The social sector’s funding landscape limits its potential

By Adam Hawksbee, Deputy Director, Onward, and former Head of Policy, West Midlands Mayor Andy Street

Greenacres Community Centre is an unassuming place. Tucked away in a residential area around ten minutes from Oldham town centre, it hosts the usual assortment of community activities: taekwondo, yoga, IT classes for budding silver surfers. Some locals might only know it for the sound of screaming kids emanating from the preschool tucked away on the ground floor.

But Greenacres is run by financial wizards. Keeping a centre like this going involves feats of bureaucratic acrobatics that would make most managers give up. The staff who run the centre manage dozens of grants and revenue streams from the local council, national government, and charitable funders. They offer free space to plucky entrepreneurs looking to launch cookery classes, in the hope that success means they can charge for sessions and contribute to the centre’s upkeep. An arts and crafts shop provides a revenue stream, as do some of the more established organisations like the superbly named support group for fathers “Men Behaving Dadly”. Greenacres’ attempt to secure ownership of the building they inhabit, which in many places is crumbling and creaking, is now entering its seventh year. It shouldn’t be this difficult.

A promising project in North Birkenhead suggests another way forward. The Cradle to Career programme, delivered by the charity Right to Succeed, is tackling child deprivation in one of the poorest corners of the country. In this part of the Wirral, half of children live in low income households – three times the national average. So local leaders have formed a 17-strong team made up of council staff, youth workers, family connectors, and educators to coordinate and target their efforts. Last year they supported over 3,500 young people. Part of the secret to their success is long-term, predictable funding from a local philanthropist. The Steve Morgan Foundation was created by a son of Merseyside who wanted to give back after building a FTSE250 housebuilding company from scratch. He contributed £2.3 million to Cradle to Career, a programme that serves just one neighbourhood, matching support from the education charity SHINE and the local council. The scale of funding is important, but stability especially so.

The funding landscape for the social sector limits its potential. Research cited in the Law Family Commission on Civil Society spells out the problem in stark terms. Charities spend around £900 million a year applying for grants, 46% of which cost more to secure and manage than the benefit eventually realised. Social sector groups in the most deprived neighbourhoods lost a fifth of their funding from local government in the last decade. Between 2011 and 2019 income for the top 1% of earners grew by 22%, but donations from this cohort fell by 7%. In this environment, it can take a financial wizard to keep the lights on.

It isn’t a coincidence that the Cradle to Career project in North Birkenhead is supported by a funder with a strong connection to a particular area. Across the country, philanthropists focused on a particular place are working with community groups and local government to forge new ways to support civil society – including in areas like Bishop Auckland, Grimsby, and Stoke. They can be a lifeline, allowing groups to build core capacity instead of relying on piecemeal funding pots. There are practical steps that can accelerate this trend towards more long-term, place-based social sector investment. The Commission’s recommendations to create national and local philanthropy champions and invest in charity sector infrastructure bodies are an excellent place to start.

Political ambition on this agenda should go further still. Turning round decades of decline in neighbourhoods across Britain means investing in social infrastructure and rebuilding from the bottom up. Charities and community groups aren’t just teammates in this transition, they’re the quarterbacks – the foundations on which public services are rebuilt and faster-growing economies emerge. They should be freed to focus their time on community service, not forms and spreadsheets.

The Law Family Commission on Civil Society sets the direction for realising the potential of our nation’s civic assets. Politicians should be competing for who can go furthest and farthest.

This piece was written in response to the publication of the report ‘Unleashing the power of civil society’