Expert view: Support is crucial to capacity building

The issue of contracting and delivering public services is generating heated debate in the sector.

It doesn't take a degree in rocket science to know that targeted and timely support with capacity building can help smaller organisations develop their relationships with the public sector.

But in some cases it also kick-starts internal conversations about the organisational development that must occur before you enter a commissioning environment. For black and minority ethnic-led organisations, the need for this discussion is even more pressing.

The BME sector shares the characteristics of many small voluntary and community groups: a history of poor resourcing from statutory funders and limited experience of contract negotiations. But the biggest barrier to good contracts is the fact that commissioners often don't know enough about the joined-up services BME groups routinely provide. This means that groups get stuck in a vicious circle: they need to prove they can work with commissioners but have never had the opportunity.

We all know the benefits these groups bring to provision: a high-level of user involvement, the ability to tap into hard-to-reach communities and the independence to deliver what the community needs. These distinctive values need safeguarding so that organisations can take the time out from delivering services to develop the skills to market themselves and secure funds from contracts.

Funders need to encourage BME-led organisations to develop a diverse funding base. Loan finance, income generation and grants all play a role in developing an organisation's sustainability. It's a good start to understand pricing and ensure that funding always includes full cost recovery, and this discipline is central to the approach taken by Futurebuilders and other lenders. However, any form of investment must be combined with the right level of capacity-building support.

Appropriate alternative finance can give organisations the freedom to reflect on what they need and how to engage commissioners at the planning stage, and ultimately to become more business-like.

BME-led organisations, like small voluntary and community groups, can appear risky to invest in because they don't often have a good financial history or strong relationships with purchasers and have never borrowed before.

However, if lenders and commissioners can provide the appropriate capacity-building, the organisation and the services it provides will become much more secure.

Caryl Agard is a Futurebuilders board member and chief executive of the Social Business Company.

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