Tania Mason interviewed Paul Green for her feature on service delivery charities in April's Charity Finance. This is the edited transcript of his comments.

VSO has changed its operating model a lot over the last five years. We used to get a block grant from DfID for about £30m, which amounted to about 50 per cent of our income. Over the last three years this decreased from £30m in 2011/12, to £26m in 2012/13 and now to £22m this year. £8m was a huge amount to lose from unrestricted income, so we had to cut our cloth accordingly. Over that time we had to change our fundraising because we knew we couldn’t be dependent only on DfID grants – but we are a UK charity and we do a lot of work with DfID so what we’ve done instead is bid in-country and in the UK for contracts from DfID and won them. So instead of being given the money we’ve competed hard and won it.

We’ve got various contracts – one for International Citizen Service for DfID in the UK. Overseas we’ve got contracts in South Sudan, Rwanda, Uganda, a number of countries. In Uganda it’s to deliver youth entrepreneurial services, in Rwanda it’s disability services. As the contracts come out across the world we pick up those calls and pitch for them. That’s where our main source of income is. So our funding is not always allocated from London, it’s often allocated from the appropriate missions in-country.

We’re a development agency that works with volunteers, not a volunteer-sending agency, there’s a slight difference.  We still send a number of UK volunteers but also people from the rest of the world. We do South-to-South volunteering, volunteering from other parts of Europe, we still do that and it’s central to what we do. But what we’re finding is there’s been a slight shift from international volunteering as it might have been five years ago to more national volunteering now. A lot of our work is about strengthening civil society, using corporate volunteers, youth volunteers through ICS.  What we tried to do in our strategy People First was broaden the range of our interventions to our partners, because it’s about local context and sending out international volunteers may not be what the local partners want. So that’s what’s happened, though we still do send a large number of UK volunteers.

We recently got a two-year extension to our £22m block grant, at the same level, until end of this government. It helps us reorganise the organisation and make it more cost-effective. That’s what we’ve been doing for the last three years; broadening our range of income so we’re not overly dependent on DfID, investing in fundraisers and investing in measurement and evaluation, to make sure we can prove our impact and prove the value of volunteering.

In fundraising we’re targeting individual giving in the UK and Ireland, and investing in restricted fundraising in Africa and Asia - moving people out of London to where they’re better placed to compete for contracts. We’ve also employed more corporate fundraisers and increased our central team here in London to support bids.

Fundraising in the regions is all about going for contracts. We don’t know what’s going to happen after two years so we’ve got to be in a position where if DfID were to give us nothing we would be able to survive. That’s always been our goal.  So now we will pitch for contracts alongside Oxfam, Save the Children, all the big players, for funding from agencies including DfID, Ausaid, the EU and USAID. A lot of our work has been establishing credentials with them and getting on their fundraising rosters. So we’re not just depending on UK aid, it’s aid across the world.

I’m a lot more confident about the future than I was three years ago.  We’ve reduced our support costs by about 30 per cent and increased our investment in fundraising. We saved a lot of money in 2010/11 to invest in these areas.  We have made redundancies and we will continue to make sure we are the right shape and structured right for the future. Obviously the environment does keep changing – the external environment and the fundraising environment – and we need to make sure we are ready for it.