The Office of the Third Sector has announced a new £130 million funding programme to provided access to small grants for local community groups engaged in grassroots projects, and to encourage additional donations from private donors.

Administered by the Community Development Foundation (CDF) Grassroots Grants will run from 2008 to 2011. The programme will be divided into an £80 million small grant fund for community organisations and a £50 million endowment programme to provide matched donations for local funders.

The endowment programme has been designed to create a direct cash incentive for private philanthropists to give money to build up large cash funds on behalf of communities. The income generated will then be invested in endowments.

Alison Seabrooke, chief executive of the CDF said: “The Grassroots Grants programme is a great opportunity for local funders to build not just the capacity of local community and voluntary groups in their area but their own. CDF are delighted to be involved in the programme and look forward to receiving applications from local funders."

Minister for the Third Sector Phil Hope said that he wanted grass roots organisation to thrive to help with the individual challenges that face each local community. “[This] is a ground-breaking programme with £130 million from central government to boost the smallest third sector organisations and the local funders that are often the best at reaching out to the most vulnerable people in our communities.”

Chief executive of the Community Foundation Network, Stephen Hammersley, said that a similar investment of £2 million was made 16 years ago and involved three community foundations. These now manage over £65 million of endowment, generating over £3 million of charitable investment in local communities annually. “On this basis the £50 million challenge should be the springboard to over £1.5bn of community endowment,” he said.

"Our experience shows that private donors value the opportunity to give something back to their local communities. This scheme will give them considerably more bang for their buck. What is key, however, is the provision of a one-stop shop for donors which ensures any donation goes directly to results-orientated dynamic local organisations with the ability to make the most of their money,” he added.

Local funders interested in further information on the programme should visit the CDF’s website at www.cdf.org.uk