A new fund for collaboration

Civil society is facing cuts of £3-5 bn over the next three years according to estimates. Given this, there is a strong argument for a small, innovative fund to finance and rapidly speed up collaboration within the sector.

There are a few offerings to staunch the haemorrhage of money from the sector. A £100m transitional fund was launched at the end of last year. This has generally been met with a response of too little, for too few charities and too short a timeframe.

There is an irony here since the launch of the Transition fund coincided with the withdrawal of Gift Aid on 5 April, which is also worth £100m annually to the charity sector.

Consider a few more lonely offerings: £20m for social enterprises in Yorkshire, a plan to turn the £70m Communitybuilders fund into an endowment, and The Big Society Bank with up to £400m of funding over the next few years. The majority of this money will only be available as loan finance, not something we necessarily disagree with as it encourages organisations to think more enterprisingly, but it will further isolate charities either unable or unwilling to access loans.

We believe that these interventions will at best cover about one-tenth of the expected losses to the sector’s funding (and that’s assuming we take the lower end of estimates for the size of cuts). It is looking bleak and Eric Pickles’ offer of support to the sector will not help many sleep easier.

What the sector desperately needs are innovative ways to collaborate and find ways to save money. Various ways exist to do this, none are particularly new, and all cost a fraction of the current proposals. Examples include: bidding consortia, procurement consortia, mergers, acquisition and joint ventures. Each of these collaborative models require some financing and expertise to set-up but all offer realistic and practical opportunities for charity longevity.

Government should recognise the practical and financial value of activities like mergers and support intermediaries through a ‘Collaboration Fund’. It would be comparatively inexpensive and hugely effective at strengthening the sector for the times ahead.