Irish society is characterised by a vast range of active and highly energetic community and voluntary organisations that provide vital services to communities and citizens at local level. While it is acknowledged that much progress has been made to develop the sector, the current economic climate poses a number of challenges as many organisations find it increasingly difficult to survive with limited resources, funding cuts, and changing needs and practices within organisations. Coinciding with this, organisations are coming under increased pressure to develop social economy initiatives which have the potential to generate local revenue as a means of responding to challenges posed by the current recession. This paper outlines some of the difficulties now facing community organisations in Cork City, and argues that it is not always within the internal capacity of organisations to fulfil core needs in a restrictive and competitive funding environment, despite the commitment of its members. The absence of infrastructural support in the form of training, mentoring, leadership, management, strategic planning, self – organising structures, financial supports, and human resources are all significant factors for many organisations. This paper highlights an opportunity for the university to respond some of these issues through collaborative engagement and interaction between sectors. Firstly the paper highlights the benefits of building closer relationships between the university and community organisations, secondly, it highlights some of the obstacles currently facing community organisations in a restrictive economic environment, thirdly it outlines the role of the university in supporting community organisations in the development of the social economy and fourthly it outlines how interaction between sectors can contribute to new and innovative practices at both university and community level.