Funding and resources in the voluntary sector

Every agency working with homeless people in the voluntary sector talks about funding and resources being an issue. Day centres face particular problems, and with Supporting People funding restricted, agencies will need to take a proactive approach to finding sufficient funding to ensure they can deliver the services that clients want and need. Effective organisations work out what they do well, and then do more of it – creating cost efficiencies in their central services. Organisations with the strongest track record in attracting new contracts are absolutely sensitive to the needs of their funders and commissioners, treating them as a key set of customers.

There are a range of non-statutory funding streams available to organisations – although it takes time to build up knowledge on diversifying funding streams and the best way to approach grant making trusts, companies and the general public. However, it’s not all about money. Many smaller organisations struggle with central services such as finance and HR. Thinking about other ways to service these functions can be helpful; companies are often willing to give staff time as part of a corporate responsibility programme. It’s important to be aware of mission drift though when approaching new funders – do their requirements fit with your strategic aims?

Full cost recovery is a real issue for voluntary organisations used to operating on a project-by-project basis. Tools by ACEVO assist agencies to understand this challenge are becoming widely used across the sector. This is supported by the Compact between central government and the voluntary sector, which encourages agencies to apply for funding on this basis. However, these principles have not filtered down to all funders in the statutory sector yet. It’s becoming harder for agencies to operate on a full cost recovery basis, especially around education, training and employment activities – Learning and Skills Council funding and European Social Fund funding will be limited from 2007 onwards. OSW are leading the voluntary sector approach to funders to ensure they are aware of the true costs of delivering outcomes – both hard and soft. Some agencies also have some way to go in terms of their ability to meet the needs of statutory sector funding requirements.

What does success look like?

The St Giles Trust has been providing a range of services which engage people who are involved in offending, and/or who have housing and additional needs. Clients are then assisted to access services and resources, which can enable them to live sustainably. These often include housing, benefits, and medical treatment. As clients’ lives become more stable, St Giles is able to offer them basic skills training followed by support into vocational training or employment. An increasing part of the work is to train members of the client group to provide advice and guidance to their peers, thus supporting service delivery, and helping them to obtain work experience and qualifications. In the future, St Giles will be concentrating on clients whose needs are related to offending and homelessness, rather than one or the other. The aim will be to deliver a range of services which engage with offenders as early as possible, and which enable them to access housing, support services, and training/employment, in order to avoid re-offending. St Giles will also deliver a limited range of “community safety” services, for example to tackle anti-social behaviour such as street drinking, or to support vulnerable tenants whose properties are at risk from crack dealers.

St Giles received support in this transformation process through the provision of core cost funding over a 3½ year period starting in January 2005 by Impetus, the UK’s first general venture philanthropy charitable fund. Impetus will be providing capacity building support in the areas of business planning, performance management, management development and market positioning during the first year of their relationship with St Giles.

What factors inhibit agencies from funding and resourcing the work they want to do?

• Lack of targeted statutory funding streams
• Lack of knowledge about funding opportunities
• Working on a non-full-cost-recovery basis
• Poor project planning and budgeting
• Lack of knowledge about how to develop business opportunities or operate a social enterprise

What can agencies do?

• Develop a project based approach to working which incorporates sufficient contribution to their core costs, including small additions to reserves
• Work in partnership with statutory agencies to influence their funding agendas
• Develop knowledge about existing statutory funding streams to appropriately ‘sell’ the work they do
• Consider organisational capacity to develop income generating work
• Consider organisational capacity to develop a social enterprise element to their work

What Homeless Link can offer now:

• The ‘Invest to Save’ project – developing a methodology to assist day centres to show the financial benefits of their work to funders
• Knowledge and information about available funding streams including trust and independent funding sources
• Information on organisations who offer pro-bono support to voluntary organisations

Potential future Homeless Link projects:

• Lobby with OSW and other partners for fairer and sustainable funding for homeless sector agencies
• Training and guidance in identifying and costing the strongest business development options
• A ‘How to’ guide on developing a diverse funding strategy
• Training on working within a contracting culture
• Training on how to market your services effectively
• Working with Regional Centres of Excellence on best practice in procurement

What partner organisations offer:

• The Directory of Social Change offers a range of guides to funders and training on fundraising for voluntary and community sector organisations
• SITRA offer best practice guides on tendering and commissioning for Supporting People teams and other funders
• The Performance Hub offers support and information aimed at improving performance in the voluntary sector
• CES offers voluntary sector advice services including specialist evaluation consultancy
• The Social Enterprise Network and Social Firms UK offer specialist support on social enterprise

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