The Government's announcement last week that the Adventure Capital Fund had unseated Futurebuilders England to run the Futurebuilders fund was met in the voluntary sector with widespread surprise.
The decision means the ACF will take over the running of the £215m fund, which was set up to provide grants and loans to voluntary organisations wanting to become more involved in running public services (Third Sector Online, 28 January).
Richard Gutch, chief executive of Futurebuilders, said after the news broke that he was shocked and very disappointed that his organisation had lost the bid. The ACF was measured in its response and resolved to talk with its staff before commenting in public.
While the sector swallows its surprise over the outcome, thoughts will inevitably turn to how the Futurebuilders fund will operate under the ACF's stewardship.
The ACF was established as a pilot initiative in 2002, with the backing of organisations including the Development Trusts Association and the Scarman Trust, to provide grants and loans for community enterprise organisations.
Funded with an initial injection of £2m of government money, the fund was designed to enable organisations to grow so they could generate sustainable sources of income. By the end of 2006, the pilot had become a permanent initiative and had grown to a point at which it had received £12.5m of government cash. It has so far promised a total of £13.2m in grants and loans of between £5,000 and £750,000 to 125 different organisations.
The organisation's history is clear, but the way forward is more hazy. The ACF will replace the existing Futurebuilders board and take over the running of the organisation. It will use the existing staff to operate the fund, but precise details on how everything will be run are sketchy.
"We can't comment until we have gone through the proper process," says a spokesman for the ACF. "That means talking first to the staff."
Stephen Bubb, chair of the ACF and head of chief executives body Acevo, will chair the new Futurebuilders board. It will be made up largely of people already on the main ACF board plus a few others, he says.
Some sources have raised concerns about a potential conflict of interest if an organisation with a chief executive who belonged to Acevo were to submit an application. But Bubb says he would play no part in the panel that makes investment decisions.
He emphasises that the ACF will build on Futurebuilders' achievements. "We really want to get the sector to step up to the plate in terms of public service delivery," he says. "What has held the sector back has been its inability to access investment funds."
Some sector leaders have raised concerns about the balance of loans and grants in the ACF's approach to funding. Kevin Curley, chief executive of community umbrella group Navca, questioned the ACF's track record in giving grants to small organisations after news of the contract win broke (Third Sector, 30 January).
Instead of straight grant funding, a proportion of the cash the ACF provides is given as a 'social investment'. The organisation receiving the money is asked to generate a 'social return' for benefit to the local community, and the money does not have to be paid back to the ACF as long as the agreed benefit is achieved.
About 30 per cent of the investments that the organisation has provided so far have taken this form. But Bubb says he is unaware of any targets around social investments under the new Futurebuilders regime.
"This is part of being flexible and working with organisations," he says. "We have tried to avoid the Big Lottery Fund problems of big rules and hoops people have to jump through. It is about a joint approach where we discuss how the investment will work."
Ben Hughes, chief executive of community sector umbrella body Bassac, says the ACF has a solid history in providing grants to small community organisations.
"The ACF has a good track record both in investment through loans and in providing small grants to organisations that Futurebuilders failed to reach, such as community anchor organisations," he argues.
"The challenge it has got is going from a small to a big organisation. Its staff team will be mushrooming. My only note of caution for the ACF would be to ensure its rapid growth does not divert it from its focus on community organisations."