Smarter Capacity Building

Amongst the many issues Nick Clegg is weighing up this morning, I suspect the future of third sector capacity building may not be top of the list. Whatever the colour of the new government, however, the way in which it supports the sector will need attention in the context of a comprehensive spending review.

We’ve had it good for the last ten years. Government has wisely recognised the need to invest in the sector’s capacity in a number of key areas including financial management, governance, workforce development and IT infrastructure, as well as providing greater access to capital. This investment has been a great success story for the sector and many organisations have transformed in the way in which they can meet the needs of their beneficiaries. For some of these interventions, such as Futurebuilders, the evidence of impact is clear. For others, such as the regional infrastructure consortia, the evidence is more sketchy.

However successful the last ten years have been, the job is not done and the sector still needs support in building its capacity. We also know that government spending will be radically curtailed. It is inconceivable that the sector can expect ten more years of the kind of support we have received. Therefore in order to make the case for continued investment we must propose a new model of smarter capacity building that meets the sector’s needs in a more efficient and effective way.

Looking back on the way in which some of these services were delivered it is fair to say that there are lessons to learn. The desire from many to equate the sector’s with capacity building has led to the duplication of services at national, regional and local levels. Similarly the principle that the sector should deliver its own capacity building has led to some confusing commissioning arrangements where conflicts of interest have had to be carefully managed. Much of the time the standard answer to addressing a particular capacity deficiency has been to set up an organisation, or a quasi-organisation like the Hubs, to deliver services to solve the problem. This kind of supply-led intervention has meant that services are often not flexible enough and run the risk of speaking to the lowest common denominator.

Now we find ourselves at something of a watershed. The state of public finances present us with huge challenges as well as significant opportunities in our role of transforming public services. Significant changes to market structures such as the lead provider model and personalisation mean that organisations have to change their business models and compete with other sectors. And all this time demand for our services continues to rise.

So what might smarter capacity building to meet these challenges look like? Social investment will be at the cornerstone of much of the sector’s development and the growth of this market, with the creation of the Social Investment Bank, is as essential as it is sustainable. However, other more traditional forms of capacity building will also the required. In a speech last September Stephen Bubb, ACEVO’s chief executive, outlined three principles which should guide our thinking in how this should evolve.

Firstly we need to be clear about the difference between capacity building and advocacy for the sector. Both functions are critical, but may operate best at different scales. It makes sense to lobby local, regional and national government over relevant issues at the same time, but it makes less sense to invest in the development of support services to improve third sector governance at multiple scales. What matters is that organisations of all sizes can access the services they need. National expertise in developing generic sector wide support, like ACEVO’s Full Cost Recovery model, may be the most effective way of building basic capacity.

Secondly statutory funded capacity building needs to become more demand led rather than supply dominated. In some cases the organisations, or quasi-organisations which have been set up have spend a great deal of their time trying to find the organisations whose capacity they can build. That’s not a very efficient system.

Since Stephen made his speech ACEVO has begun to offer third sector leaders individual budgets, funded through our Income Generation and In Better Health programmes, allowing those leaders to identify the support they need and then procure it in a way which works for them. Just as with personalisation in health and social care, this model requires an active market of providers of capacity building services, “guides” to help identify need and connect people with the services which the market provides, and resource to allow users to access those services.

Later this year we will begin a research project with leaders of infrastructure organisations to develop a model for how such a demand led market of capacity building could work at a local level, including the roles which local authorities and other statutory agencies should play.

There are other ways of changing the way in which capacity building is resourced, including incentivising lead providers in supply chains to build the capacity of other providers (such as will be promoted through the Merlin standard used by DWP in welfare to work services), and to better develop the building of the sector’s capacity and especially its leadership as a CSR activity. As you might expect ACEVO is leading the debate on these issues too.

Thirdly, we need to gather better evidence about the impact of capacity building and the difference we make. Gathering evidence on this is notoriously difficult but critical if we are to be able to coherently make a case for continued investment.

It is vital that the sector takes the lead on this debate itself and presents the new government with a realistic, constructive and effective model for how investment should be developed. We must use our resources wisely to maximum impact so that the sector is better placed to meet the needs of our beneficiaries.