CF sets out tough terms for merger

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Political and voluntary sector anxieties dominate reaction to a proposed super-distributor. Jane Taylor reports 

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Chris Smith, the Labour MP who as Culture Secretary created the New Opportunities Fund in 1998, has written to his successor Tessa Jowell, voicing his concerns about the proposed merger between NOF and the Community Fund. Smith told Lottery Monitor: ‘I have no in-principle objection to rationalising the administration, but it’s very important that the separate stream of funding that is represented by the Community Fund should be maintained.’ Smith went public with his cautionary note three days after the Community Fund’s board met on January 21 to discuss the merger, and attached a long list of conditions to progressing the idea (see box below). These conditions would place very severe limitations on a merged organisation, and must cast doubt over the practical benefits of a single body. 

The CF board's terms for merger

Chris Smith seemed to echo the CF line when asked whether he saw any benefit in a new body: ‘You’d have to have two separate sub-organisations… There could be some overheads and admin costs stripped out, but the administrative arrangements would need to be clearly marked out.’ The National Council for Voluntary Organisations also expressed its concern, stating that the three tests of any merger should be additionality, independence and ‘a guaranteed percentage of funding for voluntary organisations’. The Scottish Council for Voluntary Organisations greeted the news as bolstering its recent call for a separate single distributor for Scotland’s entire share of lottery funds. The merger talks began shortly before Christmas, after the Secretary of State formally asked the boards to explore the option. It is not, however, very optional: the government appears determined that it will happen, despite the early reservations expressed by the CF’s board and the charity and voluntary sector. Tessa Jowell had previously been convinced that a single distributor was the best way forward for lottery funding, but was persuaded that the upheavals and political objections involved were not worth risking. A merged super-distributor formed from Community Fund and NOF would dominate the funding scene, controlling more than 50% of lottery cash and possibly 80% or more of awards made. To create a new distributor will need primary legislation, for which the earliest slot is the 2004-5 parliamentary session. But the DCMS intends that the boards should have made substantial practical and administrative progress towards

merger by that time. Tessa Jowell is aiming for a white paper outlining the role, remit and shape of the new body by this summer, with some kind of parallel or joint administrative structure in place by next January. The New Opportunities Fund’s board gave the proposed merger a cautious welcome, with members expressing concern that the immense work created by the process should not throw either organisation off-balance in terms of meeting their funding pro-gramme targets.