Noting “a creeping sense of crisis” regarding voluntary sector funding, the Finance Hub commissioned BRAP to explore how improving ‘financial fitness’ might be of benefit to third sector organisations (TSOs) looking for a more intelligent approach to funding their activities. Exploring how to bridge the gap between what funders and service commissioners are willing to fund or purchase, and the capacity building needs that should be prioritized by TSOs, the findings of this research have now been published.

Responses from over 30 TSOs revealed a fairly common experience of funders’ requirements for demonstrating investment fitness which included amongst others the need for sound financial management and controls, a demonstrable track record of service delivery, and a ‘knowledge of the TSO marketplace’.

Of the investment fitness needs that presented the greatest challenge in terms of the capacity of the sector, the monitoring, measuring, assessing and evaluating of outcomes, the development of collaborative ways of working, and the demonstrating of being able to be financially self-supporting within a typically unrealistic timeframe - something that was particularly resonant with social enterprises – were all identified.

Overall, the greatest need was identified as the need for timely information from funders where such interventions as greater access to funding support in the form of face to face events, open days, and jargon busting would be useful.

The research found that there is a significant opportunity cost for TSOs in identifying appropriate funding and in assessing one source against another for ‘fit’. Because of this, there is clear case for better co-ordination between funders to understand the combined impact of their funding on capacity building for the sector and for greater investment in addressing the capacity needs for TSOs.