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How To Manage An Approach For Asset Transfer

When approached by a VCO about taking over or purchasing an asset that your Public Sector Organisation currently owns, it is first necessary for you to establish four things:

The current financial value of the asset and the associated costs
Who in your authority is responsible for the asset, the current use of the asset, and its current community value and stability
The plans of the approaching organisation and their ability to carry out the plans
The policy context of the transfer and/or community benefits – including an appraisal of the other potential options for the asset

It is this information which will enable you to make an informed decision about the asset transfer. While it is the obligation of the approaching organisation to provide information about their own plans and credentials, the gathering of the remainder of the information will be your responsibility.

As the owner of the asset or the person responsible for it you are probably going to need to consult with or involve other key people within and outside your organisation. This may include property services, the ward or constituency office or parish council, the planning department, the finance department and your local Community Sports Network.

It will also be important to establish whether your organisation already has a policy on asset transfer to the voluntary and community sector.

Once you have this information you can use it to begin detailed discussions with the group about the possible transfer of the resource. It is probably best to hold an initial meeting with the key people from the VCO and those within your organisation who have the authority to consider asset transfer. This initial meeting between all those involved in the asset transfer process must, as a minimum, cover the following:

The exchange of full contact details (and general availability) of all people involved. It is also important to examine who might be approached in an urgent situation.
The decision-taking structure within the VCO and the PSO. It is important to establish who has the authority to make decisions and, where a single individual does not have the authority to make a decision, what the process and timescale will be.
The resources and skills available within the VCO and areas of expertise that may be missing. An examination of how the missing expertise might be found (eg through training or consultancy) as well as discussing how that might be funded.
The aims and objectives of both parties and the timescales that each would like to work to. Understanding from the outset the goals of both parties and an understanding of preferred timeframes is important in limiting frustrations later on. It may not be that all goals and timeframes are shared, but at least there can be a recognition of differences at this early stage and the start of negotiations to find a middle way.
A full description of the likely process of asset transfer so that both parties understand what the next steps are likely to be. It is all too easy to assume that everyone has a shared understanding of a complicated process. Ensuring you have a shared understanding from the outset can reduce problems later on.

It may be that the group approaching you does not already have a particular asset in mind. They may want to discuss their ideas for community sport and would like you help them find an asset they might take on to deliver their ideas. In this case the steps outlined above are still appropriate. Once you have this information you will be able either to signpost the group to other people in your organisation who may be able to help them find a suitable asset, or contact your colleagues (eg in property services) to find a suitable asset yourself.

Possible Risk Factors

The Quirk Review provides a list of the possible risk factors that a Public Sector Organisation might encounter when putting the ownership of an asset into the voluntary and community sector. It also contains a set of actions that can be taken to manage the risks.

A thorough assessment of these risk factors in each individual case is highly recommended – before any detailed transfer plans are made. The table below summarises some of the key risk management options.

The Department for Communities and Local Government is funding a community asset transfer demonstration programme which will be producing new guidance on a range of issues – including risk management.

The Department for Communities and Local Government’s Advancing Assets for Communities Programme

Possible risk factor	Possible actions to manage risk
Organisation does not have the capacity to take over and manage the asset	review of organisational capacity to be undertaken with input from a respected and experienced third party develop, fund and implement an agreed organisational development plan adopting relevant quality standards ensure that organisation has adequate ongoing third party advice take an incremental approach and make progress on transfer conditional upon implementation of organisational development plan review organisational capacity over the cycle of the project
Community organisation cannot raise the cash needed to purchase or refurbish the asset offered	commission and fund conditions survey and outline improvement proposals at outset landlord commits to initial investment in asset, in a way that helps to lever in other investment, and ensures the initial condition of asset is sound local authority maintains capital funding budget for necessary major investment, repairs and safety work to community assets, particularly to smaller organisations with less potential for enterprise and self-sufficiency
The ability of public bodies to support a particular project is limited by State Aid rules or other restrictions	ensure there is clear understanding of the exemptions allowed for by the rules ensure that local authority and community organisation have access to expert information and case studies of comparable projects, which have been shown to be outside the State aid rules
Community organisation not able to manage asset effectively	develop a viable business plan based on documented evidence, possibly subject to third party review ensure that community organisation has access to specialist information, advice, and training that is available from national networks local authority can adopt an incremental approach to full asset transfer or offer long leasehold transfer transfer freehold or leasehold interests to a larger development trust, community land trust or similar organisation that holds portfolio of assets on behalf of smaller community-based organisations but can intervene if an individual organisation runs into difficulties
Asset not used in public interest, taken over by an unrepresentative or unaccountable minority, access to asset not inclusive	landlord and community organisation develop an ‘expectations document’ which forms the basis of an ongoing partnership that outlines their aspirations for the future insistence that organisation’s governing instrument and other policy documents have a strong commitment to working with the ‘whole community’, to equal opportunities and to open, accountable and transparent governance procedures transfer the asset to a multi-purpose community organisation which can then provide space for and community development support to a range of smaller, single-purpose organisations leasehold or freehold documents to include covenants which determine the purposes for which the asset can be used without unduly restricting the receiving organisation’s ability to innovate and exploit asset include ‘asset lock’ which imposes restrictions on sale of freehold or lease to third parties, such that assets cannot be used for purposes other than those defined in the organisation’s governing instrument
Community organisation is not able to invest in the asset to meet its longer term liabilities for upgrading and cyclical maintenance	consider the income earning potential of the assets transferred at outset develop a business plan that allows receiving organisation to develop income generating enterprises, and thereby generate sufficient surpluses to accommodate future liabilities leasehold transfer under which landlord retains external and/or major repairs liabilities asset to be handed over with an endowment to cover future maintenance costs, at least for an initial period
Reliance of smaller receiving organisations on volunteers through lack of resources for professional/support staff	Consider establishing a wider community-based partnership or network ensure access to specialist information, advice and training through national networks, by paying for membership or services peer support for volunteers through facilitating local and national networking encouragement to increased enterprise and business development, where scale and nature of asset allows (through training and consultancy)
Fragmented ownership of assets across an area could impair strategic objectives of local authority and/or its LSP partners	partnership working at LSP level and development of area wide multi-partner strategies for use of assets, within the framework of the proposed new Best Value duty active engagement of the third sector in development of Sustainable Community Strategy and LAA, as well as more specific service delivery plans involve community organisations as a partner in renewal and service delivery programmes
Confusion and lack of awareness over roles, responsibilities and liabilities between landlord and community organisation	landlord and community organisation include within their ‘expectations document’ their respective legal, financial and other statutory liabilities and arbitration clauses where there is disagreement where the public authority is providing funding, establish a formal service level agreement (updated annually) between the authority and the organisation to identify location of specific responsibilities, points of contact, service targets etc ensure access to specialist information, advice and training through national networks, by paying for membership or services appoint a public authority officer to co-ordinate the authority’s relationships with asset-based groups, and draw on in-house skills and knowledge within the authority
Conflict between competing community organisations for use of ownership or management of asset	revised public authority asset management guidance to cover the inclusion of the option of community management or ownership within the options appraisal process for surplus or underused assets public authority to develop criteria for selecting which organisation to transfer an asset to, in partnership with representative third sector/community organisations where appropriate, give preference to well networked, multi-purpose organisations, rather than single-purpose organisations

The above list is taken from Making Assets Work: The Quirk Review of community management and ownership of public assets

Resources

How To Manage An Approach For Asset Transfer

Possible Risk Factors