Steve Wyler, co-author of research report Community Hubs: Understanding Survival and Success, blogs about the resilience and adaptability of community-led business
I’ve noticed that whenever there is a discussion about community organisations operating in poor neighbourhoods, the question of capacity or capability almost invariably comes up. The kinds of people, it is said, who have management or leadership responsibilities in these small community groups, rarely have the knowledge or skills required to run things properly.
This presumption of incompetence seems to me to have some very negative consequences. One is that it produces a particular kind of ‘capacity building’ initiative, where professionals and experts and consultants, accompanied with a whole paraphernalia of training programmes and business tools and codes of governance, are brought in from outside to tackle the presumed incapacity which afflicts poor communities.
Moreover, this thinking infects the routine behaviour of local government and other public sector officials, as well as those who run larger charities and many housing associations. They seem to believe that community organisations should not be trusted with more than the most minimal resources, or if they are, they should be subjected to the most robust monitoring and control measures, to ensure that funds are not wasted.
And perhaps worst of all, nationwide investment in community infrastructure, especially in the poorest communities, is often blocked by those who fear that, the more that local people are in control, the higher the risk that things will go badly wrong.
This thinking is not just pernicious in its effects, reinforcing the frustration and sense of powerlessness felt by many in the poorest communities, and deepening the divide between left-behind areas and the more prosperous parts of the country, but it is also wrong.
It is simply not supported by the evidence.
Over the last few months I have been part of a team, with Neal Trup and David Carrington, who were commissioned by Local Trust and Power to Change to investigate the business models used by ‘community hubs’. These are community centres and other local community-run organisations, operating from one or more buildings, and which provide a combination of facilities and services.
We examined the accounts, over a five year period, of over 100 community hubs, from across England. We also conducted surveys and focus groups. Some of those in our sample were very small, with annual income of just a few thousand pounds, wholly reliant on volunteers. Others were larger, with a team of paid staff, operating at greater scale within their locality.
What we found at all levels of scale was an impressive picture of resilience and adaptability. Overall, grant income has declined from 37% in 2013/14 to 30% in 2017/18. But community hubs have been willing and able to respond. For larger community hubs there has been a sharp upward shift in contract income. For medium, smaller and micro community hubs, increases in rental, fees and social enterprise income have at least in part compensated for the loss of grant income.
Skill in attracting new forms of income has been accompanied by a determination to control costs. The community hubs we encountered scrutinise costs with great rigour. They have been prepared to take painful decisions to reduce staff if funds were not there. They have learned how to negotiate hard, and change suppliers if necessary.
The best of them have built a culture where everyone realises ‘this is not our money, it belongs to our community’, and so whatever money there is should always be used well.
Liquidity is a challenge for many of these organisations. Free reserves (the element of unrestricted funds which excludes buildings or other fixed assets) were on average only 14% in 2013/14, falling to 12% in 2017/18. Across the sample, only 43% had free reserves of at least three months or more. Worryingly, just under a quarter had negative free reserves, whilst a further 20% had less than one month’s reserves.
These organisations operate on very narrow margins, in a difficult financial environment, and yet overall they manage to remain viable. Our analysis of accounts showed that average annual surpluses over the five year period were 1.2%.
There have been efforts over the last two decades to encourage the transfer of assets (land and buildings) into community ownership, and our research has shown that those community hubs which have the freehold or a long lease on their building are likely to increase their income three-fold, and therefore achieve more for their community. However, asset ownership can also increase volatility, increasing the likelihood of either generating greater surpluses or greater losses. This is because many buildings have been transferred to community ownership in poor condition, or with restrictions on their use.
Of course, not all community organisations are well run. Some are not, and some fail, as in all sectors. And it is true to say that our research sample only included organisations which are still operating, so to some extent was biased towards those who are most successful. But nevertheless what we uncovered was a positive picture of what people running small community organisations, in difficult operating circumstances, can and often do achieve, against the odds.
When we invited them to share their tactics and tips for survival and success, the main themes were as follows.
As can be seen, the ability to manage money is only one of a series of necessary competencies, and excellence at multi-tasking is an essential attribute.
These organisations are aware they cannot become complacent; the environment they operate in is unlikely to become easier, margins will remain desperately tight, and there are always things to improve and to learn from. But it is wholly wrong to start from a presumption of incompetence. Put simply, these are the people who know better than anyone else how to keep their show on the road.
Our conclusion therefore was that the most effective strategy for enhancing the financial and other success of community hub organisations is to start with the skills and insights which already exist in abundance within the sector. The task must be to make it easier for learning to be transmitted horizontally between practitioners, locally, regionally and nationally. And yes, to supplement this with training activities (including for board members) but, wherever possible, with peer-based action learning.
So, next time I am in a discussion where someone starts to say that it is not possible to invest in community-run facilities, especially in the poorest areas, because the risk of mismanagement of funds is simply too high, I will – quietly but firmly – tell them how wrong they are and invite them to take a look at the evidence. And I will also suggest that, if they want to understand what really good resource management looks like, and improve their own practice, I can introduce them to some excellent people from those communities they so often look down on, who could teach them a thing or two.
Steve Wyler is the former CEO of Locality, the national network of community organisations dedicated to community enterprise, community ownership, and social change, and now works as an independent consultant, researcher, and writer in the social sector. The research report for Local Trust and Power to Change, Community Hubs: Understanding Survival and Success, by Neal Trup, David Carrington, and Steve Wyler, is available here.
As a response to this research, we commissioned The Community Hub Handbook which is a practical, go-to guide for anyone running their own local community hub.