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Public services and the third sector

Jake Eliot and Richard Piper

This think piece has been written Introduction
by the Performance Hub for
policymakers in government
and the third sector who are
interested in improving public Government is committed to transforming public
services and working with services, to ensure they are based on what
charities, voluntary organisations, communities need, offer flexible solutions to
individual service users and give value for money.
community groups and social
Involving organisations from the private and third
enterprises. It outlines how sector has been seen by government as an essential
thinking about the full value part of achieving this transformation. However, much
of third sector organisations of the rationale and explanation for involving third
can help all the players in public sector organisations1 (TSOs) in public services is
services focus on what matters. muddled or unclear, as we discuss below. Simply
transferring service delivery from the public sector
to the third sector or private sector without
developing the specification of the service itself
won’t necessarily lead to improved public services.

One of the main causes of this muddled thinking is

the term ‘added value’ and the way it has been used
to describe the contribution of the third sector to
public services. We, the Performance Hub, think it is
important, in order to achieve successful, transformed
public services, that we move away from talking
about added value and instead, ensure that individual
TSOs are able to understand and communicate the
full value of their organisation.This will help TSOs
better understand and appreciate the different ways
in which they can create value for a public service,
should they choose to get involved in this arena.

An essential part of policymakers’ and purchasers’

role is to support organisations to do this, in
addition to defining clearly what they think matters
in each public service being purchased, and to
engage organisations in a variety of ways throughout
the commissioning process.

This think piece summarises some key ideas about

what we term ‘full value’, that government can use to
help improve public services.These are explored
more fully in our publication True Colours: Uncovering
the full value of your organisation which is based on a
project that looked into the variety of ways that
1 voluntary
TSOs, as well as their non-statutory funders and organisations,
government purchasers, assess and communicate community groups,
charities and social
their value. enterprises

Full Value: Public services and the third sector

Moving on from
‘added value’
In the past, some sections of government and some ● It causes confusion in commissioning.
within the third sector have argued that TSOs should The confusion over what value third sector
get involved in public services where it is in the organisations can create and where this can be
interest of both parties and where they can add assessed makes it difficult for purchasers to take a
value. As TSOs have got more involved with the clear and consistent approach to commissioning
design and delivery of public services, both services from TSOs.There have been a number of
government and the sector have debated the nature different misconceptions about how added value
of the so-called ‘added value’ the third sector brings can be assessed in the procurement process.
to public services, and whether it exists at all. Commissioners have been known to say they
want social, economic or environmental benefits
Despite a number of contributions to the debate2, but then do not include them as part of the
there has never been a consensus about what added service specification. Or they expect a TSO to
value means or how it might be assessed. At most, deliver these benefits as ‘free’ outcomes that they
added value has been described in vague, general wouldn’t expect from a private sector provider or
terms, as the benefits to society of greater third public agency.TSOs have even been expected to
sector involvement in public services that stem from give comparative evidence on their added value,
the distinctive characteristics of TSOs. relative to bidders from other sectors.

Our analysis demonstrated that the concept of ● It is a red herring. Added value is about trying
added value is unhelpful for the following reasons: to make a special case for taking the third sector
seriously in the public services debate. But why
● It is a crude generalisation. The idea of does a special case need to be made, when other
added value rests on the assumption that TSOs sectors are assumed already to have something to
bring added value because they are distinctive: contribute to the design, commissioning and
independent, values-driven and involving users and delivery of services? If any organisation delivers an
volunteers in their organisations. While many TSOs output or outcome that is of significant value to
offer some or all of these benefits, they don’t do the success of a service, then that value should be
so because they are third sector organisations. An included in the specification and assessment.The
organisation’s ‘sector’ does not create these nominal ‘sector’ to which an organisation belongs
benefits and characteristics. And it is untrue to should not be a deciding factor in designing,
suggest these characteristics are distinctive to the commissioning and delivering better public
third sector. Private and public sector organisations services.
can put users at the centre of their services too.
Organisations in other sectors can innovate and
show flexibility to meet different needs. Expertise,
understanding and skills are built up by individual
organisations, not whole sectors. Social benefits
aren’t automatically added to a service simply by
2 Bolton M Voluntary
getting a TSO to deliver it. Sector Added Value.
A Discussion Paper,
(London, NCVO, 2002);
Hopkins A Delivering
public services: services
users’ experiences of the
third sector (London,
National Consumer
Council, 2007)

What is ‘full value?’

We believe a far more meaningful way forward is to organisational value of closeness to users might be
think about the ‘full value’ of individual organisations, The four elements of full value
rather than to make general statements about the
presumed added value of an entire sector. Primary outcomes: the changes and benefits an organisation
creates for its primary group of users, or primary target audience.
The qualities and benefits of an organisation (its value) This can also include unintended or extra outcomes for this group
are usually broader than just the results it creates or – unplanned changes or those beyond your immediate remit.
the change it brings about for its primary user groups.
Secondary outcomes: changes and benefits that your
organisation creates for people who are not primary users of
Full value, as an idea, takes into account everything an
the organisation. Depending on the organisation and the type
organisation does that benefits people and makes
of service they offer, a TSO might create valuable outcomes for
them happy. It includes what the organisation does
the local economy, the environment, its own staff, trustees and
for its users and also for non-users who are affected
volunteers or other organisations in their area, for example.
by its work. It includes both the ‘hard’, more easily
measurable outcomes and the softer outcomes of a Primary satisfaction: the enjoyment and satisfaction that the
service, and also the outcomes that are planned for, primary users get from their engagement with an organisation.This
and those that are unexpected but still very is not just a reflection of the extent to which a planned outcome
valuable. As well as the actual outcomes of work, it is achieved for the user, but how positive the user’s experience of
also includes the satisfaction an organisation a service is, and whether an organisation listens and responds to
generates and the enjoyment it gives in working users’ individual circumstances and needs.
towards those changes.
Secondary satisfaction: satisfaction the organisation creates for
Most TSOs are more valuable to more people and all the other audiences that are connected with or affected by it.
in more ways than the organisation, or its funder or This might include, for instance, the extent to which staff and
commissioner, appreciates.There are four different volunteers or funders are satisfied by their experience of working
elements that together make up an organisation’s with you.
full value (see box opposite).

These different elements may be expressed or an important principle for the TSOs but it won’t
experienced in different ways by different audiences. automatically create value for others. It may, though,
For instance, a social primary outcome for a user in practice, encourage the organisation to create
might be experienced as an economic secondary mechanisms and ways of working that actively involve
outcome for the local community. users in the design of their services and engage them
in the running of the organisation. Done well, this
These elements of full value are not the same thing specific benefit of the organisation could be of value
as organisational values, which in the past have been to a commissioning authority which is looking for
linked to the benefits of involving the third sector in ways of consulting with that user group.
public services.Values can include elements such as
wanting to work closely with users, maintaining An organisation’s full value can change over time.TSOs
independence, always looking to innovate, or can create more, less or different value, depending
supporting the principle of volunteering. Such values on what they choose to do and how they operate.
are a bedrock for TSOs.They can help create value.
But they are not, in themselves, specific benefits or
achievements of the organisations. For instance, the

Full Value: Public services and the third sector

Full value:
a way forward
More and more commissioners are taking an The full value approach helps TSOs to better
outcomes approach to planning, buying and reporting understand their value and better communicate to a
on public services.3 The extent to which a public purchaser how they can meet the needs of service
service delivers its desired outcomes for its primary users.The approach recognises that TSOs can
users should be central to judging its success. benefit from support to enable them to offer
However, they are not the full picture. Also important commissioners and purchasers better information
are the wider benefits for the users that might never about how and why they are of value. It discourages
have been valued before; and the benefits of the commissioners from forcing TSOs to demonstrate
service for those people who are affected by it but are ‘added’ value before they are taken seriously as
not its direct users; and the satisfaction and enjoyment partners in the transformation of public services.
the service creates for both the users and others. And it also discourages commissioning and
procurement from descending into a competition to
For instance, an in-school counselling scheme for see which provider can deliver the biggest variety of
bullied children might be successful in delivering its outcomes for the price of the contract. Rather, the
primary outcomes of reducing bullying in the school full value approach to commissioning involves having
and giving pupils greater self-confidence. However open and creative discussions with different parties
there may also be valuable wider benefits both for the about which outcomes really matter, as well as an
users (eg the pupils become quicker to seek other appreciation for the importance of satisfaction levels
support from the school in the future), and non-users of both users and non-users alike.This outlook
(eg the parents of bullied children are more aware of needs to be combined with a fair, transparent, and
the needs of their children, or become more closely proportionate process for deciding which
involved in the school).The level of satisfaction organisations can offer the best service.
experienced by both these groups is also crucial; for
instance, having confidence in the service will affect the The rest of this think piece gives more information
likelihood of pupils turning to the school for help in about the benefits of full value to commissioners
the future.This is the reality of public services.Taking and TSOs.
a full value approach can help government and the
third sector capture some of this complexity.

The full value approach The full value approach

involves: does not involve:
● appreciating the full range of benefits that are ● suggesting that public sector purchasers should
created by organisations of all types value everything a TSO does, all of the time
● helping government, the third sector and citizens ● treating an organisation’s ‘sector’ as a
think afresh about what matters: the priorities and determinant of its value
needs that should be valued in our public services ● expecting TSOs to provide disproportionate
● giving TSOs and commissioners a broader menu levels of evidence about their value.
of issues and potential priorities from which to
choose the ones that matter the most 3 Audit Commission
Hearts and Minds:
● recognising that TSOs may need support to Commissioning from the
Voluntary Sector,
help them demonstrate their value. (London, Audit
Commission, 2007)

Benefits for
public services
The full value approach offers policymakers and instance, other departments within a local
commissioners a way of truly making sense of what authority or specific groups within the broader
matters in the delivery of a public service.The community who are currently being targeted by
concept can help policymakers, commissioners and other services. Joining up measurement of services
TSOs take a broader and more creative view of the across a range of local authority departments is a
value of organisations and the different roles they significant challenge to realise in practice. However,
could play in improving public services. the full value approach can at least highlight where
value is being created across service delivery
For their part,TSOs can get a better understanding areas, which can act as an important precursor
of their own full value and use this to communicate and motivator to understanding how impact can
strong, coherent messages about appropriate be assessed across departmental boundaries.
elements of their value to their stakeholders,
● Become more focused, specific and efficient
including articulating to funders and commissioners
in each contract. During the procurement
how and why they should be involved in consulting
cycle, purchasers can be clearer about what
users, helping to design the service, stimulating
outcomes they want to buy and for whom.They
demand or delivering the service.
can be clearer with potential providers about
what is open to influence from different agencies,
It is already widely understood that, to get better
and how what matters to them could be
services, value needs to be placed at the heart of
measured. Public sector purchasers will also have a
the commissioning process. By thinking about full
better understanding of the variety of roles that
value, commissioning can:
different TSOs could play in improving services.
● Create better designed services, through ● Help TSOs to assess their own value.
discussions about what is needed. While individual Funders and contractors have a major role to play
TSOs and purchasers may not always agree on in creating the conditions in which organisations
what the focus of a service should be, there is an can fulfil their potential and deliver value as a
opportunity to gain greater understanding about means of achieving better public services. Late
what is key in a service through discussions about payments, short-term contracts, and over-
value between purchasers, users and stakeholders burdensome monitoring and reporting
and potential suppliers. requirements can hinder any bidder, especially a
small TSO, from delivering a valuable, responsive
● Maximise value. Through focusing on the actual,
service, despite having the experience and the
specific value – the achievements and benefits –
expertise to do so. With support from their
offered by each individual organisation they
funders and purchasers, individual TSOs feel more
purchase from, commissioners can maximise the
confident and better able to assess the qualities
value of their investment. Awareness of the
and benefits they offer to society and are able to
distinctive value an organisation can offer will help
communicate their worth more effectively by
both TSOs and purchasers create more value in
tailoring messages to different audiences.
the future.
● Become more joined up. Placing value at the Thinking about the commissioning process from the
heart of commissioning may highlight occasions perspective of full value can help all parties involved
where services create value for audiences other to appreciate the variety of opportunities for
than the primary users of a service and the organisations to create value, and not just in terms
commissioning authority. It might benefit, for of delivering services under contract.

Full Value: Public services and the third sector

Benefits for third

sector organisations
The concept of full value can help TSOs think
creatively about the ways that they could improve
what they do, and how they might already offer
Further reading
additional, under-appreciated benefits to purchasers
which are currently hidden. Effective organisations
who have got to grips with the full value they create
may own a more sophisticated and detailed picture
of how they are valuable, in a variety of ways, to a
number of different audiences.This is powerful
Uncovering the full value of your organisation

information that can help TSOs evaluate their impact

and plan for the future, but we do not think it is
helpful for organisations to try and communicate
their full value to funders by bombarding Jake Eliot and Richard Piper

commissioners with information that isn’t relevant to

the value of the contract. Rather,TSOs should be
deliberately selective and carefully communicate
what matters according to their audience.
If you are interested in the ideas outlined in
TSOs that deliver public sector services under this pamphlet and would like to learn more
contract often fail to cover their costs, let alone about full value, why not read our publication,
make a surplus. By pro-actively communicating their True Colours: Uncovering the full value of your
value to public sector procurers,TSOs can expect to organisation, published February 2008.
compete more favourably with other providers that
You can order a copy online from the
do not offer the same benefits, and perhaps, also
Performance Hub website:
receive a better price for their services. A clearer
understanding of the ways in which a TSO is
valuable may also throw up new opportunities for
the organisation to create value in public services, in
For a helpful insight into how outcomes and
addition to delivering services under contract, for
impact can be incorporated into the
instance, by contributing to the service specification
commissioning process, the New Economics
or assessment criteria.
Foundation (nef) has produced a briefing for
the Finance Hub, Impact Briefing: putting
Our guide True Colours offers a number of exercises
impact at the heart of the tendering process,
to help TSOs get started on assessing their full value
published July 2007.
and gives advice on how to think about
communicating different parts of this value to You can download this briefing from the
different audiences. Finance Hub website:

Published by the Performance Hub
The Performance Hub works to help third sector
organisations achieve more.
The Performance Hub is funded by Capacitybuilders
through the ChangeUp programme and is jointly run
by Charities Evaluation Services (CES) and the
National Council for Voluntary Organisations (NCVO).
CES is the accountable body. CES is a company
limited by guarantee. Registered in England and Wales
no. 2510318. Registered office: 4 Coldbath Square,
London, EC1R 5HL. Registered charity no. 803602.
Published March 2008
Written by Jake Eliot and Richard Piper
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© NCVO 2008
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Every effort has been made to ensure the accuracy
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However, neither NCVO nor CES can be held
responsible for any action an individual or organisation
takes, or fails to take, as a result of this information.