The Cabinet Office announced this week that the ACF, which specialises in community lending, would take over running the fund, which provides grants and loans to third sector organisations.
The ACF - chaired by Stephen Bubb, head of the chief executives body Acevo - will take over from April this year. It will replace Futurebuilders England, which has managed the fund for its first three years.
Kevin Curley, chief executive of Navca, said he was dismayed that Futurebuilders had lost the contract. He said the ACF lacked experience in distributing grants, which Futurebuilders had used to enable small organisations to take out loans.
"For the first three years of the fund, there has been this recognition that grants are just as important as loans in investment," said Curley.
"I don't think the ACF has any track record in awarding grants, so they are going to have to learn about it."
Futurebuilders had been willing to take a risk on smaller organisations that did not have confidence in dealing with loans and would be less certain of being able to repay the money than larger charities, he said.
A spokesman for the Office of the Third Sector said: "The service specification makes it clear that the fund is to be delivered as a mixture of grants and loans - this will not change."
Representatives of the ACF were due to meet Futurebuilders staff yesterday to start the handover. ACF will install its own board to direct operations.
Jonathan Lewis, chief executive of the ACF, wrote to Futurebuilders' 45 staff last week to say that he wanted to maintain offices in London and Newcastle. Lewis said in the message that the organisation's employees were its most important asset.
ACF will be responsible for investing £215m of government funds - £65m of new money in addition to £150m of existing funds (Third Sector Online, 28 January).
- The Futurebuilders fund was launched in 2004 to provide grants and mainly loans to third sector groups to run public services.
- It has so far provided more than £111m of grants and loans to about 250 groups.
- About one quarter of the loans made have been handed out to organisations with incomes of less than £100,000 a year.