Could Futurebuilders help you build for your future?

Since its inception in 2004, the Government-backed Futurebuilders Fund has offered £111.5 million of loans-based investments to over 245 third-sector organisations that deliver public services. Sadly, not a penny of it went to all the community waste organisations out there that benefit their communities in so many ways, from removing waste and conserving resources to providing training and careers for those struggling to find work or furniture and computers to those in need.

Previously, the investment packages were restricted to organisations dealing with young people, education, health, crime and community cohesion. All that is about to change, however, as, from April 2008, the fund will be opened up to organisations working across all public services, including sport and leisure, the arts and, yes, waste and recycling.

Peter Deans, Operations Manager for Futurebuilders England, explains: "Futurebuilders started four years ago with a set of public service areas, which were prescribed to us by Government. They saw it as an experiment to see how this kind of package of risky loan finance helped organisations deliver more public services. They concluded that the model is working and is worthwhile. They've committed to it for another three to six years and in the process, they thought, 'Well, hey, why not expand this beyond the original set of prescribed areas to all areas of public service.' That of course includes community waste schemes, which we're very excited about because we think there's great potential there for helping excellent local and regional projects grow."

The Futurebuilders Fund was set up in response to the Treasury's 2002 Cross Cutting Review into the role of the voluntary and community sector in public service delivery. The £215 million fund supports sustainable growth in the third sector by offering voluntary and community organisations loans-based investment packages. Deans explains: "We want [organisations] to grow in a sustainable way and that means them taking a quite business-like approach to what their future developments are. If we just give people grants...there's a tendency for people to develop business models which aren't very sustainable, whereas if they grow using loan finance, they're much more likely to develop sustainable models."

Loans packages start at £50,000 and have no prescribed upper limit. Loans always make up the predominant form of investment, though Futurebuilders also provides grant aid "to help manage the risks" of its investments (by covering costs until a project begins generating income, for example) and the exact amount is determined on a case-by-case basis.

Investees typically use the packages to acquire or refurbish buildings or equipment or to develop human capital by investing in skills training, for example.

Futurebuilders only works with not-for-profit organisations. "We don't do for-profit businesses", adds Deans. Eligibility criteria are further limited. To qualify for an investment package an organisation must: operate in England; want to expand public service delivery by working with public agencies; be willing to accept that the majority of the investment will come in the form of a loan; require a minimum of £50,000.

Applicants for and recipients of investments receive support in the form of an in-house case officer and freelance, specialist consultants as required. Deans explains: "We will take a fairly engaged approach with our investees. We like to know how they're getting on; we like to know what their challenges are. We've had a number of cases where we've been able to spot problems almost before the organisation has and help them quickly resolve issues and bring an organisation back on track. We do that by providing advice, providing consultancy and also reviewing the terms of the investments."

Deans is quick to point out that Futurebuilders is not a bank, that it "operates in a much more risky territory compared to a bank, and therefore we accept more risk...and one of the ways we manage it is by providing some grant aid". However, the loans in the investment packages the Fund gives out still must be repaid, as with any loans. According to Deans: "Interest rate is six per cent and it's fixed certainly for the first three years. After that, we review it, but it's a repayment like any loan; we get monthly repayments which include capital and interest, though we can offer repayment holidays when an organisation's cash flow shows that they're not going to make enough money in the first year or two to be able to pay us back, we can be flexible about that."

Futurebuilders operates in a high-risk financial area and supports projects that "banks wouldn't tackle", but the organisations it supports have, in general, been very successful and only a "handful" have been unable to repay their loans. According to Deans: "In those cases we have sought to balance making sure that the project that has failed is wound down in such a way as not to damage the rest of the organisation's work... if things go wrong and it's the fact that the market hasn't worked out as we and the organisation had hoped, then we will bear some of the risk of that, and that's what we're here to do."

Now that the fund is open to environmental organisations, Deans hopes to see applications from "the full spectrum of the kinds of projects that are in the sector, from white goods recycling and furniture recycling to waste pickup". The fund can help organisations in their work with local authorities in many ways, from putting together bids to win contracts, to expanding services and acquiring staff, buildings and equipment.

The Futurebuilders Fund has already helped many community sector organisations grow, and it still has over £100 million to allocate over the next two years. It is eager to spread the wealth to the community waste sector, as Dean says: "My encouragement to organisations in the waste and recycling sector is to put the best foot forward, really, and come to us with their ambitious plans for growing. There are lots of excellent organisations out there who, for want of some capital to develop, could do a lot more."

So, all those plastics collectors who have been thinking of developing kerbside schemes, glass recyclers who have been looking into employing colour-sorting technology and WEEE refurbishers who have been considering expanding their warehouse space should take Deans' advice and visit www.futurebuilders-england.org.uk or phone 0191 261 5200 to talk about their ideas and begin the application process. Futurebuilders would love to hear from you.