Agencies and housing experts are concerned that the Supporting People strategy and devolution of homelessness funding may penalise specialist groups and force smaller charities to merge in order to survive.
Supporting people, which combines housing benefit and other funding into a single local authority reserve, came into force yesterday. Devolution of funding from the homelessness directorate to reflect local authorities new responsibilities following last year's Homelessness Act is also due for completion this week.
The changes will force agencies and local authorities to work more closely, but this is likely to be problematic because of a general mismatch of priorities. While agencies tend to focus on single homeless people, local authorities are more concerned with family homelessness. Local authorities also have different targets, causing confusion for agencies working across authority boundaries.
"Agencies will either have to alter their mandates to fit in with local authorities in order to continue receiving the financial support that this brings, or stick to their mission statements and look elsewhere for funding," said Joe Saxton, co-founder of think-tank nfpSynergy.
Seeking alternative funding may prove impossible for small agencies that do not have dedicated fundraising staff. "It may be that there is a critical mass below which agencies won't be able to function," said Saxton.
This is expected to lead to an increase in the number of working partnerships and mergers.
"Merging is certainly starting to make sense for a lot of homelessness agencies, both in terms of economies of scale and increased impact," said Daniel Currie, director at the St Giles Trust.
The Connection at St Martin's was formed this week after a merger between the London Connection and St Martin-in-the-Fields Social Care Unit. Chief executive Colin Glover said: "Funding was certainly a consideration in our recent merger decision."
Agencies working with minority client bases may also find that local authorities are not prepared to fund their projects because there are too few users at the local level. Currie said: "There is the fear that smaller specialist groups with a client base spread across London or the UK may be penalised."