Blog

I've just been listening to the radio reports about Government negotiations on Icelandic banks and wondering whether we are seeing the begining of the end of capitalism as we know it! Anyway, it set me wondering what impact all this may have on the the third sector organizations that rely on public contracts for their liveliood. It seems to me that the crisis is a dual edged sword for them. It could raise the demand for their services yet at the same time make the market place in which they operate even more competitive.
On the one hand, the apparently now inevitable recession is likely to spark a greater need for economic development and regeneration services into some of the communities that third sector organizations are experts at reaching. This should mean greater prioritisation of enterprise support and more opportunities to win contracts, especially working in partnership with other similar organizations or with the private sector.
On the other hand, previous experience dictates that there is going to be a general tightening of public sector budgetary belts. This will increase the existing tendency to seek greater efficiencies by scaling up the tendering of public sector contracts. It may also make the market place more crowded as suppliers are squeezed out of lower priority areas of procurement that get cut back and seek new opportunities in high prirority areas. Finally, the financial crisis may have a direct impact on organizations looking for finance. Increasingly, the third sector, particularly social enterprises, are being encouraged to use traditional sources of loan and investment funding and those sources are likely to become harder and harder to secure.
So, I think there are some rough seas ahead for the third sector that will require skilled and courageous captaincy. Rather like the banking sector though, I suspect the third sector will emerge from the other side of the crisis/recession leaner but also stronger and fitter. The capacity and capability of the remaining organizations should be much enhanced - not least in their strategic management skills.