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NAVCA slams ACF for negative semantics on grants

Finance | 7 Oct 2009

NAVCA has accused the  Adventure Capital Fund of discrediting grants by urging organisations to move away from ‘grant dependence’ in its recent guidance on the £70m Communitybuilders Fund.

In a 500-word report, Kevin Curley, chief executive of NAVCA, has complained that ACF’s language and thinking is damaging to the interests of the local voluntary and community sector.

“The term ‘grant dependence’ is used to discredit grant funding,” he said. “We acknowledge the potential risk of grant funding at a time of recession, when public sector finances are under severe pressure. However, other sources of income are equally uncertain in such times and carry their own potential risk. The resilience of voluntary and community action is enhanced when there is a mix of funding sources, so that organisations are not overly reliant on any one of these.”

Curley (pictured) goes on to argue that grant funding preserves the independence of the sector by maintaining the freedom and capacity of the sector to pursue their own missions, while contracts could constrain.

“The experience of our members is that an over-reliance on contractual arrangements can result in voluntary and community organisations simply becoming agents for the delivery of closely specified state services, based on payments by results, where risks are inappropriately transferred onto providers.

“It may therefore be more apt for the ACF to warn against 'contractual dependence' rather than 'grant dependence'.

“We would urge the ACF to re-evaluate the advantages of partnership, mutual benefit and interdependence, to reconsider its use of negative language with respect to grant funding and to acknowledge the legitimate place of grants as part of the overall funding mix.”

Lewis 'agrees' with Curley 

In response, Jonathan Lewis, chief executive of the Social Investment Business which runs ACF, said he had agreed with a large part of Curley’s report.

“For the most part he and I seem to be in agreement,” Lewis said. “To be clear, the Social Investment Business has invested in nearly 300 sector organisations of different sizes and stages of organisational development.  These investments have been a combination of grant, loan finance and free business support and we ensure that they have the right financial, managerial and governance structures to take on investment loans.

“With the Communitybuilders Fund, there is a significant grant element to the investments we will make, including grant-only products as well investments that will include both loan and grant elements.

“Our view is that organisations should avoid being completely dependent on any single source of income, especially given the uncertainty that surrounds public spending. Our position is upheld by robust evidence that organisations relying on grants alone lack the broad range of skills and structures needed to survive in the long term.”

“As Kevin says, organisations need to be mindful of achieving a funding balance. To that end, we strongly encourage organisations to think about generating income from a variety of sources and be mindful of the consequences that can result from a reliance on grants alone.”

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