Models of devolved delivery for museums, libraries & archives …………………………………… . June, 2010 ……………………………………………………………………………………...
Structure of discussion 0 …………………………………… . Tuesday, 27 th  July, 2010 ………………………………………………………………………………………………………… ........ Th...
1.1 Context: what is it?   (1/5) What does it look like? <ul><li>Traditionally single service charities </li></ul><ul><li>...
1.2 Context: why explore it?  (2/5) Why devolve? <ul><li>To gain  savings </li></ul><ul><li>To keep services  open  in com...
1.3 Why devolve? becoming sustainable   (3/5) <ul><li>Fiscal exemptions </li></ul><ul><li>Low operating cost </li></ul>Eff...
1.4 Why devolve: social change (4/5) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The dev...
1.5 Devolution: the real opportunity (5/5) Financial change Social change <ul><li>Managing cuts to budgets & resources </l...
Structure of discussion 0 …………………………………… . Tuesday, 27 th  July, 2010 ………………………………………………………………………………………………………… ........ Th...
2.1  Philanthropic: applicability of format    (1/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ...
2.1  Philanthropic: managing risk  (2/2)  …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ Th...
2.2  Investment: applicability of format   (1/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… .......
2.2  Investment: managing risk   (2/2) …………………………………… . July, 2010 Key risk <ul><li>Primary focus of investment models wil...
2.3  Community enterprise: applicability of format  (1/2) <ul><li>Uniquely flexible governance formats for collaborative p...
2.3  Community enterprise: managing risk  (2/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........
2. The devolution spectrum Characteristics : Highly regulated Public benefit Fiscal exemptions Sector/policy/value driven ...
Structure of discussion 0 …………………………………… . Tuesday, 27 th  July, 2010 ………………………………………………………………………………………………………… ........ Th...
3.1 Final thoughts: diversity of options Joint services Single services <ul><li>Conglomerate cultural services / leisure c...
3.2 Final thoughts: financial sustainability  <ul><li>Fiscal exemptions </li></ul><ul><li>Low operating cost </li></ul>Eff...
3.3 Final thoughts: MLA can help <ul><li>The opportunity of devolved governance for museums libraries and archives </li></...
Final thoughts Any questions? Devolution is an option open to any service With the right plan in place there is no reason ...
3.2 Planning a model (1/2) Assets protected Public benefit led Financial strengths Organisational strengths • Supports phi...
Appendix:  Legal formats & their characteristics Charities Tax exemptions inc gift aid Trusted format Protected liability ...
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Alternative governance mla

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An overview of models for alternative governance. Jo Woolley, MLA

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  • 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 &amp; 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 &amp; auditing requirements can create distance &amp; 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 &amp; 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 &amp; 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 &amp; 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 &amp; 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
  • Alternative governance mla

    1. 1. Models of devolved delivery for museums, libraries & archives …………………………………… . June, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    2. 2. 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 <ul><li>1. Context </li></ul><ul><li>What & why </li></ul>3. Final thoughts
    3. 3. 1.1 Context: what is it? (1/5) What does it look like? <ul><li>Traditionally single service charities </li></ul><ul><li>But scenario now varying with new emergent models: </li></ul><ul><li>Merging of specialised services </li></ul><ul><ul><li>Northumberland Museum & Archive </li></ul></ul><ul><ul><li>Sport & Culture Glasgow </li></ul></ul><ul><li>Merging of boundaries </li></ul><ul><ul><li>Greenwich Leisure </li></ul></ul><ul><li>Merging with the third sector </li></ul><ul><ul><li>Salford Museum </li></ul></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley What is devolution? <ul><li>Devolution is the transfer of strategic and financial control </li></ul><ul><li>over its services </li></ul><ul><li>from local authority to a separate organisation: </li></ul><ul><ul><li>A charity or trust ( philanthropic ) </li></ul></ul><ul><ul><li>A private sector company ( investment ) </li></ul></ul><ul><ul><li>A new or existing social business ( enterprise ) </li></ul></ul>
    4. 4. 1.2 Context: why explore it? (2/5) Why devolve? <ul><li>To gain savings </li></ul><ul><li>To keep services open in communities threatened with closure </li></ul><ul><li>To make it easier to fundraise – people don’t give to councils </li></ul><ul><li>To gain increased independence – external bodies have stronger voices </li></ul><ul><li>To gain increased expertise / skills – plug capacity gaps </li></ul><ul><li>To embed a different culture </li></ul><ul><li>To become sustainable & vary sources of support </li></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    5. 5. 1.3 Why devolve? becoming sustainable (3/5) <ul><li>Fiscal exemptions </li></ul><ul><li>Low operating cost </li></ul>Efficiencies Earning Assets <ul><li>Philanthropy & gift aid </li></ul><ul><li>Entrepreneurialism </li></ul><ul><li>Charges & admissions </li></ul><ul><li>Asset transfer </li></ul><ul><li>(building, land, collections) </li></ul><ul><li>Endowment </li></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    6. 6. 1.4 Why devolve: social change (4/5) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley <ul><li>Devolution can help the sector deliver social change </li></ul><ul><li>Charitable delivery for public benefit </li></ul><ul><li>Community delivery </li></ul><ul><li>Staff ownership </li></ul><ul><li>Private sector partnerships </li></ul><ul><li>Economic regeneration </li></ul><ul><li>Community empowerment </li></ul><ul><li>Big Society </li></ul>
    7. 7. 1.5 Devolution: the real opportunity (5/5) Financial change Social change <ul><li>Managing cuts to budgets & resources </li></ul><ul><li>Making savings </li></ul><ul><li>Economies of scale </li></ul><ul><ul><li>Merging with cultural services </li></ul></ul><ul><ul><li>Merging across boundaries </li></ul></ul><ul><ul><li>Integration with third sector </li></ul></ul><ul><li>… with less </li></ul><ul><li>Economic regeneration </li></ul><ul><li>Community and Big Society </li></ul><ul><li>As well as state delivery: </li></ul><ul><ul><li>Charity delivery </li></ul></ul><ul><ul><li>Community delivery </li></ul></ul><ul><ul><li>Staff ownership </li></ul></ul><ul><ul><li>Private sector partnerships </li></ul></ul><ul><ul><li>Achieving more… </li></ul></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    8. 8. Structure of discussion 0 …………………………………… . Tuesday, 27 th July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley 2. Comparative assessment A charity or trust ( philanthropic ) A private sector company ( investment ) A new or existing social business ( enterprise ) <ul><li>1. Context </li></ul><ul><li>What & why </li></ul>3. Final thoughts
    9. 9. 2.1 Philanthropic: applicability of format (1/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Fundamentals Key strengths <ul><li>Charity or trust </li></ul><ul><li>Most common devolution format </li></ul><ul><ul><li>120 charitable leisure trusts devolved from direct delivery (sports) </li></ul></ul><ul><ul><li>2006 museums survey: 76% councils delivered directly, 8% trusts </li></ul></ul><ul><li>Charities can create complex governance structures to exploit full market opportunity, scale up & grow </li></ul><ul><ul><li>- Charities are eligible for all public and private grants </li></ul></ul><ul><ul><li>- Charities can trade and enter into business partnerships </li></ul></ul><ul><li>Supports single services because protects asset transfer </li></ul><ul><li>Charities can benefit from the most tax exemptions of all models </li></ul><ul><li> - NNDR relief not exclusive to charities and a gift of Treasury </li></ul>
    10. 10. 2.1 Philanthropic: managing risk (2/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Key risk <ul><li>Competition: UK cultural sector earns lots from fundraising </li></ul><ul><ul><li>Fundraising traditionally low for regional mlas </li></ul></ul><ul><ul><li>Philanthropy is not ‘free’ </li></ul></ul><ul><ul><li>market becoming more competitive </li></ul></ul><ul><ul><li>Statutory right to ‘free’ service models makes it a big culture change </li></ul></ul>Other risks <ul><li>More single services charities, the greater likelihood of growth slowing </li></ul><ul><li>Growth requires enterprise activity and investment partnerships </li></ul><ul><li>Model offers least versatility for partnerships at board level & the limited accountability can compromise board excellence </li></ul><ul><li>Organisational stresses - grant funding can stress capacity for market responsiveness, trading subsidiaries need strategic integration </li></ul><ul><li>Most devolved cultural services yet to exploit fundraising and gift aid </li></ul><ul><li>- if not prepared to ask for donations why become a charity? </li></ul>
    11. 11. 2.2 Investment: applicability of format (1/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Fundamentals <ul><li>Models that contract or partner private sector – for profit </li></ul><ul><li>Second most common form of devolution </li></ul><ul><ul><li>>1% museums in 2006 and two library services </li></ul></ul><ul><li>Unique capacity for significant investment to restore deteriorating assets </li></ul><ul><ul><li>Guarantee long term, year on year funding or budget projections </li></ul></ul>Key strengths <ul><li>Partnership working – particularly applicable to joint services </li></ul><ul><li>Probability of greater or speedier market responsiveness </li></ul><ul><li>Associated with efficiency - and delivers - but not unique to model </li></ul><ul><li> 1997-2007 public sector productivity declined by 3.4% </li></ul><ul><li>against a private sector rise of 27.9% </li></ul>
    12. 12. 2.2 Investment: managing risk (2/2) …………………………………… . July, 2010 Key risk <ul><li>Primary focus of investment models will be to achieve efficiency </li></ul><ul><li>- unless significant consumer demand influences service provision </li></ul>Other risks <ul><li>Risk of creating virtual monopolies driving improved but homogenised services rather than ones determined by need (offset by contract) </li></ul><ul><li>Risk to integral service improvement & skills growth </li></ul><ul><li>- little incentive to embed key entrepreneurial and management skills </li></ul><ul><li>Apart from efficiency and investment it offers the least potential to exploit full range of income opportunity – </li></ul><ul><ul><li>private benefit puts off philanthropy </li></ul></ul><ul><ul><li>greater challenges in asset transfer </li></ul></ul><ul><li>Over time investment is likely to be offset by gross profit </li></ul>
    13. 13. 2.3 Community enterprise: applicability of format (1/2) <ul><li>Uniquely flexible governance formats for collaborative partnerships </li></ul><ul><li>Demonstrable efficiencies through low net operating margins but also- </li></ul><ul><li>Community & staff ownership linked to increased productivity with: </li></ul><ul><ul><li>Less risk aversion than public sector (greater potential to innovate) </li></ul></ul><ul><ul><li>Greater entrepreneurialism than voluntary sector </li></ul></ul><ul><ul><li>Greater sense of mission than private sector </li></ul></ul>…………………………………… . Tuesday, April 7, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Fundamentals <ul><li>Delivery of cultural services by social enterprises – for ‘profit’ </li></ul><ul><li>Little sector take up but third sector growth area - as charities but also social enterprises, community or staff ownership models </li></ul>Key benefits <ul><li>Sound financial sustainability – attract philanthropy and investment </li></ul><ul><li>Asset development models can be used strategically to create economic impact within deprived areas </li></ul>
    14. 14. 2.3 Community enterprise: managing risk (2/2) …………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley Key risk <ul><li>Transfer of assets – land, collections, building, money – for success </li></ul><ul><ul><li>shared body of experience in assessing this area of risk – Quirk, DTA, Community Matters, BIG and ACF </li></ul></ul>Other risks <ul><li>Need for strong leadership to think laterally and opportunistically about income generation – capacity gap </li></ul><ul><li>Greater risk of staff reduction </li></ul><ul><li>Achieving diversity –sections of community or workforce can be excluded from participation (offset by good workforce policy) </li></ul><ul><li>Success requires earning a greater sum in profit than actual value of VAT and some NNDR savings </li></ul><ul><li>Challenge for the cultural sector in managing the compatibility of charged services with a free core service </li></ul>
    15. 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
    16. 16. Structure of discussion 0 …………………………………… . Tuesday, 27 th July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley 2. Comparative assessment The devolution spectrum <ul><li>1. Context </li></ul><ul><li>What & why </li></ul>3. Final thoughts
    17. 17. 3.1 Final thoughts: diversity of options Joint services Single services <ul><li>Conglomerate cultural services / leisure charitable trusts utilising admissions income and economies of scale </li></ul><ul><li>Private sector joint service delivery models investing in higher performance </li></ul><ul><li>Community land / benefit trusts responding to social need around education, economy, health </li></ul><ul><li>Specialised charitable trust utilising philanthropy and asset exploitation </li></ul><ul><li>Specialised privatised business model investing in improvement </li></ul><ul><li>Community managed / owned model </li></ul><ul><li>Single service alliances through collaborative models such as cics </li></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    18. 18. 3.2 Final thoughts: financial sustainability <ul><li>Fiscal exemptions </li></ul><ul><li>Low operating cost </li></ul>Efficiencies Earning Assets <ul><li>Philanthropy & gift aid </li></ul><ul><li>Entrepreneurialism </li></ul><ul><li>Admissions </li></ul><ul><li>Asset transfer (building, land, collections) </li></ul><ul><li>Endowment </li></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    19. 19. 3.3 Final thoughts: MLA can help <ul><li>The opportunity of devolved governance for museums libraries and archives </li></ul><ul><li>range of models applicable to museums, libraries and archives </li></ul><ul><li>assessment of strengths and weaknesses of each legal format </li></ul><ul><li>‘ best practice’ case studies </li></ul><ul><li>key areas of risk </li></ul>Strategic analysis Practical guidance The Field Team <ul><li>An online resource available shortly including </li></ul><ul><li>A feasibility framework for developing trust options for museum services </li></ul><ul><li>A guide to the review process and legal transfer issues </li></ul><ul><li>Precedent legal documents to save replication costs from local authority to local authority </li></ul><ul><li>Regional workshops </li></ul><ul><li>Practical advice and support </li></ul><ul><li>Your Field Team can advise with options appraisals around devolution </li></ul><ul><li>Strategically, Field Teams can help broker networks and relationships, and help develop collaborative working with the third and private sectors </li></ul>…………………………………… . July, 2010 ………………………………………………………………………………………………………… ........ The devolution opportunity for museums, libraries & archives Jo Woolley
    20. 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. 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
    22. 22. Appendix: Legal formats & their characteristics Charities Tax exemptions inc gift aid Trusted format Protected liability Asset lock Risk averse regulation Subsidiary structures NPDOs for public benefit CCLG CLG CIO UCO Tax on enterprise No debt finance Limited reserves Competitive Board membership less accountable A LA in PPP able to use funding to lever philanthropy and claim gift aid Industrial Provident Society <ul><li>NPDOs or profit distributing </li></ul><ul><li>Community Benefit Society </li></ul><ul><li>Co-operative </li></ul><ul><li>Charitable fiscal benefits </li></ul><ul><li>Model designed to generate income </li></ul><ul><li>Risk averse regulation </li></ul><ul><li>Can offer democratic governance </li></ul><ul><li>High set up costs </li></ul><ul><li>Competitive rather than collaborative </li></ul><ul><li>Cumbersome administrative & regulatory structure </li></ul><ul><li>Cross--domain leisure & cultural services to earn revenue & decrease LA investment over time </li></ul>Community Interest Companies <ul><li>Business activity for community benefit </li></ul><ul><li>Limited by guarantee </li></ul><ul><li>Limited by share </li></ul><ul><li>Eligible for grants, loan finance, unrestricted reserves; supports enterprise & income </li></ul><ul><li>Collaborative </li></ul><ul><li>Reliable regulation & asset lock </li></ul><ul><li>Board members paid = accountability </li></ul><ul><li>No tax benefits </li></ul><ul><li>Arguably limited philanthropy </li></ul><ul><li>Shareholders can change purpose – claw-back clauses </li></ul><ul><li>Regeneration in deprived areas </li></ul><ul><li>Broker relationships between sectors </li></ul><ul><li>Empowering small / specialist services for full devolution </li></ul>Community Benefit / Land Trusts Defined by statute (H&R Act 2008) Democratic corporate body holding property for community. <ul><li>Access loan finance, mortgages, unrestricted reserves </li></ul><ul><li>Membership includes private & public sectors </li></ul><ul><li>Collaborative </li></ul><ul><li>Can assimilate other models but can’t be sold </li></ul><ul><li>Democratic format could discourage scaling up geographically </li></ul><ul><li>Limitations on constitutional form they take </li></ul><ul><li>Furthering programme of asset transfer & participation </li></ul><ul><li>PFI opportunities - CLT own freehold </li></ul>Limited Liability Partnerships <ul><li>Hybrid corporate body combining limited liability with advantageous tax characteristics and organisational flex </li></ul><ul><li>Tax applied as partnership - only liable on member share </li></ul><ul><li>Unrestricted reserves </li></ul><ul><li>Supports public private ventures </li></ul><ul><li>Unlimited flex </li></ul><ul><li>NO NNDR exemptions </li></ul><ul><li>Ineligible for grant/ social enterprise funding </li></ul><ul><li>No asset lock </li></ul><ul><li>robust for private sector but flexible for social enterprise - PPP </li></ul><ul><li>Profits donated to claim gift aid </li></ul><ul><li>NPDO with restricted objects and prohibition on profit distribution but light touch regulation of Companies House </li></ul><ul><li>NNDR savings and some VAT; some grants; unrestricted reserves </li></ul><ul><li>Flexible model for private sector partnership (group structure) </li></ul><ul><li>Directors paid </li></ul><ul><li>Can form CICs </li></ul><ul><li>Ineligible for much grant funding </li></ul><ul><li>Prohibition on profit distribution can reduce appeal </li></ul><ul><li>No asset locks </li></ul><ul><li>Could be useful ‘first step’ model as allows LA to retain control - and can transfer to other formats when ready </li></ul>Companies Limited by Guarantee)

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