When Snuggling up to Councils Causes Problems

I had a brilliant visit to Newcastle and Gateshead on Wed 18th April 2012, thanks to Entrust, Sandown Allotments Association, Redheugh Boys Club and Cyrenians, Teamworks Social Enterprises and Teams Community Centre.  There were some really excellent examples of social enterprise and entrepreneurs, community service, partnerships and innovation.  However, the visit started me thinking about relationships between voluntary and community organisations or social enterprises on the one hand and local councils on the other.  I should stress that these are purely my views and don’t reflect in any way on those people that I met on my visit.

Some councils have traditionally been very supportive of the third sector.  Examples of support range from core funding to providing free accommodation to work from, to maintenance of sports facilities or directly paying salaries and running costs.  That kind of support can be very useful in helping organisations get up and running and allows them to focus on their mission – serving and supporting communities.

However, what happens when the honeymoon is over?  At the moment, many charities and social enterprises are facing severe cuts in funding.  The problem goes deeper than immediate impact on cashflow.  Some organisations have had their development constrained by their dependency.  They have no assets or reserves, which means that they have no financial safety net to fall back on.  They have never had to develop financial management capabilities that would allow them to progress alternative strategies.  The organisations have grown up leaning on local government, but now the support has been pulled from under them.

There are two conclusions that I draw from my visit.  The first is that it would be helpful if councils took a long-term approach to supporting the third sector, that is about strengthening organisations to allow them to deliver on their mission.  The second is that, as trustees and managers face difficult challenges ahead, generating unrestricted income to build reserves and invest in strengthening their organisations should be a priority.

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