Charities must collaborate and improve their technical skills to win more council contracts, according to John Denham, Secretary of State for Communities and Local Government.
Denham's comments came after he met voluntary and public sector leaders in London yesterday to discuss ways of increasing the involvement of charities in running community services on behalf of local authorities.
He said the third sector had unique skills that councils needed to harness, but charities needed to work together if they wanted their bids to be successful.
"I have a real concern that the third sector is not getting the opportunity to play full its part," said Denham.
He said the Government was interested in making wider use of social impact bonds, which provide returns for social investors based on the savings they help public services to make. Denham said he was also interested in establishing ‘community shares', which would allow local people to raise funds for or buy stakes in community services, such as shops and pubs.
David Tyler, chief executive of Community Matters, who attended the meeting with Denham, said it was an "incredibly positive" gathering.
He said many small community groups were worried about arranging themselves to suit government purposes but that the trend towards collaboration was irreversible.
Peter Kyle, deputy chief executive of chief executives body Acevo, said Denham was "enthusiastic and well-informed about the challenges of commissioning".
The Communities and Local Government department also launched a new community enterprise strategic framework yesterday, setting out the Government's plans to support community enterprises. These include offering skills training and advice on setting up consortia for contract bids.
There is a video of Denham talking about these issues here.