Third sector funding should be focused more on helping local community groups to grow from the bottom up rather than on implementing top-down formulas, according to a report by the Community Sector Coalition.
Unleashing the Potential, to be published next month, calls for a new funding settlement between the next government and the sector that would recognise the scale of grass-roots organisations. It says focusing on public service delivery is irrelevant to most voluntary organisations, whose needs are largely ignored.
"At national and local level, significant decisions are made, supposedly for all, that do not involve or connect with any organisations below a certain size or profile," the report says.
"Most community groups are left out of this decision-making process due to a lack of voice and representation. There is a huge policy gap regarding the community sector."
The report hails some positive initiatives, such as the Grassroots Grants endowment match fund and the Communitybuilders programme. But it adds: "This approach is not always sustained, as demonstrated by the recent exclusion of the community code from the revised Compact and the cancellation of the Campaigning Research Programme."
The report calls for more small grants programmes and community chests as a cost-effective way of stimulating grass-roots activity.
It says: "What cannot be allowed to continue is the structural inequality that puts distance between rich and poor, large and small in the sector, a feature of recent years."
Matthew Scott, director of the coalition, said the report was not an election manifesto but a statement of intent that he hoped would attract political support.