In a submission to the Treasury ahead of the Budget on 23 March, the charity proposes a new fund called the Local Innovation Fund for Transition. It would, says the submission, encourage the development of public service mutuals and make it easier for other voluntary groups to adapt so that they could deliver public services in a way that measured their effectiveness and saved money in the long term.
The submission, seen by Third Sector, says the fund should be worth £1.3bn - equivalent to about 30 per cent of the value of area-based grants given to local authorities by the Communities and Local Government department in the financial year 2010/11, which totalled £4.4bn.
"The fund would go much further than the current [£100m] Transition Fund and be open to both third sector organisations and public sector staff setting up a mutual or cooperative," the report says.
"It would need to be sufficient for people to feel it is worth bidding for, and sufficiently challenging for people to come up with new ways of meeting needs exposed by service cuts.
"A fund equivalent to 30 per cent of area-based grants, £1.3bn, could achieve this. Although this is much less than is necessary, it would be enough to bring about a significant transformation of services in many areas."
Titus Alexander, head of campaigning at Novas Scarman, said he thought the figure was reasonable, but he was not sure what response the suggestion would get from the Treasury. "The Transition Fund that has already been set up is well-intentioned, but it is nowhere near enough to address the serious problems many in the voluntary sector are dealing with," he said.