Editorial: Important questions about future of Futurebuilders need answering

There are two important questions about the future of the Government's £150m Futurebuilders fund, which is intended to help finance voluntary sector organisations hoping to develop and market good service-delivery proposals.

Stephen Cook
Stephen Cook

One recent example of the use of the money was the loan of £700,000 and a grant of £220,000 to PeaceMaker, a voluntary group in Oldham, to produce community cohesion programmes that support local authorities in the north of England with new legal and moral duties in this field.

The first question is: who is going to manage the fund, which still has £65m in it, once the contract of Futurebuilders England runs out in April next year? Five organisations are in contention, including the incumbent, and it emerged last week that Charity Bank - which was until recently part of the consortium that makes up Futurebuilders England - has taken part in the first stage of the tendering process: filling in a questionnaire required from all applicants by the Office of the Third Sector. This was confirmed by the bank, which did not say that it was not planning to be a contender.

It has since been suggested that Charity Bank is not really planning to put in an application; rather, at the request of the OTS, it has filled in the questionnaire as a way of offering feedback about its experience as part of Futurebuilders England. If that is the case, the whole business takes on a byzantine quality that can only increase the nervousness of all involved about commercial confidentiality and unfair advantage. Perhaps more information will emerge about this in due course.

The second question is perhaps more fundamental: what does the Government really want from Futurebuilders? Or, to put it another way, where does it want the activities of the fund to sit in an investment spectrum that runs from hard-nosed commercial loans at one end to straightforward grants at the other?

In June, the Treasury indicated that the existing proportion of 80 per cent for loans and 20 per cent for grants should be tightened to 89:11. This caused some consternation for those members of the Futurebuilders England consortium who were actually calling for an increase in the proportion given out as grants. It also sat uneasily with the recommendations of the Futurebuilders Advisory Panel in December last year. The panel concluded that the fund was doing important and innovatory work, although it would be some time before it would become clear whether it was really succeeding in it aims. But it also emphasised that development grants should remain an integral part of the Futurebuilders formula because they helped with the transition from a grants culture to a loan culture and sometimes resulted in the organisation concerned obtaining loans from other bodies - "a good outcome for Futurebuilders and for the third sector".

Since then, there have been no definitive statements about this crucial subject, and it may be that the OTS and the Treasury have not yet made up their minds about it. The OTS is expected soon to send the contenders a document outlining the basis on which it expects the Futurebuilders fund to be operated in future. It would be a good idea to publish this so the sector at large can know what to expect and can express views about it.

Stephen Cook is editor of Third Sector

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