What Is Commissioning? A Guide for Charities and VCSEs

Commissioning is the process by which public bodies — most commonly local authorities and NHS organisations — decide what services their communities need, allocate funding to provide those services, and oversee their delivery. For charities, social enterprises, and other voluntary, community and social enterprise (VCSE) organisations, understanding commissioning is essential: it shapes how public contracts and grants are awarded, what commissioners expect in return, and how your organisation can demonstrate its value.

TL;DR: Commissioning is how local authorities and NHS bodies decide what services to fund and who should deliver them. It follows a four-stage cycle — analyse, plan, do, review — and increasingly focuses on the outcomes services achieve rather than the activities they carry out. VCSEs earn billions delivering publicly commissioned services each year, but securing and retaining those contracts requires a clear understanding of how commissioners think and what evidence they need.**

The Local Authority Commissioning Cycle

The commissioning cycle is most commonly described as a four-stage process: analyse, plan, do, review. This framework, widely used by UK councils (including Richmond Council's commissioning approach), reflects the way commissioners continuously refine services in response to evidence about need and impact.

Analyse

Commissioners start by gathering data on local need. This means looking at population data, public health intelligence, existing service provision, and gaps in provision. It also involves talking to communities, service users and providers to understand what is working and what is missing. For a VCSE bidding for a contract, this stage is relevant: commissioners who have done thorough needs analysis will have clear priorities, and bids that align with those priorities are far more competitive.

Plan

In the planning phase, commissioners define the outcomes they want services to achieve, decide how much funding is available, and determine how services should be structured and procured. This is where decisions are made about whether to commission a single large contract, a portfolio of smaller grants, or a mix of approaches. Commissioning intentions are sometimes published at this stage, giving the VCSE sector advance notice of upcoming opportunities.

Do

The 'do' phase covers the procurement, contracting, mobilisation and active delivery of services. Commissioners advertise opportunities, assess applications, award contracts or grants, and work with providers to ensure services launch effectively. For VCSEs, this is the most visible stage: it encompasses tendering, due diligence, and the start of formal reporting relationships.

According to a 2025 government analysis of VCSE public procurement, VCSEs earned a total of £81.0 billion directly from the public sector in England from April 2019 to March 2024 — around 8% of total identifiable public sector spending. Local government is the largest source of VCSE public sector income, and 80% of VCSEs active in public procurement are charities (GOV.UK, VCSE Procurement Analysis 2025).

Review

Commissioners evaluate whether commissioned services are delivering the intended outcomes, using monitoring data, service user feedback, and outcome evidence submitted by providers. The results of a review directly inform the next cycle of analysis — meaning that the quality of your Impact Reporting as a provider can directly influence whether a contract is renewed or re-commissioned with revised requirements.

How Local Authorities Commission Services from VCSEs

Local authorities commission services across a wide range of areas — adult social care, children's services, mental health support, housing, employment support, community wellbeing and more. VCSEs are significant delivery partners in all of these areas. The 80% of VCSEs active in public procurement that are charities (GOV.UK, 2025) reflects just how embedded the charity sector is in delivering publicly funded services.

Commissioning can take several forms:

• Grant funding — a funder provides money to support a service or project, typically with lighter-touch conditions than a contract. Local councils made approximately £599 million in grants to VCSE organisations in 2023/24, spread across an estimated 44,212 individual grants (Directory of Social Change, Grants for Good 2025).
• Contracts for services — a formal agreement in which the VCSE is paid to deliver a specified service to an agreed specification, with defined KPIs and reporting requirements.
• Framework agreements — the council pre-approves a list of providers, from which individual service agreements can be called off without a full tender each time.
• Alliance contracts — multiple providers and the commissioner operate under a single contract with shared accountability for outcomes, suited to complex or cross-boundary services.

The shift from grant funding towards contracts has been a long-term trend, but it is not uniform. Many councils continue to support smaller VCSEs through grants — particularly for preventive, community and informal services that do not fit neatly into a service specification. However, financial pressure on local authorities is intensifying. Between 2009/10 and 2024/25, per-person local authority spending on services other than adult and children's social care declined by more than a third (-38.1%) in real terms (Institute for Government, Performance Tracker 2025), squeezing the budgets available for commissioned community services.

For VCSEs, Case Management systems that capture structured data on every interaction are increasingly important: commissioners want to see not just activity counts but evidence of who was helped and what changed for them.

The Role of Integrated Care Boards in Health Commissioning

Alongside local authorities, NHS Integrated Care Boards (ICBs) are a major source of commissioned health services for VCSEs. The 42 ICBs established across England on 1 July 2022 replaced Clinical Commissioning Groups (CCGs) and took on responsibility for planning NHS services across their geographic areas (NHS England). ICBs are accountable for NHS spend and performance within their system, with a remit to integrate care across hospital, community, mental health, and primary care settings — and to join up health and social care with local authority services.

Since April 2024, ICBs have taken on delegated responsibility for an expanding range of specialised services previously commissioned nationally by NHS England (NHS England, Specialised Commissioning 2024/25). This delegation is continuing, with further services moving to ICB commissioning from April 2025.

For VCSEs working in health and wellbeing — including social prescribing, mental health services, carer support, and community health — ICBs are a critical commissioner alongside the local authority. Many ICBs are developing joint commissioning arrangements with their local authority partners, particularly for services that address the social determinants of health. Organisations working across both sectors need to be able to demonstrate impact in a way that resonates with both NHS and local government commissioners.

The Shift Towards Outcomes-Based Commissioning

One of the most significant trends in commissioning practice is the move away from specifying inputs and activities towards commissioning for outcomes. Rather than contracting for "X hours of support per week", outcomes-based commissioning asks what difference the service should make to people's lives, and holds providers accountable for achieving those results.

This shift has several drivers: a desire to give providers more flexibility in how they achieve results; a focus on value for money rather than cost alone; and a need to demonstrate public impact in an era of constrained budgets. The National Youth Agency's Guide to Commissioning Outcomes for Young People (2024) describes outcomes-based commissioning as starting from what commissioners are trying to achieve and working backwards to service design, rather than starting from existing provision.

In practice, this means that VCSEs need to:

• Articulate their theory of change clearly — what do you do, who do you reach, and what outcomes do you produce?
• Collect structured outcome data — not just case counts, but evidence of change over time for the people you support.
• Report against commissioner-defined outcome frameworks — including local authority outcomes frameworks and NHS population health metrics.

Impact Reporting tools that help organisations aggregate data across programmes and present it clearly to commissioners are becoming essential — particularly when commissioners are comparing multiple providers against the same outcome indicators.

Despite the ambition, challenges remain. Research by the National Lottery Community Fund's In Pursuit of Outcomes (February 2024) found that for complex, systemic issues, more relational contracting approaches — such as Alliance Contracts or Payment for Learning — may be better suited than Payment by Results models. VCSEs delivering in complexity need commissioners who are willing to adapt their approach accordingly.

Frequently Asked Questions

What is the difference between commissioning and procurement?

Commissioning and procurement are related but distinct. Commissioning is the strategic process of understanding need, designing services, selecting providers, and evaluating impact across a full cycle. Procurement is the formal process of sourcing and contracting a supplier — it is one part of the 'do' stage of the commissioning cycle. A commissioner thinks about population outcomes; a procurement officer manages the tender process and contract award.

Do small charities get commissioned by local authorities?

Yes. The majority of public contracts awarded to VCSEs go to charities, and many local authority commissioners specifically value the reach and trust that smaller, community-rooted organisations have with hard-to-reach groups. Smaller contracts and grant programmes are often designed to be accessible to smaller VCSEs. However, competition is real, and smaller organisations are more likely to be affected by financial pressures on councils — the Directory of Social Change found that financially at-risk councils have cut VCSE grants significantly, with a quarter of affected councils reducing spending by more than 75% (DSC, 2024).

How can VCSEs prepare for outcomes-based commissioning?

The most important steps are: building your monitoring and evaluation systems before a tender, so you have baseline data to offer; developing a clear theory of change; and investing in tools that make it easy to capture and report outcome evidence. Commissioners increasingly expect providers to arrive at the table with evidence, not promises. Impact Reporting software helps organisations structure their data in a way that is meaningful to both internal managers and external commissioners.

Recommended Next Pages

• Software for Local Authority Commissioning Teams
• What Is Social Value?
• What Is Social Prescribing?
• Monitoring and Evaluation Software for Charities

Published by the Plinth Team. Last updated 21 February 2026.