How the government aims to reset its relationship with charities

Charities and government need each other. Ministers rely on charities for their expertise in supporting specific, and sometimes hard-to-reach, communities. Meanwhile, charities need government departments for funding and to enact policy that benefits their work. 

But in recent years this relationship has taken some hits. There has been a fall in the number and value of contracts and grants to charities from departments, meaning they rely on each other less.     

According to the National Council for Voluntary Organisation (NCVO) this fall has been “significant”. Figures released in 2025 found that while government money accounted for 30% of charity income in 2020/21, this proportion had dropped to 26% the following year.  

Another factor to erode this relationship has been culture war debates, which have included MPs within the previous Conservative administration criticising the work of the RNLI, for saving lives of those seeking asylum by boat in the English channel, and the National Trust, for addressing its properties’ historic links to slavery.  

In this context, the Labour administration has sought to reset the government’s relationship with charities, making pledges before it was elected in 2024 and then through a Civil Society Covenant a year later, to better involve the voluntary sector in decision making and to respect the work they do.  

We look in detail at this Covenant and assess whether it will be enough to repair the damage to charities’ relationship with government.  

What is the Civil Society Covenant? 

In July 2025, Prime Minister Keir Starmer and Secretary of State for Culture, Media and Sport Lisa Nandy launched the government’s Civil Society Covenant. 

"It presents the opportunity to forge a new relationship where government, both national and local, can partner with civil society to create change that lasts generations,” says this 6,000- word document  

It further acknowledges that charities “are part of the fabric of our nation”, strengthening communities, and are a force for innovation working in partnership with government.  

The Covenant also specifies that charities should “never be expected to step in and replace government” with government instead acting in partnership with them.  

Nandy adds: “If we are serious about renewal, civil society must be heard, not just at the margins but at the heart of decision-making.” 

Pledges made include recognising the value of the work of charities in supporting communities and their important part in shaping policy.  

The Covenant also recognises charities’ independence and their role in holding government to account. The government pledges to share information, data, and best practice, while asking charities to be proactively transparent and accountable themselves.  

In addition, the government has committed to report annually on action it has taken to honour such pledges.  

What action has been taken so far? 

In July 2025, the health initiative Diagnosis Connect was announced, a programme which aims to automatically refer 100,000s of patients to specialist charities for support at the point of diagnosis. This has been developed with government by the Richmond Group of health charities.  

In announcing the move the Department of Health and Social Care (DHSC) stresses that support from charities is “designed to complement not replace” patients’ usual NHS care. 

The service is set to launch in 2026 and aims to support 250,000 patients in its first two years, focusing on areas such as diabetes, mental health, and lung conditions.  

It will initially focus on patients diagnosed in primary care, such as through their GP surgery. As it expands the government aims to create a digital referral system to allow hospitals to refer patients to charities for support and information. 

Another policy change that helps fulfil Covenant pledges has been government guidance issued in 2025 to public sector bodies to ‘maximise procurement spend’ on charities.  

This calls on councils, government departments, the NHS, and non-departmental bodies to prioritise small to medium-sized charities and businesses in their commissioning. It aims to remove barriers small charities face in accessing public sector contracts. 

The previous National Procurement Policy Statement under the last Conservative government did not ask commissioners to prioritise local small businesses and charities in procurement decisions in this way. 

What do charity leaders think? 

The government’s attempt to reset its relationship with charities has been broadly welcomed by sector leaders. However, they want to see further action taken to match ministers’ promises.  

NCVO’s former Chief Executive Sarah Elliott said the Covenant is “an important milestone” but added “for this partnership to thrive, we need stability – and action” especially around fairer commissioning, longer term funding and better regulation.   

Jane Ide, Chief Executive of charity leadership body the Association of Chief Executives of Voluntary Organisations (ACEVO) says the Covenant creates a “positive foundation in resetting and reshaping” the relationship between government and charities.  

However, “the true test of the Covenant will be in how it supports the government to deliver on these missions in practice, not just in principle”, she adds. 

Meanwhile, the updated national procurement statement has been welcomed by community organisation Locality.  

“This new approach needs to turn the tide,” says its Chief Executive Tony Armstrong. “Local community organisations can deliver better services for local people and keep the income and opportunities flowing round their neighbourhoods.”