Independent research confirms positive impact of Futurebuilders Fund

Successful fund proven to build capacity of third sector organisations to deliver public sector contracts

The Social Investment Business, fund manager for the Office of the Third Sector’s Futurebuilders Fund, welcomes Sheffield Hallam University’s positive Evaluation Report on the Futurebuilders Fund that was issued today (31 March 2010).

The independent report was commissioned by the Office of the Third Sector and was undertaken by a consortium led by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University.

The evaluation assesses the impact of the Futurebuilders Fund, a government pilot scheme, as to whether it increases the capacity of the voluntary and community sector to deliver public services. A copy of the report is available to download online.

Futurebuilders provides loans, grants and business support to third sector organisations in England to help them bid for, win and deliver public service contracts. The Fund provides support for organisations that would not have access to commercial funding.

Stephen Bubb, Chair of the Social Investment Business and Chief Executive of ACEVO, commented:
“Futurebuilders demonstrates a model for social investment that works and works to scale, but there is still a huge unmet demand for funding – we have been receiving enquiries of up to £90m a month. We will continue to explore innovative ways to bring more money into the sector.”

Key findings from the report include:

• Futurebuilders builds the capacity of the third sector to deliver public services.
• Of the case studies evaluated for net savings, public service delivery contracts won by investees provide a net saving to the public sector purchaser.
• Of the studies evaluated in the report, there were net savings to the public purse of between £600 thousand and £5 million after ten years.
• Investments are largely additional – investee organisations would not have secured investment funding at the same scale and at the same time from commercial sources, such as banks.
• Futurebuilders investees were not found to be displacing existing services – service capacity was found overwhelmingly to be additional to existing provision. The management costs as a proportion of the loan book appear lower than comparable government backed social investment organisations
• Futurebuilders has evolved considerably since its inception. Under the second management:
  • the average time from agreement to invest to the first draw down has reduced from  448 days to 125 days
  • there has been a rise in applications from and investment in small third sector  organisation
  • the conversion rate of applications to investments has increased from 24% to 40%
  • processes have been streamlined with clearer marketing and more tailored support packages.

Jonathan Lewis, Chief Executive of The Social Investment Business said:
“This report shows what a success the Futurebuilders Fund has been, strengthening third sector organisations and helping them deliver public sector contracts – even in this challenging economic climate.  For the year ending December 2009 Futurebuilders investees won 369 public sector contracts with a total value of £77.1m.
“We have supported third sector investments that would have been unable to secure finance from traditional commercial lenders – and we’ve done that with a low write off rate (3.3% cumulatively). We look forward to building on this success.”

Minister for the Third Sector, Angela Smith said:
“Futurebuilders is one of the most innovative funds set up by government and I’m pleased today’s independent report has recognised its success in paving the way for the future growth of the social investment market.
“Futurebuilders has a strong track record of social investment in a wide range of organisations, allowing them to invest in high quality, cost effective services for local communities.”