fiscal exemptions are not the only route to increased value for money Devolving models will need to consider ways of Minimising their financial risk by lowering their operating cost Creating a financial stable model through exploiting income generation -and the controversial subject of admissions likely to arise again Building long term financial sustainability and growth by gaining assets upon which to capitalise Misconception that money ‘leaves’ the sector in some models – there is always a cost Judge financial sustainability on value for money – value of service & outcomes relative to the public cost of provision Track a proportionate decrease in public subsidy relative to earned income
- MLA can help if you do think that devolution is a viable option for you Paper on website Practical guidance
- Conclude with two key messages really There are many devolution models with as many different benefits for your local users and communities - think carefully about all the options before selecting the model Devolution is an option open to all services. With the right plan in place there is no reason to suppose that any service could not successfully devolve.
- Figure attempts to distil characteristics of the models into their purest forms but the business model of a devolved organisation should plan to grow in different directions to develop its own unique combination of characteristics If more than one model offers appeal or ‘fit’ to a local area, there is no reason why a devolving service could not structure its devolution progressively, in steps - to mitigate risk of failure and gradually build capacity for various stages of devolution – Setting aspiration for community ownership models Staggering progress through first partial and then full philanthropic devolution Philanthropic model - community enterprise Private investment model - community enterprise through CIC