The government’s announcement of a £10m fund to help charities and social enterprises develop the skills and infrastructure to win more capital investment and public service contracts is welcome, but may not go far enough says Paul Cheng, head of Charities Aid Foundation’s social investment fund CAF Venturesome.

The Investment and Contract Readiness Fund is one of the latest in a number of actions paving the way for charities, social enterprises and other civil society organisations to play a bigger role in public service delivery, along with the official launch of Big Society Bank today (Friday, July 29^th) and the launch of a £30m Big Society fund to help modernise organisations that supply critical support to front-line charities, voluntary groups and social enterprises, announced on July 15^th.

Nick Hurd, Minister for Civil Society, announced the £10m fund in an open letter to the sector this week, which also outlined plans for the public service reform.

Cheng, accepts ‘investment readiness’ is a problem for many charities and social enterprises. “From our experience of offering loans through CAF Venturesome we know that many organisations are lacking the basic financial literacy, management and strategy to be investment ready.  While the announcement of this fund is welcome, there also needs to be a wider debate on what ‘investment readiness’ actually looks like and means across the sector.

Civil Society organisations have been invited to take part in a listening exercise for all sectors over the summer to help identify where further changes are needed.

Cheng said the government’s own plans for public service reform place a strong emphasis on charities and social enterprises delivering services, and if this is going to work there will be thousands of charities that will need help to take advantage of these new opportunities. “In this context, it is not clear how far £10m will really go,” he adds.

But Hurd says: “We are creating new opportunities potentially worth billions of pounds for charities and social enterprises. By enabling all sectors to compete for contracts on a level playing field citizens and communities will benefit from greater choice and more responsive services.

“The £10m Investment and Contract Readiness Fund will create a pipeline of civil society organisations ready to grasp new opportunities. They will break down barriers and build expertise in the sector so that it can become a mainstream option for public service delivery. And as the Big Society Bank capitalises the social investment market finance to grow organisations will becoming increasingly available.”

While Asheem Singh, new director of strategy and policy at Impetus Trust that is using a venture philanthropy approach to creating investment-ready social organisations, says: “Those who suggest that £10m is a drop in the ocean miss the point.  Pro bono advice of course must be allied to strategic grant-making and more grant funding is crucial to creating more investment-ready organisations, but as a sector it is our time to make that case; to marshal our resources and know-how."

Hurd’s open letter follows publication of the Open Public Services White Paper on 11th July, which sets out how the government will improve public services by “putting choice and control in the hands of individuals and neighbourhoods”.

Further announcements on work to improve innovation in public sector commissioning are expected shortly.