The UK's Department for Work and Pensions last week released a draft proposal of how England's share of the funds, which has been halved because of the expansion of Europe, will be distributed during the 2007-2013 funding round.
The proposal sets two priorities - employment and skills - and says the funds will be matched to domestic programmes run through statutory bodies such as the Learning and Skills Council and Job Centre Plus. This co-financing system marks a departure from the previous structure, where groups applying for structural funding had to secure match-funding from a range of sources, including non-statutory organisations.
Tamara Flanagan, chair of the Third Sector European Network and director of European funding at CSV, said voluntary sector projects will suffer unless the Government makes tackling social exclusion a priority. She added that delivering funding through government programmes would make it more difficult to judge the outcomes.
"The change came with a view to minimising bureaucracy and avoiding a situation where people had to look for match-funding," said Flanagan.
"But it means it's going to be hard to see the additionality. Traditional sector beneficiaries are now less likely to benefit from European funds because they don't fit government programmes so well."
The sector has 12 weeks to respond to the proposals.