Grant-makers are changing who, what and how they offer their support, as Rick Pearson discovers

Here’s a question for you: why, at a time when funding is in short supply, are many funders seeing a decline in the volume of applications they’re receiving? Surely, you’d expect the opposite to be true. In the September issue of The Fundraiser, Alan Eagle, foundation manager at Santander UK Foundation, argued that this could be explained by the fact that charities have had to reduce their fundraising staff resources, concentrate on securing core-cost funding instead of seeking small grants for projects, And with grant applications typically being very cumbersome, document-heavy and demanding in terms of evidence and number-crunching, it’s not hard to see why many have all but given up on this income stream.

What is needed in order to tempt fundraisers back, said Eagle, is for grant-makers to make their application processes quicker and easier.   

That’s exactly what Eagle has done, creating Community Plus, a grants scheme with a five-minute application form. But he’s not the only one to be making wholesale changes to the application process.

Over the last, the Big Lottery Fund has transformed its grant-making procedures. According to its England director, Dharmendra Kanani, they started by going back to basics. “As a funder, the first question you have to ask is: what’s happening in the communities that you’re serving?” he says. “The harsh economic climate facing communities, coupled with the existing levels of disadvantage, means you have to rethink how you meet need. If you’re going to be an intelligent funder, there’s a responsibility to think – and rethink – what you must do to deliver public benefit and social good. That was our staring point; we then looked at how we can make the funding process better, simpler and more in touch with how people are responding to need.”

The Nationwide Foundation is also making some significant changes. As of April this year, following an evaluation by Cass Business School’s Centre for Charity Effectiveness into the organisation’s previous three-year strategy, the Nationwide Foundation is using a Theory of Change approach. This involves focusing on the outcomes the foundation wants to help achieve: bringing empty properties back into use for people in need; improving the living conditions of vulnerable people in the private rented sector; and increasing the number of affordable homes via alternative, scalable housing models – and working backwards from there.

“We hadn’t quite cracked how to measure the real difference our grant strategies were having,” says chief executive Lisa Suchet. “Cass’s evaluation found that although the funded projects generally achieved good outputs, their performance on outcomes was mixed or indeterminate.” So, for example, the charity would know how many people it had helped or how many support sessions it had delivered, but was less clear about knowing the impacts of that help – the real change achieved. Suchet adds: “Cass also explained to us that we can’t expect to know what we are collectively trying to achieve across a grant programme if we don’t set out clear and measurable change outcomes from the outset.”

A simpler process

Both these grant-makers’ changes are designed to make charities’ lives easier. Kanani says: “We wanted to reduce effort on the part of applicants, allowing them to spend more time serving communities and less time writing funding bids doomed to failure. We wanted to find a way to let people know earlier whether their project is likely to receive funding from us.”

To that end, the Big Lottery Fund created Big Advice, a service staffed by people who make judgements on applications. “Charities can now speak to us before submitting a funding application, and we can give them an early indication of its likelihood of success.”

The Nationwide Foundation’s new strategy also makes its clearer which grantees are likely to be successful. “New funding recipients must have clear project strategies that work towards our three stated outcomes,” says Suchet. “Even at the initial funding enquiry stage, we have found it is much easier for organisations to recognise if they are eligible for our funding, and for us to identify which projects we should fund.”

Safety first

In the current economic climate, many funders are having become much more selective in terms of who and what they support. Andrews Charitable Trust is a case in point Interested primarily in funding innovative projects, its director, Siân Edwards, says the trust has become more cautious in recent years. “The funding pot is not getting any bigger, competition for funding among charities is tighter, and the number of charities is continuing to increase,” she says. “Our response has been to be very cautious – probably more so than we ever have been – about encouraging people to reinvent the wheel, or to think about setting up separately and independently.”

As Edwards points out, there are lots of charities out there already. “If a new charity approaches us with an innovation in water provision in the developing world, we’ll think: ‘OK, it’s a great idea, but do they really need to be an independent organisation?’ There are lots of organisations that already work in the water sector, so are we being responsible in encouraging them to set up a new organisation?”

Emerson agrees, saying that there will be less willingness on the part of foundations to fund a charity “just because it exists or has done good work in the past”. Now, he says, they will have to be able to demonstrate how they will continue to reach the beneficiaries for which the funding is available. “If foundations feel a body other than a charity is best placed to do this, they will fund through them,” he adds.

More than money

In a time of austerity, it’s natural for foundations to look at ways in which they can support charities beyond simply providing grants.

As Emerson says: “The rapid and dramatic changes in the external environment, and the effects of austerity on ‘need’, will see more foundations reassessing how they deliver grants. As one of the few remaining sources of grant-making, foundations must use their resources to achieve impact in a wide variety of ways, now more than ever before. This could be everything from the provision of consultants to the sharing of best practice.”

In the case of the Big Lottery Fund, it’s investing money into developmental support. “If you want needs to be addressed and prevented, it will only come through the efforts of the organisations that you fund,” says Kanani. “So you need to invest in that organisation’s capability to deliver. We’re doing that.”

With an annual income of £600,000, the Nationwide Foundation is a much smaller funder than the Big Lottery Fund. But it does have another, less tangible asset in its favour: its name. “The Nationwide name gives us a lot of weight,” says Suchet. “If we can help champion causes through leveraging our relationship with Nationwide, we can make a big difference to our beneficiaries. In this sense, we’re offering more than just money.”

Andrews Charitable Trust aims to help even its unsuccessful applicants. “We aim to leave the organisation in a better place than when we found them, even if they don’t get any funding,” says Edwards. “So we try to improve their business plan, and we give them quite a detailed commentary about what we think the problems are with it.”

Social skills

In many corners of the sector, social investment (SI) is being hailed as the next big thing in achieving change. For industries such as housing, SI can be a natural fit. “With housing, it’s very easy for SI to work: in simple terms, you build a house, sell it or remortgage it, and the funding gets recycled,” she Suchet. “As such, SI has organically become a big part of our strategy.”

The Big Lottery Fund is also committed to SI, as Kanani says: “SI is another approach to tackling need and we’re putting nearly £100m into that area – everything from social impact bonds to payment-by-result activities.”

Emerson, however, believes the majority of grant-makers are more nuanced in their response to SI. “There are current pressures in England from the Cabinet Office for foundations to put funds into SI, about which there are very mixed views,” he says. “We have just published the first research of foundations’ views of, and involvement in, SI to help illuminate what’s going on here. There is an argument to say that the more money that goes into SI, the less is left for regular grants.”

Whether funders decide to invest in SI or not, as the people with their hands on the purse strings, they are seemingly the ones with all the power. Kanani, however, says that it’s the charities and beneficiaries who give their funding meaning. “As a funder, you should also keep a level of humility in your role: it’s the people who you support that really give life to your funding.”

This article first appeared in The Fundraiser magazine, Issue 35, November 2013