Wales' economic and social regeneration has flourished with funding from Europe, but now EU enlargement threatens this dependency on grants. Emma Maier looks at alternative income sources.
A voluntary project in Glanaman, south Wales, is making an immeasurable difference to the lives of many young people in the Amman Valley by giving them the opportunity to learn about motor mechanics, gain qualifications, and take formal driving lessons.
The project, run by Cwmaman Youth Council in partnership with Carmarthenshire County Council, helps local young people develop a responsible attitude to driving, and provides an opportunity for them to socialise in a safe environment. But it also enhances their opportunities for work in an area where public transport is poor, and which has high levels of car theft and joyriding.
Like many schemes in Wales, it was made possible by funding from the EU, delivered in the shape of a grant from the Wales Council for Voluntary Action's Social Risk Fund.
In Aberystwyth, on the west coast, there is a similar story. Mentro Lluest provides - using EU funding - horticultural training from a basic level, right up to providing access to higher education, particularly for those with learning difficulties or mental health problems.
In fact, you don't have to travel far in Wales before you come across more examples of how EU structural funds are helping to regenerate the country, economically and socially. Objective 1 funding alone has delivered £1.3bn (see box, opposite page), £680m of which has already been shared out among 1,000 successful projects. Of this, £40m has gone to more than 150 voluntary sector projects.
Wales has also received a further £100m from other EU funding streams, and WCVA has supported more than 200 small voluntary organisations with grants of up to £10,000 through the Social Risk Fund. According to figures from the Welsh European Funding Office, this has resulted in the creation of 20,000 jobs and has safeguarded 30,000 more.
"Wales is doing very well," says Janet Royall, head of the European Commission office in Wales. "In Brussels recently, the commission told the Welsh Assembly's external affairs committee that it was pleased with the progress being made in Wales. The programmes are working for local people, helping to create a more prosperous Wales."
But like all good things, the current wave of EU structural funding will not last forever, and when it does come to an end, such projects will face an uncertain future. "Most groups are going to be affected, from the larger charities like RNIB and RNID, right down to the local residents' associations," says WCVA's funding advisor Phil Chappel.
"It's not just voluntary organisations - it is the whole of Wales," adds WCVA's director of Europe Phil Fiander. "And we just don't know what the impact will be."
The money distributed through the structural funds was originally set aside in 2000 to last for a seven-year period. It was allocated specifically to help less well-off regions in the EU by funding schemes that involve the public, private and voluntary sectors working in partnership. However, when the time comes to start the cycle afresh in 2006, there will be 10 new member states to consider. Most of these are far less well-off than the existing members, so competition for the funding will dramatically increase.
This change will have such a large impact that the European Commission (the body that handles the EU's administrative and management responsibilities - essentially the EU's civil service) has decided to re-evaluate the very existence of the scheme.
The UK Government has suggested that all Objective 1 funding should be ploughed into the new member states, and that Objective 2 and 3 funding should be reclaimed by donor states and distributed by domestic governments rather than the EU.
Although some other member states, including Sweden and the Netherlands, support the UK stance, most are against it, particularly new member nations.
Many regions that benefit from EU funding, such as Wales, are also wary of allowing individual governments so much control.
"What is right for Wales and what is right for the rest of the UK is not necessarily the same," says WCVA's Fiander. "While the UK may want to push for repatriation of structural funds, people on the ground may have a different view."
This caution is shared by the European Commission, which believes that a regional policy set by the EU would be more effective than 25 separate national policies. "The Commission believes that a strong regional policy is a prerequisite for a successful European Union, based on values that include solidarity," says Royall. "It is an important tool at EU level for boosting competitiveness and growth."
Preliminary proposals for the future of the funds are expected to be announced in the Commission's Third Cohesion report on 2 February, but a concrete decision will not be made until some time in 2005 after the proposals have been put to the member states for discussion.
On top of this uncertainty, it is also unclear how much money will be available post-2006. In December, six EU heads of state, including Tony Blair, wrote to the EU president asking for the budget to be capped at 1 per cent of the EU GDP. Such a condition would make it impossible to sustain EU structural funding at the current level. Although the budget is unlikely to be capped, we cannot be sure until the Commission publishes its views on 25 January. "It is a bit of a moveable feast at the moment," admits Royall.
Amid this confusion, one thing is clear. Whatever happens after 2006, Wales is likely to receive less money - it is simply a question of how much less.
"When the new states join, places like Wales will substantially suffer because their GDPs will no longer fall below the threshold of 75 per cent of the average EU level, needed to qualify for Objective 1 funding," says European Commission spokesman Aled Williams. "However, the Commission has said that it doesn't want to stop the funding overnight, and I think that a reasonable transition period is expected for Wales."
Transition period or not, given the ever-scarce nature of alternative funding streams, now is the time for voluntary organisations to start considering how they might make up for lost funding.
"There are so many unknowns and it is very difficult to work out a reasonable strategy, but it would be wise to explore general sustainable funding issues," says WCVA's Fiander.
This is especially important given the degree to which voluntary organisations in Wales rely on EU funding.
"Many charities in Wales are highly dependent on statutory funding, whether it be from the Assembly, local government or Europe - more so than the rest of the UK, possibly with the exception of Northern Ireland," says Martin Price, chairman of the Institute of Fundraising Cymru. "They have to start thinking about more innovative ways of generating income, including income streams that don't depend on the vagaries of government."
Wales is in a particularly difficult situation. There is a shortage of charitable trusts and regionally-based companies, and public fundraising is difficult because of low average earnings in the region.
"There are 2,500 charitable trusts in the 'big book' that the Directory of Social Change provides, but only about 40 in Wales, and while some trusts in England can be persuaded to help, the prospects still aren't great," says Price.
"The general public in Wales is quite generous in terms of public appeals, but average salaries are below those in England, and the GDP is 78 per cent of the UK average, which takes its toll."
The National Lottery is another potential source of funding, but this again is dogged with uncertainty.
"The National Lottery is always an option, but with the merger of the Community Fund and the New Opportunities Fund, no one is sure how things will pan out and what level of funding will be available in the future," says Fiander.
Nevertheless, there are still plenty of options open to Welsh voluntary organisations, provided that they are able to think laterally. "It is partly about recognising potential," says Fiander. "People have often been doing the same thing for years and years, and don't realise they have the potential to generate income."
Inter-trading and using existing intellectual property to raise money are two possible ways of generating income in a more sustainable way.
"I came across a mental health charity in Swansea that was being paid by the local council to produce a directory of services rather than getting a grant from the council to cover production costs," says Price.
"This is a perfect example of a charity using the intellectual property that it is going to have to develop anyway as part of its objective to raise money. "There's an assumption that charities, because they are charities, have to give away what they've got, but that is not the case. It's all about changing the mindset."
Glyntaff Tenants and Residents Association receives grant aid from Community First, Newydd Housing Association and the local council, as well as some Objective 1 funding. Six years ago, the organisation decided to set up a self-funded community business offering estate management, DIY, lawn-mowing and window-cleaning. Plans are now in place to charge the public to use these services later this year, and the project is expected to be totally self-funding within three years.
EU STRUCTURAL FUNDING EXPLAINED
Structural funding as a whole was designed to help regenerate the poorest regions in the EU, predominantly those that had been badly affected by the decline of traditional industries.
Grants are made from four separate funds, including the Regional Development Fund and the Social Fund, with each fund seeking to fulfil a different purpose. Money from these funds is distributed according to three objectives designed to target differing levels and types of need. Three of the four funds also contribute to four other initiatives.
In addition, WCVA administers the Social Risk Fund, which is jointly funded by the Welsh Assembly Government and the European structural funds programme. The scheme provides grants of up to £10,000 to voluntary organisations with an annual income of less than £100,000.