Belfast Telegraph

Understanding the third sector is key to being able to make the most of it

Platform

By Alan Moneypenny, chairman of the Ulster Community Investment Trust

Despite being one of Northern Ireland's most important sectors delivering significant economic and social advantage, the third sector remains one of the least understood.

In part the sector itself must take responsibility for this - terms such as the 'third sector' or 'CVSE' (community, voluntary and social enterprises) are not easily defined. This is unfortunate as the sector includes a great many highly successful businesses and organisations, routinely mobilising thousands of volunteers in pursuit of their shared goals.

Another issue is the fragmented nature of the sector which makes its impact difficult to measure - the last detailed report commissioned by Government dates back to 2013.

What is not in doubt, however, is that the sector has grown strongly in the past five years. Back in 2013 the baseline numbers indicated that there were approximately 4,000 organisations employing 30,000 and generating revenues of £1.2bn. The third sector economy has grown since then and this is important in an environment where Northern Ireland is seeking to lessen its dependence on public spending.

For the record, the third sector embraces those organisations which occupy the space between the private and public sectors. It includes community and voluntary groups, charities, foundations and social enterprises. Social enterprises are businesses whose surpluses are retained and reinvested to support social objectives rather than maximise profits for shareholders.

Just like any other business, these organisations must be managed professionally and innovatively if they are to thrive and survive. Most compete in the open market to deliver products and services and they rely on building their revenues to grow and reinvest. In many cases these are essential frontline services that have a direct impact on the standard of living experienced by our communities.

Typically they are smaller organisations (most employ less than 50), but a number have turnover in excess of £10m. They have a relatively strong presence in the community and health and social care sectors, but that profile is changing with more emphasis on economic development and encouraging people into employment.

The third sector, like all others, is not without its challenges. Central funding has come under increasing pressure, contract procurement is characterised by tighter margins and the payment cycle has expanded, stretching the cash-flow cycle. In all of these support is needed if sustainability is to be secured.

Ulster Community Investment Trust (UCIT) is a dedicated provider of loan finance into the third sector. It is one of the largest such organisations in the UK. It is also an all-island business with a widely diversified portfolio of loans which include commitments to tourism, sports and recreation, childcare provision, arts and heritage, healthcare and many other worthy undertakings.

UCIT was established in 2001 to deliver finance and support to the sector. Since then it has provided loan commitments of £80m to over 400 organisations. In many instances these projects would not have been possible without a flexible, but professional approach to lending.  All profits generated by UCIT are retained and recycled for the benefit of its clients.

If demand for loan finance can be viewed as a marker of growth in the sector, then 2017 has been something of a purple patch.

Demand is now at an all-time high with UCIT approving a record £14m to 119 CVSE organisations across the island during 2017. Indeed, such has been the uptake that UCIT has had to develop bespoke funds to service different sectors. These include a dedicated £4m sports fund launched recently and the £1m Building Better Futures Fund - a joint initiative with the Belfast Charitable Society and Building Change Trust which provides unsecured loans of up to £25,000 to smaller CVSE organisations.

UCIT's core fund provides loan support ranging from £25,000 to £1m to cover requirements as diverse as capital investment, bridging finance and working capital.

The value of the third sector cannot, of course, be measured simply by economic metrics. It is generally well accepted that Northern Ireland has a sizeable problem with inactivity in the workforce.

The third sector, with its 'grassroots positioning', has the ability to reach those parts of society which the public and private sectors struggle to, and can thus play a key role in helping people re-engage with the labour market.

The sector has an important part to play in the regeneration of Northern Ireland's economy by providing community-based development activity that complements more traditional top-down programmes. On that basis the third sector should be viewed as a driver of economic change that is worthy of more understanding.

Belfast Telegraph

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