Government report probes Futurebuilders fund

Five in six applications to the Futurebuilders fund were turned down when Futurebuilders England was running the scheme, according to a government report.

There were 1,300 applications asking for a total of £1bn, but Futurebuilders England paid out only £111m to 215 organisations, according to an interim report on the evaluation of Futurebuilders, commissioned by the Home Office. The fund was recently taken over by the Adventure Capital Fund (Third Sector Online, 28 January).

The report, by carried out by Sheffield Hallam University, says the current ratio of applications to investments appears low and that too many "inappropriate applications" had been made.

However, it said the fund had good governance and support services.

Key findings:
  • Making applications to the fund has cost the third sector between £4.4m and £6.9m, and managing the fund has cost the Government about £10m.
  • The fund provides good support services, but it might need to offer more financial management support to small organisations, especially those struggling with VAT and loan financing.
  • Loan offers are being drawn down more slowly than expected because investees face "organisational, policy and funding changes" at a local level.
  • Organisations providing "community cohesion" found it more difficult to market their services than groups involved in other funding streams, because there was no statutory requirement to provide it.
  • A case study of 14 organisations found only one was expected not to repay a loan, and that eight had provided public savings.

The report also identified several "strategic issues" the fund must face to be successful:
  • Whether organisations can build development capacity because of Futurebuilders' work.
  • Whether third sector organisations can win enough contracts to be sustainable.
  • Whether the commissioning market was stable enough to allow Futurebuilders' investments to be realised.

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