Charities should organise themselves into consortia if they want to compete with the private sector in delivering public services on a large scale, according to Jonathan Lewis, chief executive of Social Investment Business.
Speaking at a conference called Funding the Future in London yesterday, Lewis told delegates there was a lot of scope for charities to win contracts.
But he said the fragmented nature of the sector and a lack of social investment funds were two of the main reasons why they delivered only 3 per cent of public services.
He said that if charities came together to deliver these services, they would be more likely to be taken seriously by banks and secure funding from them.
Lewis said the sector needed its own version of Capita, a huge outsourcing company that runs a range of public services. He said this could help to organise the sector better and pass any profits made from contracts back to the charities delivering them.
"If we all work together, we have the potential to deliver services that we haven't been able to as a sector to this date," he said.
Earlier at the conference, Lord Freud, the minister for welfare reform, championed the government's move towards payment by results for contract work.
He said this would ensure that charities would get work because they were producing results rather than having to rely on the goodwill of a particular politician.
"The opportunities are huge and I hope you are all able to take full advantage of them," he told delegates.
Peter Holbrook, chief executive of the Social Enterprise Coalition, also addressed the conference, saying that the sector needed to take advantage of service delivery opportunities before they disappeared.
"Don't build reserves; invest in your business," he said. "This is the time to build new businesses."