Part one of this piece explained what due diligence looks like. If you read it and thought “that sounds manageable,” you are probably already working in an organisation with a compliance function, a finance team, and someone whose job it is to keep the policies current.
If you read it and felt a low-level anxiety about your insurance certificates and when you last reviewed your safeguarding policy, you are probably running a small charity on a restricted budget with three members of staff and a board that meets quarterly.
The first group is not the problem. The second group is exactly who the social value economy needs, and exactly who it keeps turning away at the door.
The cost
Getting due-diligence ready is not free.
A few examples of things that aren’t free include
- A governance review to ensure your constitution is current and your board is functioning properly.
- An independent examination or audit of your accounts, filed on time, every year.
- Insurance at the levels corporate partners require.
- Policies that are current, reviewed, legally accurate, and owned by a named person.
- The time to compile all of this into a pack that can be shared with a prospective partner quickly.
For a large charity with a head office function, this is infrastructure that already exists. For a small community organisation delivering real impact with a lean team, it is a project. It takes time they do not have and money they have not been given.
I want to be very clear about the next part, because I may be an outlier here. The company asking for due diligence will benefit commercially from passing it. The commissioner requiring social value will evidence their statutory duty through it. The main contractor will add points to their bid because of it. The subcontractor will strengthen their commercial proposition with it.
The charity will do the work. And nobody has paid them to be ready to do it.
The case for companies paying
When a company partners with a charity for social value, they are not making a donation. They are making a commercial transaction. The charity’s community relationships, delivery track record, and local legitimacy are assets the company needs to win contracts and evidence outcomes. Assets have a price. If a charity partnership adds ten percentage points to a bid worth two hundred thousand pounds, the value of that partnership to the company is not a certificate of appreciation and a mention in the annual report. It is twenty thousand pounds of contract value, at minimum.
The infrastructure that makes that partnership possible, the governance, the insurance, the policies, the capacity to evidence outcomes in the language of a procurement officer, has a cost. That cost should sit with the party who benefits commercially from it.
Which is the company.
This does not mean a one-off payment before the partnership begins. It means building the cost of charity readiness into the social value budget from the start. It means paying for the support a charity needs to become a proper supplier, not just expecting them to arrive already equipped. Few companies to do this. Most are still treating due diligence as the charity’s problem and moving on when the charity fails to pass.
The case for commissioners building it in
Companies respond to what commissioners require. If a commissioner’s social value specification rewards partnerships with locally embedded volunteer organisations, charities, and social enterprises (VCSEs), companies will seek those partnerships. If the same specification includes a requirement to support those VCSEs to become delivery-ready, companies will fund that support.
At the moment, most specifications do neither.
Commissioners design social value requirements without asking the charity sector what it would need to meet them. They set outcome targets without funding the infrastructure that produces outcomes. They measure delivery without measuring readiness.
The fix is not complicated. Social value specifications should include a capacity building component. A funded period, before delivery begins, during which the contractor supports the charity partner to meet due diligence requirements, develop their evidence framework, and build the capability to deliver and report. Not as a nice-to-have. As a scored, weighted requirement.
Commissioners who include this in their specifications will get better social value delivery, more sustainable charity partnerships, and outcomes that hold up beyond the life of the contract. That is what maximising public benefit actually means.
The case for funders waking up
Grant-makers and trust funders have a role here that most of them are not playing.
Funding a charity to deliver a project is familiar. Funding a charity to become the kind of organisation that can sustain itself through social value contracts is less familiar, and significantly more valuable.
A charity with a reviewed governance structure, current policies, appropriate insurance, and a track record of evidenced delivery does not need the same level of grant funding next year. It has a route to income that compounds. It is more resilient, more credible, and more useful to the communities it serves.
Funding organisational readiness is not mission drift. It is the most strategic investment a funder can make.
The charities that will still exist in ten years are not necessarily the ones with the most compelling projects. They are the ones that built the infrastructure to sustain themselves. Funders who understand this are already shifting their practice. There are not enough of them yet.
What needs to change
The social value economy will not function properly until the cost of participation is distributed fairly across the parties who benefit from it.
Companies should fund charity readiness as part of their social value budget, not expect it to arrive for free.
Commissioners should build capacity building into social value specifications, as a requirement, not an aspiration.
Funders should invest in organisational infrastructure, not just project delivery.
And the charity sector should stop absorbing the cost of a system that was designed without them, resourced without them, and that profits from their work without adequately compensating them for it.
