02 May 2008
The £215m investment fund set up by the government to help third sector organisations provide public services has rejected claims that its new structure will create a 'sub-prime market' in voluntary organisations.
Speaking at a farewell reception for the previous board of Futurebuilders England, which came under the management of Adventure Capital Fund on April 1, National Council for Voluntary Organisations chief executive Stuart Etherington said: 'Futurebuilders England would appear to have focused significant attention on the speed with which money can be dispensed.
'It is a distinct possibility that they will loan money to organisations which will not be able to repay.'
Concerns over the turnaround for applications were also voiced by the chair of London Rebuilding Society, Steve Round, and Charity Bank chief executive Malcolm Hayday.
But Jonathan Lewis, chief executive of Futurebuilders England, told Public Finance that he strongly denied the claims and that the previous structure for processing applications had been very slow, with only 7% of applicants receiving funding.
'That left 93% wasting a great deal of time not getting funding,' he said. 'We will give an indicative “yes” or definite “no” within one week. We will process applications within a six-week period.'
Lewis said faster decisions were in response to demand from the sector and that he wanted the £100m left in the fund to be out there in use. 'It's the sector's money. If it's not being used by the sector, it's doing nothing,' he added.
He told PF that he would judge the fund's performance by how many recipients moved into public sector provision. 'Failure for us is that we don't help third sector organisations win public sector contracts. By definition we are investing in the riskiest part of the market – we need to take some risks.'
Lewis said the fund provided sustained support to applicants, as many were 'unbankable' and had never borrowed before. From now on, investment decisions worth up to £2.5m will be made by the Adventure Capital Fund investment committee, without requiring board approval, which Lewis said had created 'log jams'.
PFmay2008
