Newsmaker: Funding the future - Richard Gutch, Chief Executive, Futurebuilders

Mathew Little

Richard Gutch is something of a voluntary sector grandee. A veteran with around 20 years' experience in the not-for-profit world, he has led charities, worked for umbrella bodies and determined the priorities of funders. His career is also a reminder that the often rancorous relationship between the sector and government is one frequently tangled in the warm threads of personal acquaintance and friendship.

As a town planner in the early 1980s, he worked for a Labour councillor in Sheffield called David Blunkett. Later, he became assistant to the chief executive of the London Borough of Brent. His then boss - and now Sir Michael Bichard - is currently the civil servant heading the Compact Working Group, charged with ensuring that charities are treated fairly by the state.

With such a CV it is perhaps not surprising that Gutch has been chosen as the first director - on £85,000 - of Futurebuilders, the £125m fund that straddles and, sceptics might say, blurs the demarcation between the state and the voluntary sector.

Last week, Futurebuilders was finally launched, and now that the wrapping has come off, charities are keen to know exactly how it works.

In essence, Gutch explains, Futurebuilders is for organisations that have the potential to deliver public services on behalf of the state, and perhaps already do on a small scale, but are held back by a lack of physical capacity.

Gutch gives the example of a charity carrying out a meals-on-wheels service for Asian elders in one part of a city. It would like to expand to serve all Asian communities, but would need new vehicles, IT system, and staff.

"There's no way that it could go from operating on a small scale to operating on a large scale without investment," says Gutch. "They wouldn't get a loan from a bank, and it's highly unlikely they could get a grant to deliver what a lot of grant-makers would consider a public service."

That's where Futurebuilders might intervene by offering a loan for vehicles, a grant for the IT system, and hands-on advice on developing a business plan and negotiating a contract from the fund's network of freelance business consultants.

Investment packages will range from £30,000, while a few projects will receive up to £10m. All investments will include an element of loan finance, and recipients must have a public-sector purchaser in sight before applying.

That's the small print, but a multi-million pound venture like Futurebuilders will also have to face larger issues, such as a familiar litany that the state is only interested in charities as public service deliverers because they are cheap. It is not an objection without substance - Jewish care charity Norwood, for example, estimated that it subsidised the state to the tune of £1.9m last year. Gutch doesn't avoid the issue: "The trouble is that the sector itself and purchasers have got into a frame of mind where they don't treat charities in the same way that they would treat a commercial contractor," he says. "That's why we've got this huge sustainable funding problem with people living from hand to mouth on short-term grants."

But Futurebuilders will be different, he claims, simply because it has to be. Without full-cost recovery in contracts, Futurebuilders-funded organisations will default on the loans they get and will be unable to continue funding new posts. Getting a fair rate for the job will be a condition of investment.

But Futurebuilders is still the Government's fund and, therefore, a funding opportunity that charities will have to enter on the state's terms. Gutch elaborates: "What we're saying - and we're still working on this - is that the services should be consistent with government strategies. If you look at, for example, at the Public Service Agreements on health and crime, they are pretty broad. I don't think it's terribly constraining. But if somebody came up with a scheme that was totally inconsistent with government priorities, then they are not going to find a purchaser, are they?"

Voluntary sector minister Fiona Mactaggart has predicted that an influx of charities into public services will herald a loosening up of the state, with statutory services learning from the best of the not-for-profit sector.

But there is a lingering fear that it could be the other way round, with the state leviathan swallowing up the sector minnows and turning them into pale imitations of itself.

Gutch insists that Futurebuilders is definitely not about off-loading existing state services on to voluntary sector providers, but about using the added value of the sector in areas where the state is failing.

"Yes, there's a risk," he says. "But a well-run organisation in its dialogue with a purchaser needs to make sure it's influencing the specifications of the service, not working to an agenda that's set by the purchasers.

"My message to purchasers is that it's not good practice to try to be too prescriptive in how a service should be delivered. It's fair enough to define outcomes - that is absolutely right. But don't try to prescribe the inputs, don't try to tell them how to do it. That's very bad purchasing practice, and you lose all the potential added value if you do that."

Futurebuilders has an agreement with the Home Office to run for three years. But, according to Gutch, it could become a permanent feature if it succeeds in unleashing a wave of innovation in public services.

"Our vision is that we demonstrate that this is an excellent way of investing in the sector so that the Treasury, other government departments and even other funders might want to put more money in," he says. "We want the Futurebuilders fund to become a sustainable fund that increases over time."

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