Protecting charities and social enterprises

The Budget announced numerous cost-cutting measures, including that most government spending departments will see 25% reductions in their budgets over the next four years. As well as protecting business and stewarding public services through these tough times, the government must be mindful of the challenges a recession poses to small local charities and social enterprises. Especially as they will play a greater role in delivering public services. Many community organisations are financially frail, and don't have budget contingencies or the access to credit that will see well prepared businesses, schools or hospitals weather the financial storm ahead. But the needs of the people who charities support are constant, and indeed increase during times of economic hardship. Individuals and families who depend on the support of charities and local services need to know that they can trust those organisations to be there for them for life. I welcome the new government's ambitious plans for growing and strengthening the third sector, and their enthusiasm for the great work that charities, social enterprises and co-operatives can do to build thriving communities. But the vision is also easier than the challenge of making something real. Loans and business support Building a stronger sector can't happen spontaneously and it won't happen without government help. Government will always subsidise the sector in one way or another and to ensure best value for public money I want to see policy-makers consider whether money currently distributed as grants could be redirected into programmes that combine them with loans and business support. That mix is the unique model of investment we have used to support over 1,000 local community organisations – providing them with seed money, credit they can't get from high street banks and help developing business plans so they can become financially sustainable and fulfil their missions of supporting local people in need for the long term. And as the money is lent and then repaid with interest it can be re-lent leading to an evergreen fund. Of course the biggest source of potential investment exists in the form of public service contracts – but to tap into that resource the sector needs to organise itself better. The current commissioning environment makes it hard for civil society organisations to participate: they are small and lack the specific experience of writing tenders that established public and private sector providers have whole departments of staff to handle. But it is possible to overcome the problem of pitting the smallest against biggest. We are working to realise the 'Big Society' vision by developing a model whereby a third sector management company bids for large government tenders on behalf of the sector and then brings together a consortia of community organisations to deliver the services. Not only does this allow the tiniest to participate, but instead of profits being given to shareholders, instead they go to building sustainability in the very organisations providing the services; a virtuous circle whereby the charities and social enterprises that deliver the profit get stronger as a result of delivering effective public services. Community organisations coming together We've helped achieve this at the national level with a consortia of small community organisations coming together to win a large welfare to work contract. Now we want to expand it to other service areas and we are already talking to several local authorities about how we can help them harness the expertise and efficiency of community organisations in their areas to deliver local services. Empowering civil society organisations to protect the people they help from budget cuts to frontline services will require big changes – from government, from commissioners and from the organisations themselves. Innovative ways to fund and organise the sector are what's needed to make that happen. Jonathan Lewis is chief executive of The Social Investment Business