Two publicly-funded bodies providing investment for the voluntary and community sectors have either wasted funds or failed to provide value for money, a National Audit Office (NAO) report released today has concluded.

ChangeUp and Futurebuilders, together costing £446 million, were both launched in 2004 to build capacity in the sector but have since suffered from administrative weaknesses.

While the report concluded some positives have come from the programmes, both initially lacked targets which led to difficulties.

Tim Burr, head of the NAO, said: “Basic flaws in the administration of both programmes have reduced their beneficial impact to date.”

ChangeUp was established to provide support for the sector by providing funding through local and regional partnerships.

Management weaknesses caused delays, creating a rush to spend public money which left doubts about the sustainability of the some of the services it stimulated.

Management of the programme was transferred to a separate organisation, Capacitybuilders, in 2006 who are attempting to redress the problems.

Futurebuilders, which provides direct loans to organisations, suffered early difficulties with some recipients being slow to take up and apply the funding.

Confusion over how the fund worked led to some organisations receiving mixed messages as to whether or not they would have to repay their loans.

Its first management contract finished in March 2008, the second includes clearer targets which it hopes will improve the rate of dispersing funds.

Mr Burr said: “Value for money will depend on whether the steps now being taken successfully address these problems.”

He added that ChangeUp had made “good headway” in its task while Futurebuilders had “improved the potential” of some companies it provided loans to.