Michelle Powell, Director of ACE – Action in Caerau and Ely, shares reflections from the launch of the new version of the Code of Practice for Funding the Third Sector.
On 15 April 2025, Welsh Government launched their updated Code of Practice for Funding the Third Sector here at ACE – Action in Caerau and Ely. We were delighted to host, and in preparing for the event, I had the opportunity to reflect on what this code will mean for us at ACE and indeed the voluntary sector as a whole. What are the challenges? What do we need it to look like in practice?
The development process of the code has been a lengthy one with valuable input from a wide range of people, which you can read more about here.
FUNDER AND RECIPIENT?
Good funding relationships are more than just a provider and recipient, they are a true partnership with strong interpersonal relationships and trust. Enabling growth, shared learning, shared practice and a reciprocal deep understanding of each of the communities they work alongside or provide for.
With that said, our way of working can seem quite different, especially to our private donors, or large public bodies, and we get that. Voluntary organisations have unique qualities and tried and tested approaches that have developed over the many years of their work.
We feel we are experts in our fields and we, for the most part knows what works well in our communities. We are not sure this is always understood by funders, especially when there is specific criteria to be followed and a set of outcomes to be achieved.
Through early and continuous dialogue, that’s both open and honest, we ask that funders and partners give us the opportunity to do ‘our thing’, trust in us and our approaches and that we will deliver a successful project. Furthermore, we ask that they build in flexibility so that we can adapt as required to achieve the best possible outcomes for our service users.
TIME AND SCALE
Short, medium and long term funding. What does this mean to me, to you, to others? Well they could, and may well do, mean different things to different sectors. For ACE we are always moving between all three as it is a necessity to have a diverse funding mix for us to survive.
We are always trying to maintain a consistency for staff and roles. Work alongside the community is a constant juggling act, more often than not made up of piecemeal solutions until large and longer term funding becomes available.
However, what we do often find difficult is there is usually a need for something new, when our communities want / need more of the same. Through effective valuing and outcomes, the expectations on delivery and impact should be realistic in line with available budget, ensuring equity in what is being requested.
FULL COST RECOVERY
For the sector to be sustainable and effective, organisations require core functions and roles to be adequately resourced. From our experience funders are keen to support project delivery and staff costs. However, they don’t always have the flexibility to contribute to the cost of the Finance or Administration teams that are required alongside delivery to ensure sound financial management and compliance. There has to be appropriate funding mechanisms that take this into account as well as more stability such as longer term funding as referenced earlier.
With funding becoming ever more limited, and with its competitive nature, we can often find ourselves undercutting our costs. This can be out of fear/concern that if we price competitively or even at full cost recovery we are pricing ourselves out of being successful, whether that be for funding or contracts. We may get a good project however if we are not getting stability, but there is a risk of damaging the organisation in the long term.
Just because we are the third sector does not mean we are the cheap sector!
Principles established for fair and consistent voluntary sector funding