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• Full Report - Building the Capacity of the Third Sector 

A National Audit Office report has concluded that two programmes aimed at building capacity in the third sector have had a positive impact on frontline third sector organisations but have not yet demonstrated value for money. Both have suffered from administrative weaknesses and a lack of initial targets against which the effectiveness of the programmes could be measured. ChangeUp and Futurebuilders were launched in 2004 and together will cost £446 million. Responsibility for both of the programmes passed to the Cabinet Office in 2006.

ChangeUp has created stronger partnerships among those organisations that support frontline third sector bodies. While the impact varies, better support has helped some frontline organisations to work more efficiently, spending less time on administration, manage staff and volunteers more effectively, and improve the service to their users. Doubts remain, however, about the sustainability of some of the support services the programme has stimulated.

Weaknesses in programme management include delays in implementing ChangeUp that created a rush to spend public money quickly, with some being wasted. As an untested approach to capacity building, outcome measures should have been set to evaluate the success of ChangeUp. But no targets for outcomes were established and no effective evaluation of the impact of the programme has taken place. Capacitybuilders, which has managed the programme since 2006, is taking action to address these problems.

Futurebuilders has brought about positive change, enabling organisations to improve governance, strategies and premises and this in turn has helped some recipients of Futurebuilders loans to win contracts to deliver public services. But this experimental programme also encountered early difficulties.

The first management contract which ended in March 2008 did not focus sufficiently on the fund’s objectives, and some loan recipients were slow to take up and apply the funding. Furthermore, not all organisations properly understood how the fund worked, with some organisations receiving mixed messages about whether their loans would have to be repaid. The second management contract contains targets that are more clearly aligned with the objectives of the programme and the fund manager is working to improve the rate at which funds are disbursed and used by third sector bodies.

Tim Burr, head of the National Audit Office, said today:

"Frontline third sector organisations provide important services to the general public. ChangeUp has made good headway in improving support for these organisations while Futurebuilders loans have improved the potential of some to win public service contracts. But basic flaws in the administration of both programmes have reduced their beneficial impact to date. Value for money will depend on whether the steps now being taken successfully address these problems."

Notes for Editors: 

1. The third sector encompasses non-governmental organisations which are value-driven and not-for-profit and which aim to further social, environmental or cultural objectives.
2. ChangeUp is a £231 million programme for improving support services for frontline third sector organisations. It has been managed by Capacitybuilders since 2006, a non-departmental public body established to administer the programme. It does not fund frontline organisations directly but supports them through local or regional partnerships. 
3. Futurebuilders is an experimental £215 million investment fund, which primarily loans funds to organisations to be repaid with interest.
4. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
5. The Comptroller and Auditor General, Tim Burr, is the head of the National Audit Office which employs some 850 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.