The North East Combined Authority (NECA) has approved a £12 million Community Impact Fund (CIF), designed to drive social innovation and ensure the North East is well positioned to access future national funding opportunities.
The fund forms part of a wider £350 million investment package announced by Mayor Kim McGuinness, aimed at delivering progress across culture, transport, green jobs and more.
What is the Community Impact Fund?
The CIF is a targeted, time-limited transitional programme designed to support the VCSE sector to grow in strength, capability and resilience. It has been developed in part to help the region compete for the national £500 million Better Futures Fund (BFF) and other outcome-based funding programmes.
By investing in capacity now, the fund aims to ensure organisations across the North East are ready to take advantage of these emerging national funding models that prioritise measurable social outcomes.
Outcomes-based approaches are attractive to statutory funders and policymakers seeking to demonstrate impact and effectiveness. The CIF provides an opportunity for parts of the sector to explore these approaches, whilst recognising that they will sit alongside, rather than replace, other forms of funding and delivery.
What the Fund Will Do
The Community Impact Fund is designed to:
- Build capacity and effectiveness by strengthening organisational capabilities, data use, and evaluation practices
- Improve access to national funding by increasing the quantity and quality of bids to programmes like the Better Futures Fund
- Prepare the sector for outcome-based commissioning, including payment-by-results models
- Protect vital social infrastructure, particularly services supporting high-need and underserved communities
- Enable coordinated commissioning, aligning regional priorities with local needs while maintaining flexibility
Designed as a three-year programme, the first two years of the programme will focus on strengthening VCSE capacity to deliver outcome‑based approaches at a system level. The final year is ringfenced primarily for match funding, with a small reserve for close-down and evaluation. It is important to acknowledge that some organisations already apply this model successfully, however the commitment of the North East CA to improve whole-region practice and develop joint solutions is welcomed.
Overall, the fund represents an important step in positioning the North East as an innovative, accelerated region with a flourishing VCSE sector. Supporting organisations to able to work with outcomes-based funding is essential to attract more investment into the sector in the region.
Recognising the Role of the VCSE Sector and Addressing Sector Challenges
In creating the CIF, the North East CA have demonstrated a clear recognition of the vital role that the VCSE sector plays across the North East. From supporting people into work and strengthening community resilience, to delivering essential local services, the sector is central to the region’s social and economic wellbeing.
With over 30,000 employees and more than 120,000 volunteers, the scale and impact of the sector is significant. This investment acknowledges that importance and seeks to ensure it remains strong in the face of ongoing financial pressures.
Engagement with the sector, through VONNE’s work leading on the VCSE sector reform strand of the North East CA Economic Inactivity Trailblazer, has highlighted several key challenges that the CIF will begin to address:
- Capacity and collaboration barriers: Smaller organisations often lack the resources to engage in complex partnerships or bidding processes
- Commissioning complexity: Procurement systems can favour larger organisations and create disproportionate administrative burdens
- Access to funding: High thresholds and compliance demands can deter participation
The CIF includes measures to support digital and data readiness, fundraising capability, and partnership development, helping smaller organisations navigate administrative requirements more effectively and enabling them to play a fuller role in future opportunities.
There is also a clear emphasis on improving collaboration through networks, partnership brokerage, and shared learning spaces, with LIOs directly referenced in the Cabinet paper as playing ‘a critical leadership role in building collaboration, strengthening networks, and supporting organisational development across the sector’ and being ‘essential partners in shaping a coherent regional approach’.
Sector Response
VONNE and the VCSE Leadership Board have welcomed the approval of the fund as a positive and timely intervention.
Speaking at the Cabinet meeting, Martin Brookes, Chief Executive of VONNE and Chair of the VCSE Leadership Board, said:
“This proposal for a Community Impact Fund is welcome.
It represents a good way to improve the strengths of the community and voluntary sector in the North East at an important moment in time.
It will equip the sector to be better prepared for the future—so it can attract funding into the North East and increase the help provided to families and households across the region.”
He also recognised the complexity of developing the fund and thanked officers across the Combined Authority and local authorities for their work in bringing it forward.
What Happens Next?
The Community Impact Fund will be developed further over the coming months, with ongoing input from the VCSE Leadership Board and partners across the region.
As details of delivery are clarified, there should be continued focus on ensuring the fund is accessible, effective, and responsive to as many VCSE organisation as possible. We recognise that outcomes-based funding models will not be suitable for all organisations or all types of work. Smaller organisations, and those delivering work that creates wider social value beyond easily measured outcomes, may find these models difficult to access or apply in practice.
However, as the national funding landscapes rapidly shifts towards back-loaded, outcomes-based models, this investment represents an important opportunity to strengthen vital community and social infrastructure as well as the wider VCSE sector. It will directly support Mayor Kim McGuinness’ mission to make the North East the Home of Real Opportunity and it will position the North East to attract and deliver future funding that will benefit communities for years to come.
You can read the full Cabinet briefing on the Community Impact Fund here.