1 Charity Commission. Strength in numbers research â November 2010. Adapting to public service tenders: What are the r
Adapting to public service tenders: What are the risks you face when you take on public service contracts? Here are the facts from a specialist insurer. Bidding for public service contracts is a key way for charities to create sustainable new revenue streams. Yet understanding all the specific contractual obligations required and any associated insurance claims, takes special expertise. For example, bidding for public service contracts is not recommended for unincorporated charities due to the high level of risks that trustees would have to bear. Similarly, bidding for public service contracts requires skill sets that are not always available in-house. If a charity enters into a competitive tendering process, the trustees must carefully consider the risk implications, and the questions overleaf can help.
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A third of charities that deliver public services obtain 80% or more of their income from public service delivery.1
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The most common funding arrangement for charities delivering public services is a mixture of grants, contracts and service level agreements.
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37% of charities delivering public services said they are funded in this way1.
1 Charity Commission. Strength in numbers research – November 2010
Key questions to ask yourself and your broker When it comes to bidding for public service contracts, there are several issues and risks for trustees to consider. Asking some searching questions now can help determine whether you are ready to bid, have the resources that such a commitment would require and the means to deliver the contract if the tender is successful. Have you considered the following: n
Additional liabilities – Is this contract or service a natural fit with your current charity objectives? Are you aware of the consequences of taking on public sector employees? Do you understand current employment law and its implications, and are you insured for such exposure?
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Trustee liability – Are you being asked to make any personal guarantees as trustees or directors? Could you be taking on any onerous terms and conditions or additional liabilities? If so, have you sought relevant financial and legal advice?
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Reputation and communication – Will all your resources now be redirected or can you still carry on with your usual activities? Have you discussed this with your supporters and beneficiaries?
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Look carefully at the ‘What ifs?’ – Are you better off considering other options such as mergers, or collaborating with other charities to tender? What happens if you don’t win the contract? Have you thought about the repercussions of this?
When your charity business model changes, so does your exposure to risk. Ecclesiastical has a reputation for helping customers successfully manage and reduce theirs. Brokers and charities have voted us the best charity insurer for the last five years running.* Take a look at our other factsheets to find out more – www.ecclesiastical.com/charity-guidance
Useful links for charities interested in this subject: www.ecclesiastical.com www.charity-commission.gov.uk www.knowhownonprofit.org www.thirdsector.co.uk www.ncvo-vol.org.uk
*Research carried out by FWD, an independent market research company. Of those brokers who named an insurer in the survey, the majority named Ecclesiastical as the best insurer for charity insurance.
What next? For further information or to ensure you’re properly covered, please speak to your specialist charity broker or visit ecclesiastical.com/charity-guidance today.
Ecclesiastical Insurance Office plc (EIO) Reg. No. 24869. Registered in England at Beaufort House, Brunswick Road, Gloucester, GL1 1JZ, UK. EIO is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
