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City Bridge Trust

Funding Approaches Review This review has been prepared to support the development of City Bridge Trust’s next funding strategy for 2018-2023

Report Author: Rob Bell

Published: May 2017

Biography of Report Author: Rob Bell is a Fellow at the Social Change Initiative, where he is embarking on a multi-year research project examining how trusts and foundations work with social movements in the US, UK and the European Union. He also currently supports the work of Coram’s Fields as a Non-Executive Director and Ashoka as a Member of their Venture Board.

Rob worked for the Paul Hamlyn Foundation for over eight years, beginning as a Head of Social Justice before holding the role of Director of Strategy. Rob played a lead role in designing and implementing the Foundation’s UK wide work aimed at supporting young people experiencing marginalisation. Rob has also worked for the Carnegie United Kingdom Trust, where he was Director of its Young People Initiative.

Prior to this he has worked in civil service roles within the Department for Education and Skills and the Cabinet Office. His early career included research associate and research fellow roles for several different Universities, including the University of Cambridge, the University of Edinburgh and London Southbank University.

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Executive Summary

The report considers the role of charitable funders at a time when research carried out by the Association of Chief Executives of Voluntary Organisations (ACEVO) and Charities Aid Foundation (CAF) found that 20% of charities are ‘struggling to strive’. There is an estimated 8,000 practising grant makers in the UK, awarding in the region of £3 billion annually, with the top 2,500 grant makers giving a total of £2.65 billion or 88% of the total annual spend. Research in 2015 confirms that spending by charitable funders has returned to pre-recession levels, but that this represents a fall in spending in real terms. The majority of grant spending is aimed at education and training (24%), health (11%), arts/culture (11%), welfare (9%), and children/youth (8%), according to analysis of 16,500 grants in 2015. City Bridge Trust (CBT) remains one of the UK’s largest charitable funders: it is the fifth biggest in terms of its assets and sixteenth largest in terms of its annual spend at circa £20 million. CBT is part of a wider group of similar funders in terms of grant-spend and ambition, which are considered as part of this research. The paper considers a wide range of research into the effectiveness of the funding approaches that charitable funders adopt in in pursuit of positive social change. The author proffers that there is a need for charitable funders to become more strategic, intentional, straightforward and impact focused, with less bureaucratic and burdensome processes for charities. To support this analysis, the author provides summaries of the following reports: the Funder Conundrum, the Institute of Philanthropy, Project Streamline – a collaboration of grants managers from various US foundations, the Grantmaking Tango and the ‘Inside the mind of the grant maker’ report. Each piece offers its own checklist of the kinds of considerations that need to be made by funders, but there is overlap and alignment on the following:

- That funders be more clear and explicit about their own intentions and therefore use approaches most likely to help them achieve their objectives.

- Funders find and support their applicants, and the types of evaluation and learning they adopt. The role and actions of funders, individually and collectively, in a time of austerity is considered in the report. The research concludes that there is an opportunity for their work to make fuller and better use of civil society in tackling stubborn and deep-rooted issues – it is argued that civil society is undercapitalised currently. It also encourages funders to commit to courageous leadership that challenges them and civil society more widely, to achieve more and to respond more quickly to rapid and dramatic changes in the external world.

The majority of the report considers the approaches funders can take in order to distribute their monetary and non-monetary resources. In order to build the resilience of the social sector, the following approaches are considered:

a) Core and unrestricted funding b) Funding proven services c) Funding for organisational development d) Investing in intermediaries and second tier organisations e) Funding small scale work

The report also offers ways funders might enhance the following types of funding support: Funding digital technology for good

a) Initiating new organisations to ‘plug gaps’ or improve infrastructure b) Mergers and close down c) Funding to build on assets and strengths d) Peer led grant-making and participatory funding e) Place based funding approaches f) Funding community business g) Funding for people with ideas h) Funding policy, influencing and campaigns i) Collaboration

The report concludes that although there are many approaches that can be taken to funding, foundation effectiveness required them to serve the charitable funder’s purpose, values and strategic objectives.

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The report adds that amongst UK funders there is not a great deal of innovation in funding approaches, but that is not the main challenge to the field. Instead, funding effectiveness and efficiency are the aspects needing most attention. The author suggests that in many cases there is a need for funding processes to undergo a significant overhaul, due to the increasingly complex and seemingly intractable social challenges that funders seek to improve and change and also the growing burden funders’ requirements place on organisations seeking funding.

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1. Purpose, scope and methodology

1.1 This is an evidence review written for staff and trustees of City Bridge Trust (CBT) and will inform the design of the funding approaches that CBT uses in its next funding strategy for 2018 to 2023. This short report intends to:

a) consider, through the prism of disadvantage, established and emerging practice in

funding, looking principally across the UK but also at pertinent examples from beyond, to identify approaches to inform CBT’s future funding decisions;

b) identify and critically review established and emerging forms of philanthropic funding including grant making and social investment;

c) give attention to strategy, practice and funding techniques, including blended models that combine financial and non-financial resources; and

d) consider evidence about different types of relationship between philanthropic institutions and grantees/investees.

1.2 This report is based on:

a) consideration of a range of secondary sources – reports, reviews and other publications

about general grant-making approaches which are publicly available; b) reflections from the report author’s own practical experience of working for, and with, a

number of different trusts and foundations; c) in-depth discussions with CBT staff and Members; and d) a small number of interviews with grant makers from a mix of UK funders, and others

working in and around the philanthropic sector. 1.3 Due to the size and breadth of the funding sector, it is not possible to present a complete overview

of the work of the funding sector. CBT should ensure that when the time comes to design specific new funds, it uses its extensive links to identify best known approaches, and considers literature particularly relevant to the intended funding approach.

1.4 Many of the specific funding approaches described will be familiar to a funder which, like CBT, is

already deploying mixed approaches to funding. In some cases however, emerging and sometimes radical examples are flagged, mindful of CBT’s interest in being an exemplar funder, able to engage in more innovative approaches. Further consideration should be given to other types of funding (including social investment), and how organisations can mobilise their non-monetary resources, in particular their people and relationships.

1.5 The author intends the report to be a provocation that will stir the reader to imagine new and

better ways of designing funding approaches, and working more effectively with both grant applicants and recipients.

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2. Grant making - Funding context

2.1 This section ‘sets the scene’ by providing an overview of trends and practice in grant making, including a discussion of learning from analyses of funder practice. It is included to allow CBT to identify opportunities for designing its approaches to be more efficient, effective, and mindful of the needs of voluntary sector organisations. This is more urgent than ever with a reported one in

five UK charities ‘struggling to survive’1. Trust and foundation funding:

2.2 In its 2009/10 Funding Commission2, chaired by Fiona Ellis, the National Council for Voluntary Organisations (NCVO) restated the importance of income from trusts and foundations to the voluntary sector. Though critiqued as ‘a series of cottage industries’, each fiercely independent and unwilling to be told what to do, they were nonetheless: independent; at liberty to support unpopular causes, potentially long term; much freer than government or lottery in terms of public and media scrutiny; able to take risks, support innovation, and fail without harmful consequence; important to people ‘furthest from the mainstream’ and responsive to the changing needs of civil society organisations. The Commission noted, as an example of this, that funding for capacity building in the voluntary sector was pioneered within the trust and foundation world.

2.3 This description of assets, as well as the sharp critique, still resonates seven years later when the

external environment has become more challenging - not just for voluntary organisations seeking to survive and deliver services or otherwise positively influence people’s lives, but also for trusts and foundations seeking to achieve a lasting social impact. As Diana Leat has written (in a 2005 paper for the Big Lottery Fund examining risk in the context of good grant-making) “Spending money is easy. Spending limited resources effectively and efficiently is extraordinarily difficult. Doing so in ways that please everyone is impossible as long as demand for money exceeds supply”. She goes on to describe the contradictory demands to which trusts and foundations are subjected – “they are expected to innovate, but not to risk failure; to make sure that applications are sound, but to make grants with minimum bureaucracy, speedily and with easy access for small local groups, and at minimum cost; to avoid duplicating other funding or only funding already well-supported

causes…”3. 2.4 Trusts and foundations, like CBT, face a common challenge: how to design grant processes in ways

that provide a basis for sound and fair decisions, minimise the risk of fraud and failure but at the same time retain the commitment to innovation, openness and transparency, and accessibility to small and marginalised groups with little or no track record. Another dimension is added to this challenge where a trust or foundation seeks to achieve wider and/or systemic change through use of its resources.

2.5 The most reliable and up to date information about the activities of UK grant giving of trusts and

foundations comes from the Association of Charitable Foundations (ACF) and the Directory of Social

Change (DSC)4. The DSC research from 2015 estimates that there are around 8,000 practising grant makers currently in the UK, and the total value of grants awarded by these funders is in the region of £3 billion each year, and represents almost 8% of the voluntary sector’s income. The top 2,500 grant makers give a total of around £2.65 billion, which represents around 88% of all grant giving in the UK. Actual grant spending has recovered to pre-recession levels, which was recorded as £2.5bn

1 Social Landscape 2017. The state of charities and social enterprises going into 2017. ACEVO / CAF.

2 Funding Commission - Funding the Future: A 10-year framework for civil society. NCVO, 2010

3 Big Lottery Fund Research Issue 17. A discussion paper onrisk and good grantmaking. Diana Leat, 2005

4 Sector Insight: UK Grant-making Trusts and Foundations. A detailed analysis of UK grant-making trusts and foundations, where they give and the causes and beneficiaries they support. Directory of Social Change, 2015

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in 2008/09, and the capital assets held by all of the trusts and foundations in its sample total almost £45 billion.

2.6 ACF’s Giving Trends 20165 draws on data from 2014/5 and describes the response many of its

members report having made to years of government spending cuts, uncertainty about investment returns and increased demand for grant funding. ACF notes that current grant-spending still falls short of pre-recession spending in real terms however, as the increases mask a lower growth rate in funders’ assets than in the previous two years.

2.7 It is estimated that around £6bn worth of annual grants is transacted through charitable

foundations, with the top 300 grant makers delivering almost one half of all charitable grant making. The steady growth in grant making, however, in no way makes up the shortfall in lost Government revenue experienced by charities (which is not looked at in detail in this review, but NCVO and others have described this disparity). In summary, government grant funding has fallen from £6bn in 2003/04 to £2.2bn in 2012/13, with a concomitant big shift towards funding through contracts (which has led to some few voluntary sector ‘winners’, but many loser – mainly smaller charities not able to increase their income in this way).

2.8 ACF’s new analysis of 16,500 grants (from members, using 2013 data) shows that education and

training is by far the biggest recipient category of grant funding (24%), followed by health (11%), arts/ culture (11%), welfare (9%) and children/youth (8%).

2.9 CBT remains one of the UK’s largest charitable trusts – fifth biggest in terms of its assets (of over

£1bn), and sixteenth largest in terms of its 2014/15 £21m spend. It has few peers in terms of its own history and governance structure, but sits within a clutch of trusts and foundations that spend a comparable amount and/or share an ambition to achieve significant lasting progressive social impact, including:

- Arcadia - Barrow Cadbury Trust - BBC Children in Need - Big Lottery Fund - Clore Duffield - Comic Relief - Esmee Fairbairn Foundation - Lloyds TSB Foundation - Lloyds Bank Foundation England & Wales - Henry Smith Charitable Trust - Monument Trust - Paul Hamlyn Foundation - Pears Foundation - Shell Foundation - Sigrid Rausing Trust - Rank Foundation - Robertson Trust - Tudor Trust - Wolfson Foundation - Trust for London

5 Giving Trends 2016 Report – Key Facts and Figures on Giving, Income and Assets in the Top 300 UK Independent Charitable Foundations Ranked by Grant Making. Authors: Cathy Pharoah, Richard Jenkins, Keiran Goddard, Catherine Walker. Association of Charitable Foundations, 2017.

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2.10 CBT has, alongside its grant funding, access to a particularly broad range of direct and indirect financial and non-financial resources, including:

a) Direct assets – endowment capital; staff; property; relationships and networks;

knowledge and information; other ‘philanthropic brands’ it could lever.

b) Indirect assets – relationship with the City of London Corporation (its sole corporate trustee) and other City of London funders, including the Livery Companies; independence; and links to philanthropic networks.

Learning from critiques of trusts and foundations’ approach to funding:

2.11 There is a considerable literature critiquing the practice of trusts and foundations and urging them

towards better grant making – being more strategic, intentional, straightforward and impact focused, with less bureaucratic and burdensome processes for charities. Sitting alongside this are concerns from within the grant making community that skilled, motivated and knowledgeable grants staff are frustrated in their work by funding approaches that are administratively cumbersome and limit their engagement with the field, grantees and learning. Foundations, after all, gather vast amounts of data and hold long-term relationships with grass roots organisations that yield knowledge and insights, developing over time. It is worth reflecting on this, particularly through the recurring themes below; because there are relatively straightforward ways that CBT can adapt its operations to be more consistent with its values and purpose.

Funding approaches:

2.12 ‘Funder Conundrum’ 6 provides a helpful model of approaches taken by funders. It posits that

funders’ approaches can be plotted at various points on six ‘spectrums’. The six spectrums, as this author has interpreted them, are:

a) What motivates them and what (scale) are their objectives for change; b) How they see their role (‘active’ versus ‘passive’ or ‘hands off’); c) Their funding process (‘light touch’ versus ‘heavy due diligence’); d) Their relationship with grantees; e) Their attitude to risk; and f) Their attitude to and willingness to engage in collaboration with others.

2.13 The report acknowledges that typically most funders end up with a mixed economy of approaches,

sometimes active, sometimes taking risks, and at other times, light touch, hands off and/or preferring to fund proven concepts. This idea of a ‘mixed economy’ might be helpful for CBT in thinking about how it wishes its grant making to look – a range of approaches, aligned to purpose, but not so many as to be bureaucratic and/or overly complicated for staff to administer, applicants to navigate or trustees to comprehend. Taking a ‘mixed economy’ approach is not intrinsically problematic then, but when it is not explicit and understood internally, and externally, it can be perceived as fragmented and non-strategic.

Successful philanthropic approaches:

2.14 Research by the Institute of Philanthropy to identify UK philanthropy’s greatest achievements

attributes three distinguishing features to the secret of successful approaches 7 . This author

6 A funder conundrum - choices that funders face in bringing about positive social change. An independent research report based on the experiences of The Diana, Princess of Wales Memorial Fund, and based on consultation with grantees, partners, funders and philanthropists. DP Evaluation, September 2012

7 UK Philanthropy’s Greatest Achievements. A research based assessment of philanthropic success. Beth Breeze, Institute for Philanthropy

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believes that CBT should be able to show how its approach demonstrates these characteristics, which can be described as:

a) Being innovative – identifying new needs and/or finding new solutions to old problems. b) Speed – being able and willing to react quickly and flexibly in pursuit of change. c) Taking calculated risks in pursuit of causes they care about.

2.15 Further, the author argues that the greatest philanthropic achievements (including abolition of the

slave trade and more recently providing famine relief and long term aid) came about only as a result of co-operation with talented individuals, public bodies and private companies. CBT is particularly well placed amongst Foundations to do this.

Streamlining grant making approaches:

2.16 In the US there is a collaborative initiative of grants managers that produces reports and guidance

under the name of ‘Project Streamline’ – its purpose is to drive change in funder practice which, with its application and reporting requirements, often serves to take applicants and grantees ‘off

mission’. One report, for instance, is titled ‘Drowning in paperwork, Distracted from Purpose’8. It

describes three types of foundation, in terms which are self-explanatory:

a) The Fickle Foundation (changeable, suddenly shifting priority with no warning); b) The Neutral Supporter (appreciated by grantees, clear guidelines, funds and then happy

to get out of way unless and until help is sought); c) The Thinking Partner (often loved, with intensive staff investment highly valued, but that

advice needs to be sound, authoritative and not unduly influence the focus and programme development of the charity).

2.17 Project Streamline points to the main flaws in the grant making system which, although derived

from empirical research in the US, reads across fairly soundly to the UK (minus some of the specific regulatory/due diligence points which are country specific). Again, these might be read as ‘cautionary tales’ by CBT when it gets to the point of designing its grant making operations to delivery against its new strategy:

a) Variability in practice – Organisations have to navigate enormous variability in the

practice of foundations; committing high amounts of staff time into determining what is wanted and searching for clues about the best way to secure funding.

b) Proportionate approaches - Application and reporting requirements often do not take

into account fully the size of the grant sought/awarded, and vary accordingly.

c) Cost effectiveness - Grant funding still tends to take insufficient account of the true costs of getting and then managing the grant, so applicants have to carefully weigh the possibility of getting funding against the cost of seeking it.

d) Outsourced burdens – Grant-seekers often bear the brunt of the grant makers ‘outsourced

burden’, taking on in particular administrative tasks associated with application and evaluation that could be done by the funder.

e) Trust undermined – Where applications have a particularly high level of bureaucracy, this

is experienced by applicants as signifying a lack of trust/suspicion of them and their work. Applicants have described being made to feel, by funders, as ‘car salesmen’ trying to wring out funding for a social purpose.

8 Drowning in Paperwork, Distracted from Purpose: Challenges and Opportunities in Grant Application and Reporting. Project Streamline, U.S.

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f) Grant monitoring - Reports that are onerous to produce and chased hard by funders never see the light of day and, if read, are seen by only the reporting officer.

g) Fundraising gymnastics – Faced with the challenge of navigating complicated programme

criteria, charities demonstrate ‘adaptive behaviours’, trying to simplify the process and reduce the odds by devoting time and energy to board mapping, reaching trustees directly and so on.

h) Double edged swords – Often when funders do streamline their processes, trimming

paperwork and sharpening focus and criteria, they add in further screening steps.

i) Time drain – Flaws in the grant-making processes results in organisations applying using their limited time and resources unwisely. Equally, grant-making staff teams are mis-using their time and resources, with many having to manage high volumes to tight deadlines, to meet the needs of internal governance arrangements.

Engagement with applicants: 2.18 It is clear from multiple sources considered in the process of writing this paper that charities find it

harder than ever to have a conversation with a real person in advance of making an application. This is completely at odds with what they generally say they want and need – they want human contact - even if it is short, at an early stage and leads to them abandoning or deferring an application. There seems to be an increasing and heavy reliance on digital technology not just to facilitate the application process (which is sensible) but on written web content to adequately communicate and explain (sometimes complex) criteria and purpose. This carries significant risks, not least of which is that sometimes poorly written information can confuse applicants and contort the honourable intentions of funders. Further, confusion can lead to applicants then trying to understand funders’ intent in other ways – for example, contacting trustees directly is one response that may perversely end up in more staff time being expended.

Avoiding drift:

2.19 Project Streamline makes a number of recommendations that are described later in this paper,

looking ahead to better ways of operating. The collaborative also makes some points about how grant making might be more efficient and effective. It has produced a useful tool to help grant makers ‘self-evaluate’ their approaches – principally at programme level, but there is no reason that it cannot be used across all grant making.

In summary, the tool works around five questions.

a) Does our grant making align with our intentions? b) Are grants structured to be successful? c) Are we efficient in our internal processes? d) Are we communicating effectively? e) Does our process strengthen and support grantees?

Other organisations – such as Keystone Accountability in the UK – have developed tools for light touch continuous feedback, drawing on practice in the international development sphere, but which look promising for funders seeking to improve their approaches quickly and efficiently.

2.20 Julia Unwin’s ‘Grantmaking Tango’ 9 from 2004, which still resonates, comes from a similar

perspective – namely, that “everyone agrees that current (grant seeking and reporting) arrangements are time consuming and may even prevent the healthy development of the voluntary sector”. In addition, funders seeking to understand the nature of the impact they make can also find the tools available frustrating and inappropriate. Whilst acknowledging that most funders

9 The grantmaking tango: Issues for funders. Julian Unwin. Joseph Rowntree Foundation, 2004

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operate with several intents – to keep good things going, change systems, build institutions – in a report crammed with powerful insights into funders’ practice and thinking, she distils to four points those key elements funders need to get right if they are to avoid (this author’s term) ‘punching below their weight’. “Taken together”, she writes, “these four steps provide a framework for deciding on the design of a funding programme”.

a) First, understand their motivation as funders; b) Second, know what impact they desire; c) Third, determine which style of operation suits them best; and d) Fourth, consider 4 key variables when designing approach – criteria and assessment,

transaction costs, allocation of risk, return to funder.

2.21 Similarly, a report titled ‘Inside the mind of the grant maker’10 in 2013 arrived at a set of variables that helped explain the difference between funders.

a) How they find grantees – reactively or proactively b) The type of grants they make – one-off or multi-year, project or capital, revenue or loan,

new or proven projects. c) Where they decide to focus and how they make decisions – where does the passion come

from, how involved are trustees and how much is delegated to staff? d) How they decide to manage demand – through restrictive criteria, and/or eligibility tests e) What type of relationship do they seek – ongoing, or limited to grant processing, funder

plus, or grant only? f) How do they know whether the money is well spent – evaluation lovers or sceptics?

10 Inside the mind of a grant-maker: Useful stuff on how grant-making works.

Elin Lindström and Joe Saxton, June 2013

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3. Foundations at a time of austerity

3.1 The NCVO Funding Commission referenced earlier in this paper (see paragraph 2.2) was broadly positive in 2010 about the improvements that had taken place in the world of trusts and foundations: “generally, the Commission’s perception is that, as a result of mechanisms like the Intelligent Funding Forum and the wider work of ACF, the quality of grant making has improved considerably in recent years. There is more focus on outcomes, proportionate monitoring and learning from grantees’ experience; there is also more ‘engaged’ funding where the funder takes a wider and more proactive approach to the various ways they can help the grantee succeed and more interest in sharing learning. Application processes are increasingly in line and better use is being made of technology”.

3.2 However, the Commission noted, there are some stubborn and deep-rooted issues that trusts and

foundations could address, should they wish to, either individually or collectively. In particular, they expressed concern that most civil society organisations were undercapitalised – a situation that is not likely to have changed significantly over the last five years. In other words, charity income and expenditure are very closely matched leaving them vulnerable to austerity, failed grant applications, economic downturn etc. Their reserves for development of working capital are very much lower than is typical in the commercial sector. Trusts and foundations, the Commission argued, provide vital sources of donated capital and by funding the full cost of work (something of a rarity, still) by providing core grants for capacity building (ditto) and funding on a long-term basis “they can help capitalise the sector”.

3.3 It is this author’s opinion that trusts and foundations could play a greater role in complementing

debt finance – either funding those aspects of investment where there is no financial return, or offering loan finance. This requires them to work explicitly with others providing that finance, but generally funders do not often come together in these sorts of arrangements. Some are also in a position to take higher risks with their own investments than commercial investors.

3.4 There is, despite these particularly stubborn issues, nevertheless a general sense in the sector that

trusts and foundations are changing who, what and how they offer their support. That, despite the relative stability and comfort of their operating environment, they are increasingly experiencing a nagging sense of under achieving, of responding only slowly (and perhaps inadequately) to rapid and dramatic changes in the external world, and not having the impact on the world they might. This is a good thing, but needs courageous leadership to act on in a meaningful way.

3.5 There is a view that many grant makers have got themselves locked in to ways of operating that

prevent them having the impact they might. The explanation is as follows: as interest in business methods grew in the 1990s and early 2000s, so grant making became more of a ‘technocratic exercise’, with a greater focus on process, on evaluation, on achieving outcomes, of standard approaches to assessment and measurement and so on. This slightly caricatures the field, but the point made by some US commentators (Paul Connolly is one example) is that as social problems have become subsequently become more global, fast moving, complex and resistant to conventional funding approaches, there needs to be something of a renaissance of more ‘instinctive’ grant making approaches - “grantmakers” says Connolly “can enhance their work by combining objectivity with passion, control with agility, proactivity with responsiveness, top down

with bottom up, and numbers with stories”11. This has profound implications for the style of grant making trusts and foundations interested in trickier social issues need to develop, and also for staff composition (an aspect hardly ever discussed in the literature on philanthropy). It is this author’s opinion that they therefore need staff that are skilled at human relations, reflecting more diverse experience, with high levels of field credibility and understanding, and even creativity and entrepreneurialism.

11 The Best of the Humanistic and Technocratic: Why the Most Effective Work in Philanthropy Requires a Balance. Paul M. Connolly, M.P.P.M., TCC Group. Published in The Foundation Review 2011, Vol 3:1&2.

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3.6 The Institute of Voluntary Action Research (IVAR) has reiterated some of the points raised above, about the role of trusts and foundations in supporting civil society organisations, in its ‘Duty of Care’12 research. IVAR showed that trusts and foundations had the opportunity to add real value to civil society organisations through:

a) Offering core funding (described by interviewees as funding to cover central organisational functions, to counter-act the many struggles to survive organisations are facing.

b) Supporting organisations to access time and space for strategic thinking – to help plan the way ahead and also to work out their own needs.

c) Helping organisations to better understand, evidence and communicate the difference they make.

d) Providing organisations with access to non-monetary support from their funder, e.g. expert advice and support, which they can meaningfully access.

12 Duty of Care. The role of trusts and foundations in supporting voluntary organisations through difficult times. Eliza Buckley, Ben Cairns, Alison Harker, Romayne Hutchison, October 2012

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4. Approaches to funding support

4.1 This section considers some of the funding approaches or tools in use in the grant making world, to help CBT increase its awareness of who is doing what, and how approaches operate in practice. It also identifies some more emergent, radical approaches that are currently less common but nonetheless appear to be consistent with CBT’s values and purpose.

4.2 This report does not critique CBT’s current approaches, but the author recognises that there is a

myriad of experience gained over its 21 year history that CBT can draw up on when developing specific approaches to deliver its 2018-2023 funding strategy. The research shows the obvious – that there is no one right approach, no ‘best’ type of funding, and instead intelligent funding employs a range of approaches to elicit success across a range of different strategic aims. The research available does however make clear the ways in which funders can improve the grant-making experience, in terms of: application, evaluation, grants management, and the management of risk.

4.3 Many in the voluntary sector complain that the approaches taken by funders to grant making tend to place a disproportionate burden on applicants and grantees – in terms of the application process and requirements of due diligence, reporting, evaluation – and often does not recognise or cover the full costs of delivering the work. Perversely, funders interested in outcomes operate using bureaucratic, slow and onerous approaches to grant making and management, thus undermining the delivery efforts of grantees. This is an area that CBT might wish to consider, and was flagged earlier in the first part of this paper.

4.4 In writing about grant making, Peter Grant sets out what he sees as the main elements of a good

approach13

a) Treat applicants and grantees as people, not organisations; b) Evaluate both the funding organisation’s achievements as well as the outcomes of

grantees; c) Be satisfied with ‘good enough’ evidence of results; d) Fund success; e) Commission research to find organisations and people outside of networks; f) Retain flexibility to ‘switch horses’; g) Be focused but retain peripheral vision; h) Be generous with recipients; i) Share information about what works; j) Fund more organisational development; and k) Have transparent policies and processes.

4.5 The author would add to this three things based on his experience:

a) Recruit and develop staff that bring field knowledge, networks and creative approaches. b) Develop long-term and trusting relationships with those who can bring about change. c) Get to know key fields and act in a way (with others) that benefits their sustainable

growth, resilience and effectiveness 4.6 The following are some of the most mentioned or (in the author’s opinion) most interesting

‘approaches’ that feature in the current funding landscape. Also highlighted are more emergent and radical ways of operating, . In each there is a brief description of the terms and examples to go on to look at more closely (unless approaches are so nascent they are still at the idea stage). Headings are not mutually exclusive, but just help with presenting the rather disparate information uncovered.

13 The Business of Giving: The Theory and Practice of Philanthropy, Grantmaking and Social Investment. Peter Grant, CASS 2012.

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Approaches that help build resilience in social sector -

Providing core and unrestricted support:

4.7 Research by IVAR14, highlighted the importance of core and unrestricted funding for the sector, as well as highlighting the challenges/issues it generates for funders and grant recipients. Many funders explicitly state that they do not consider this type of support, restricting their assistance to ring fenced projects, tightly prescribed and focused. It may be perceived by them as too risky or as giving away too much control or as ‘letting statutory funders off the hook’ by effectively subsidising the cost of service delivery.

4.8 On the other hand, it signifies a high level of trust in performance, leadership and communication, and allows charities a more secure base for action. It can improve the reputation of a funder too, and it reduces the power imbalances that exist resulting in applicants feeling that they are treated as ‘used car salesmen’ by funders. In general, with core funders, this type of funding is more likely once a relationship of familiarity and trust has been established – so it may follow on from a period of project support. Funders see themselves as investing in relationships with charities and their senior teams, often when a charity occupies (or could occupy) a strategically important place in the field. There are challenges around this – the in-grant relationship needs to be active, with good communications on both sides, and funders (and their trustees) must anticipate and prepare for plans to change. In addition, core funding throws up evaluation and attribution challenges, so expectations around outcome/impact measurement need to be managed.

4.9 Paul Hamlyn Foundation (PHF), Tudor Trust, Esmee Fairbairn Foundation (EFF) and Network for

Social Change (NSC) are some of the relatively few foundations that offer core funding to some of their applicants. PHF have restricted their core funding programme at youth organisations that are taking a strongly youth centred ‘strengths based’ approach, where the charity anticipates growing its impact – through scale-up, influencing work, or generating tools and approaches for wider take up by others. Funding is fixed at two years and capped at £30k pa. During this two-year period staff at PHF invest in getting to know the grantee, its team and its activities and begin a conversation about whether the grantee might be helped further through a ‘growth fund’. Tudor Trust offer core funding following a careful due diligence process and multiple visits. Grantees appear to understand that this type of funding demands more up front interaction with the funder to test out the relationship. NSC differ from these two examples, as they offer core funding to new ideas and start-ups, meaning that they do not necessarily have a pre-existing or long-term relationship with the applicant. CBT has some experience in offering core funding as part of its current strategy, which it could build up on, namely through its grants to London Funders and the Human Trafficking Foundation.

4.10 If CBT were to consider core funding as part of their funding approaches, then they ought to explicitly define and publicise the criteria attached to this. They would also have to consider implications for how staff use their time, as some of these funding relationships may require more time to develop and manage.

Funding proven services to continue delivering: 4.11 During this time of austerity, funders are under pressure to support or subsidise those services that

may have previously been provided or commissioned by local authorities. This is challenging both politically and because they tend to be costly and involve the funder effectively acting as a commissioner of outcomes. In the area of youth transitions (education, employment, training) , venture philanthropists such as Impetus PEF and Inspiring Scotland have blended monetary and non-monetary assistance to develop more effective interventions, reduce the unit costs, and increase the scale. The Inspiring Scotland 14:19 Initiative is funded by pooling donations from Scottish Government, charitable trusts, high net worth individuals and business. Inputs include

14 Thinking about... core funding. Ben Cairns, Chris Mills, Sarah Ridley, IVAR 2013

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expert assistance, pro bono support, encouraging learning and partnership working within the funder cohort. Ventures (grantees) are selected through a mix of criteria including geography, growth/impact potential, willingness to work in engaged funding relationship.

4.12 There are also funders that will continue to support charities to deliver ‘tried and tested’ work because they know them well, have invested heavily in them previously and consider them to be an essential part of the landscape even if their effectiveness could be increased. Charities are often wary of approaching funders to continue work that is proven, or improving, but with far fewer commissioning routes than before, funders are increasingly being considered a potentially viable option to consider. The Henry Smith Charitable Trust is considered a funder that will look favourably at funding ongoing delivery work, without requesting ‘innovation’ from the organisation. Trust for London will fund organisations that meet its criteria for up to 9-years, and this time period represents a funding anomaly. Equally the boards of both the Joseph Rowntree Foundation and the Barrow Cadbury Trust recognise explicitly that social change takes time, and so they need to invest in charities over the long-term.

4.13 CBT should consider, in partnership with other funders, including local authorities, the possibility

of them co-funding effective organisations that are successful at achieving change, but do not necessarily have a sustainable income source through trading or winning contracts.

Funding for organisational development:

4.14 Whilst many funders offer funder plus support either on a bespoke basis or through a programme of

activities, fewer appear to build in to grant funding a component for organisational development. In general, it is not something that charities believe they can ask for help with. One slight exception to this is that some funders will invest in supporting grantees to improve the quality of outcome and impact data that they generate, but while there has been a genuine shift in charities’ fluency around impact data, most of this has not been explicitly paid for in this way.

4.15 In general, those trusts that provide core funding will often be sympathetic to and encourage grantees to outline their development plans and subsequently support new, core positions – so called ‘boring funding’ for things like Heads of Operations, Communications and so on.

4.16 Lloyds Bank Foundation England & Wales (LBFEW) has an extensive ‘funder plus’ programme,

mainly aimed at supporting small and medium charities, which may include inputs from corporate staff from the bank. Trust for London provides additional support with some of its grants, and exhibits characteristics of ‘relationship philanthropy’ (see paragraph 5.2) in its overall approaches. PHF previously ran a pilot grants plus programme called Fitter for Purpose, in partnership with NCVO, and it offered tailored support to help grantees increase impact plus work.15

4.17 CBT may wish to complete a robust assessment of organisational development support that would

benefit a grantee, if they feel the application is likely to be successful. CBT may wish to restrict this to certain types of application – for example those receiving core funding, or for smaller organisations with growth potential. It may also be necessary to contract out the ‘funder plus’ offer, as there is evidence from PHF’s Fitter for Purpose work (see above) that there is sometimes a difference between what grantees ‘ask’ for and what it transpires is most valuable – this process needs some interrogation and challenge to boil down to what is really needed.

Investing in intermediaries and second tier organisations:

4.18 There is no clear narrative within the literature about the most effective approaches for supporting

second tier umbrella/infrastructure bodies, as well as a new subset of thoughtful new organisations set up to help others grow their impact, achieve scale, access social investment and improve their use of data. However, it is clear that many may struggle to trade and/or get grant funding for their

15 ‘Fitter for Purpose’ Evaluation report. Kirsty Gillan-Thomas, PHF 2016

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work. CBT has funded research in to the future of London’s civil society support functions as detailed in The Way Ahead report, published in 2015.

4.19 There is also a particular paucity of expert affordable advice and assistance to help charities test their idea for scale, and access the funding to begin the scaling process. The Scale Accelerator, which is run by the International Centre for Social Franchising (ICSF), supported by a group of nine foundations (including CBT), puts forward one grantee from each funder plus a cash investment. The focus of the project is to help charities work through the process of establishing a deliverable growth/scale up plan. It is currently run as nine bilateral grants to ICSF, and an alternative approach would be to fund ICSF directly to widen its reach and achieve more. Impetus PEF uses its venture philanthropy approach, made up of a combination of funding and expert support, to help the charities within its funding portfolio to reach optimum scale, but they do not guarantee the sustainability of their ventures. The Big Lottery Fund’s Realising Ambition programme, which was delivered in partnership with Catch 22 and others, was aimed at strengthening the evidence base for successful replication of charity project ideas.

4.20 CBT should continue to invest in building capacity amongst intermediary and second tier organisations in key strategic fields relating to organisational growth and development. CBT could also build on its experience of running the Stepping Stones fund – a social investment readiness grants programme.

Funding small scale work:

4.21 Most of the voluntary sector in the UK comprises tiny charities, operating on small amounts of

money, and often staffed by volunteers. London is no exception. They do not need huge amounts of money, and their fundraising efforts can result in a huge drain on resources and a drifting away from their original mission. Often the due diligence funders apply to these organisations is the same as that which is applied to larger charities. This disparity in approaches has resulted in a growing interest in funding the best approaches through which smaller charities can be supported, whilst balancing this against funders’ risk tolerance and risk appetite.

4.22 ‘Lean philanthropy’ and ‘fast funding’ are terms used to describe efforts being made to ensure that application and decision-making processes are made more straightforward, effective and efficient. Some interesting learning can be gained here in terms of grants designed to enable quick responses to disasters and emergencies – for example the Natural Environment Research Council urgency grants allow scientists to respond rapidly to unexpected and transient events affecting the environment (such as the 2010 Amazon drought or the eruption at Iceland's Eyjafjallajökull volcano in the same year). CBT also has previous experience to draw up on in this area, having been part of a coalition of funders who managed and distributed the London Bombings Relief Fund.

4.23 In New Zealand, Foundation North has ‘quick response’ grants available to charities (subject to

certain criteria), capped at $20,000 (about £11,000). Another New Zealand based funder, Creative New Zealand, offers Quick Response Grants to help New Zealand artists, arts practitioners and arts organisations to create and distribute their work, with decisions taking five weeks, with a 25% success rate. PHF is currently piloting its Ideas and Pioneers fund, which intends to introduce a funding stream that does not tie up entrepreneurial applicants in bureaucracy, resulting in faster decisions and lighter touch due diligence and reporting requirements.

4.24 CBT may wish to consider developing its own ‘fast fund’ for very early stage/small amounts of

funding, which was reflective of the criteria highlighted above. It may be easier to distribute via an external contractor, and particular attention should be paid to facilitating learning across grantees, light-touch reporting on activity and outcomes, and use of interviews for assessment and grant management.

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Approaches that support the use of digital technology for good:

4.25 The ‘tech for good’ space is an area of growing interest, with a number of smaller initiatives from a range of funders arising in this space in recent years. However, there is perhaps not yet enough money in this space to fully realise the potential impact of tech for good.

4.26 Those working in this field, suggest that there is too much focus on delivering a solution, as opposed to supporting grantees to lead test-driven/user led approaches to address a challenge and to find the right solution over time and through ongoing investment that responds to the learning gathered. There is also limited recognition amongst trusts and foundations that developing any digital service takes 5-7 years on the start-up to scale journey, as evidenced in the commercial sector, and so grants over 2 to 3 years are not sufficient in this space. Finally, the right measures for deciding if digital interventions are working are not working at the moment, and more investment is needed in this area.

4.27 Comic Relief (CR), through its Tech vs Abuse programme is deemed by one field expert as “the

smartest approach to funding non-profit tech I've seen”. CR have published clear design principles; funded charities' responses to design challenges and in addition to a grant provided support to create test-driven development approaches (rather than just funding 'delivering a solution'). The Legal Education Foundation has a tech funding strand in which they are promoting greater thought and discussion about how the interaction of law, technology and access to justice. Power to Change are currently thinking about the use of digital/data solutions to support programme evaluation.

4.28 According to CAST (the Centre for Acceleration of Social Technology) there are the six main things

needed to build this field so that it is more effective in aiding digital tech to achieve greater social impact. In some respects, these could equally be applied to ‘off line’ approaches to social change, and are described as:

a) A culture of reuse – both sharing and reusing products and outputs in formats that can be

accessed by others, e.g. research, open data etc. To develop a commitment to a reuse culture, through making work easier to share and search, ensuring that new products and outputs reference the work that has gone before.

b) User led, and test-driven development – to ensure all products, services and programmes are built around a test-driven and user-led process.

c) Creating three strands of value - to work with start-ups and new projects to develop their own three values, and to work with funders, commissioners and investors to implement funding, support and evaluation frameworks that support such growth.

d) Lean metrics and ongoing testing - to build approaches using lean metrics, and to work with tech for good organisations to implement and support similar approaches — creating a shared measurement framework (and language) that is honest, justified and evidenced.

e) Smaller problems for bigger solutions - to continue to be specific and focused on where digital can make a big difference, and to work tirelessly to bring that value about. Being honest about where digital has no, or limited role, and ensuring products and outputs bring multi-talented/disciplinary teams to focus on identifying and addressing important problems.

f) Addressing challenges, not suggesting solutions - to continue to use a test-driven approach to addressing challenges. To work with funders, investors and social organisations to understand and implement trusted methodologies to rigorously find the right solutions to big social challenges — taking into account the accountability and reporting differences that this may bring.

Initiating new organisations to ‘plug gaps’ or improve infrastructure:

4.29 Some funders are interested in encouraging and then funding new organisations, because they have

(either individually or with others) identified a gap in the sector that needs to be plugged, or a new challenge to be addressed, or a deficit in sector or field infrastructure. Diana Leat’s report for

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Barrow Cadbury Trust, the Calouste Gulbenkian Foundation (UK Branch) and PHF (The Inventive Foundation16) has UK and EU case studies of this in practice. British Future was set up by a small group of collaborating funders, including the Barrow Cadbury Trust, Unbound Philanthropy, the Diana Fund and Trust for London, to develop new narratives on identify and migration, to be used by immigration reform progressives, as a result of gaps being identified in this space. Equally, the Migration Observatory was set up at Oxford University to produce and disseminate robust objective data on immigration

4.30 CBT may wish to commission a ‘gap analysis’ in its main fields of operation, so that it can identify where there might be a need for new activity, or new organisations. It is arguably more productive to do this in partnership with other funders.

Mergers and close down: 4.31 As the sector responds to the challenges of austerity and financial uncertainty, so too does the

need for them to consider radical choices grows. These may be, in extremis, closedown, but also reducing operations and/or a merger. Throughout these processes, resources and assets built up over years and decades are at risk of being lost.

4.32 In general, funders could be described as not being particularly pro-active in assisting charities address these difficult choices. Were they more willing to help, then there is an argument that the sector might be more effective at protecting the resources and assets lost when a charity ‘goes under’. A cautionary tale is that of YouthBank UK, which in the noughties was overseeing youth led grant making across the nation, as well as developing and protecting quality standards. Central Government funding became more difficult to secure and the charity closed, but arguably the interest in and need for this type of approach has never been greater. The Esmee Fairbairn Foundation, since 2012 has offered funding support for organisations in the early stages of thinking about merger, with a maximum of £15,000 being offered initially to help with merger planning costs. CBT should consider having a similar fund and/or specialist advice available to groups considering closing down or merging with another organisation.

People, assets, place – Funding to build on assets and strengths: 4.33 In recent years, a number of funders have begun to talk in terms of assets based approaches –

sometimes called ‘strengths based’ approaches, or ‘advantaged thinking’. This is used both to apply to places/communities and to people. It is not yet clear the extent to which this is having a significant lasting impact on the thinking and practice of foundations, who have in the main tended to talk about their role as helping address needs. However, it has influenced the practice of some, and for others - such as the Rank Foundation – such approaches are entirely consistent with long held values. The shift that is taking place may mean that funders have to adapt their ways of operating – such as handing over more control of resources to beneficiaries, to allow people and organisations time to work out approaches, to be less prescriptive in how funding is spend, and more flexible around accountability and impact measurement.

4.34 The Carnegie UK Trust has previously supported rural community development through supporting asset based approaches, which they are then using to achieve a wider transformative impact at the level of policy and processes elsewhere. PHF’s Youth Fund is restricted to support for those organisations seeking to build on and invest in the strengths of young people, and is heavily influenced by earlier Foyer Federation work on ‘advantaged thinking’.

4.35 CBT has already commissioned work around Londoners’ needs, for its Strategic Review 2018-2023,

but it should also invest in helping people to identify and build upon local strengths – both at the level of individuals in need of assistance, but also at community level.

16 The Inventive Foundation – creating new ventures in Europe. Diana Leat, 2014.

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Peer led grant-making and participatory funding: 4.36 Under the current governance arrangements applicable to charitable trusts it is very rare for

boards to delegate their authority to award grants, and in the main trustees have the final say over funding. However, participatory funding is emerging as an area of growing interest as the argument that ‘people power’ generates more effective lasting change grows in potency. Several major initiatives already operate in this space, most notably Local Trust, a charitable trust endowed by Big Lottery to put 150 communities in England in charge of 10 years’ grant support. Other initiatives have put people with ‘lived experience’ in charge of funds, similar to the way in which participatory budgeting operates – typically a process of democratic deliberation and decision-making, and a type of participatory democracy, in which ordinary people decide how to allocate part of a municipal or public budget.

4.37 Youthbank UK, which was incubated at National Youth Agency, grew quickly with support of local and central government. It has now closed down, but several independent YouthBanks are still operational. Under this model young people were trained up as grant makers and made (local) decisions about how to spend funding budgets. Applications to them were from individual/groups of young people seeking to bring about pro-social change. Its work was considered a very interesting and empowering model that ended simply because government funding commitment waned, and it was over-dependent on this source. The currently operating Edge Fund builds funds to help achieve social, economic and environmental justice and to end imbalances in wealth and power. Beneficiaries have direct say over where the money goes.

4.38 CBT may want to consider a pilot funding programme of giving direct control over resources to

local communities, so that they can themselves invest in and build upon local assets. This could be done directly by CBT or in partnership with a delivery partner.

Place based funding approaches: 4.39 The idea of place based funding is on first sight straightforward, but it is also prone to being used

as a catch all to describe any manner of local funding approaches. In general, it is used to refer to everything from grant making purely on geographical grounds to multi-faceted collaborative partnerships aimed at securing large scale change. In the latter case, funders tend to be ‘embedded’ in a particular place over a longish term and their funding is informed by in depth knowledge of a place and its people. In 2014, PHF commissioned Mandy Wilson Ltd to scope the potential of a place based approach. The unpublished report might be helpful to CBT should it wish to consider this funding approach in more detail17.

4.40 Place based approaches are sometimes treated as synonymous with ‘asset based’ approaches since they tend to focus on the positive qualities and strengths of an area or community, and seek to enhance and build on those. The motivation for embarking on such an approach may come from a pre-existing attachment to a place, or a remit confined to place, but more often than not it is driven by a desire to achieve significant, lasting change and – in some cases – to generate a replicable approach that might take root in other localities.

4.41 There are a multitude of funders who are interested in and/or implementing place based funding

approaches. Within London, the ‘Giving Schemes’, such as Islington Giving, focussed on encouraging more giving have been growing in number, size and impact over the last few years. CBT has been a key supporter of this movement, through its investment in specific Giving schemes, and its infrastructure through the London’s Giving reference group. The Lankelly Chase Foundation is well-known for their work to fund agencies that are to varying degrees taking a place based approach to systemic change. It is also working with a number of players to understand what place based means in this context, the values and principles that should underpin this work and what role

17 Scoping the potential of a place based approach for Paul Hamlyn Foundation. Mandy Wilson Ltd, June 2014 (unpublished)

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funders are best placed to play; and to this end they commissioned the Institute of Voluntary Action Research (IVAR) to deliver an historical review of place based approaches.

4.42 Going forward, it is recommended that CBT work with other funders in this space to consider

carefully whether and how place based funding approaches might form part of the funding blend at some point during its next strategic period.

Funding community business: 4.43 Developments around this are have emerged relatively recently, in the main led by the Big Lottery

Fund endowed Power to Change, which operates as an independent foundation, that has been set up to operate for 10 years only. In that time Power to Change will invest £150m in supporting community business, helping build a new and robust economic model of delivering social change. It provides grant funding and loan finance, as well as non-monetary expert assistance and help with development and networking. CBT may wish to consider how the learning from Power To Change could be used in London, given the links its trustee (the City of London Corporation) has to business, including small and medium enterprises. This learning could also be used as an integral part of any place based or peer led funding approaches that CBT may wish to implement.

Funding for people with ideas:

4.44 It continues to be very difficult for people seeking to develop their thinking and ideas to get

support for this work – principally, by accessing an income that allows them to spend time focusing on this development. The paucity of this very early stage assistance is in marked contrast to the more widespread availability of financial assistance (albeit at a modest level) for social entrepreneurs seeking to take forward a specific ‘business’ proposition, as demonstrated by the UnLtd – The Foundation for Social Entrepreneurs.

4.45 In the main, the opportunities aimed at funding individuals, exist in the form of fellowships – such as the Winston Churchill Memorial Trust funded fellowships, or through leadership programmes, such as the Clore Social leadership programme. Another notable example is PHF’s Ideas and Pioneers Fund, which supports people with unusual or radical ideas to improve the life chances and opportunities of people in the UK. PHF is willing to provide up to £15, 000 of funding for individuals or small groups with ideas that will help people overcome disadvantage and lack of opportunity, in order for them to realise their potential and enjoy fulfilling and creative lives. PHF will consider funding work to enable grantees to develop the idea from concept to set-up: this may include problem definition and analysis, scoping, exploratory work, and prototyping. PHF will also introduce grantees to a group of peers for mutual support. The Rayne Foundation previously made a large investment (£500k over 4 years) in individual fellowships, through its Raynes Fellowships programme. Every year, five individuals from a refugee background were given the chance to spend up to £15,000 developing their BIG IDEA. The idea could relate to mentoring, health, culture, or sport, and ultimately had to be a workable idea that could make a real difference to support or develop the recipient’s community. Fellows received the support, resources and training to turn their vision into a reality and thus make a real difference to people’s lives.

4.46 It would be useful for CBT when thinking about the funding available for London charities, to also develop a view about the ‘pipeline funding’ in the sector – for example, how easy or difficult is it in London for people with good, pro-social ideas, to test them out and take them forward, deliver them, and gather impact evidence. If it is extremely difficult, as this author would expect, then CBT may wish to consider the implications of this – does it meant that the sector is neither as creative or as close to grassroots and emerging needs as it might be; or does it mean that specific investment aimed at individuals or small organisations to catalyse the creation of ideas is needed?

Funding policy, influencing and campaigns: 4.47 Charities tend to find it difficult to get funding for work that allows then to build capacity and

capability around communications and influencing, yet this domain is important if the ambition is

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to achieve wider or systemic change – at the level of policy, practice, or even attitudinal change. There are many funders, such as Trust for London, Barrow Cadbury Trust and JRF that are very active and explicit about the changes they wish to cause, including JRF’s ambition to solve UK poverty by 2030. The Webb Memorial Trust was formed in 1947 with the purpose of ‘the advancement of education and learning with respect to the history and problems of government and social policy’. Since 1987 the Webb Memorial Trust has funded a wide range of projects in the UK, helping to create a better informed debate about poverty, its causes and solutions.

4.48 CBT should give due consideration to whether or not charities in London have access to adequate

support and assistance to help them build their communications and influencing capacity. It should consider then what monetary or non-monetary support it can offer to groups based on the findings.

Collaboration: 4.49 There is a growing body of experience and research around the collaborations that funders engage

in, which is worthy of more in depth exploration18. Encouraging and enabling more productive working relationships between business and charity is also a key area of collaboration for funders to encourage and support. There are powerful arguments as to why charitable trusts need to develop more productive relationships with business – mainly to increase the pot of charitable funding available certainly, and to bring in business skills to charitable settings. However, it also represents an opportunity to close the gap in understanding between sectors, with both under attack in the media – most recently charities for their fund raising approaches. Clive Cowdrey, founder of the Resolution Foundation, has spoken persuasively about the need for funders, business and government to work more closely together in this new era which he characterises as low growth, shrinking state, growing (complex) social need and challenges: the most complex emergent social issues we face, he argues, cannot be tackled by any one organisation or sector, acting alone and instead require a blend of actors and inputs. To begin to do this well trust and foundations need to be skilled at building relationships in other sectors.

4.50 There are a number of venture philanthropy (VP) operations at work, that bring ‘business thinking’ to social change. Inspiring Scotland and Impetus PEF are the two main UK examples, but there are others. Both provide long haul funding, often tapering and requiring match, alongside intense funding support and performance management (including pro bono and other specialist inputs on organisational development, data, delivery etc.) The relationship is most helpfully seen as a managing partnership, and there is a strong emphasis on accountability for results and quarterly benchmarks, as well as an exit strategy – from day one. Inspiring Scotland has been particularly well supported by the Scottish Government, who in some of its investments acts like a funder commissioner.

4.51 Most funders enthuse about collaboration, in all its forms, but it is this author’s opinion that the

reality is that still relatively few practice it, and fewer still are skilled and effective collaborators. Rarely do funders invest in building their capability and capacity for collaboration – it is as though it is the most natural thing in the world, when in fact it is in many respects counterintuitive for organisations so invested in their own identity and independence of thought and action.

4.52 Some of the most interesting examples of collaboration in the funding sector are through ‘pooled

funding’ initiatives. Some examples include:

a) The Strategic Legal Fund for Vulnerable Young Migrants (SLF) - a fund to support legal work that goes beyond securing justice for an individual and makes a significant contribution to law, practice and procedures to uphold and promote the rights of vulnerable migrant children and young people more generally. The SLF makes grants to organisations to: Undertake pre-litigation research, or make third party interventions to ensure that the key legal points are made in existing cases.

18 Cairns, B., Harris, M. and Hutchinson, R (2010) Collaboration in the Voluntary Sector: A Meta-Analysis Institute for Voluntary Action Research, London

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The SLF is hosted by Trust for London, delivered in partnership with Esmee Fairbairn Foundation, Unbound Philanthropy, Joseph Rowntree Charitable Trust, Paul Hamlyn Foundation, and MigrationWork CIC.

b) Thomas Paine initiative (based at Global Dialogue) - a collaborative grant-making programme which aims to build stronger support for human rights and to increase the amount of funding for human rights activities in the UK.

c) Future Advice Fund - collaboration between Unbound, the Legal Education Foundation (who leads it), the Baring Foundation, Comic Relief, and (until its closure) The Diana Memorial Fund. This fund addresses the challenges that the legal aid sector has faced following public funding cuts.

d) Four Freedoms Fund (FFF) - founded in the U.S. in 2003 to build the capacity of immigrant rights field organizations at the regional level. FFF currently supports grantees in approximately 30 states and manages a number of strategic initiatives: a Southeast Fund to support emerging groups in the deep South; a Capacity Building Initiative to strengthen its grantees’ organizational infrastructure; a Strategic Communications project to improve messaging and expand communications capacity of field groups; a Civic Participation Initiative to help FFF grantees conduct effective Get Out the Vote (GOTV) activities; a Response to Harsh Enforcement Initiative to advocate for reforms to overly harsh immigrant enforcement policies; and programs to support DACA/DAPA outreach and application assistance. FFF also re-granted significant resources in 2013 to support public education activities on issues arising from the federal immigration reform debate. FFF’s donors include the Carnegie Corporation of New York, the Coulter Foundation, Ford Foundation, Gates Foundation, Evelyn and Walter Haas, Jr. Fund, J.M. Kaplan Fund, Open Society Foundations, JPB Foundation, the Hagedorn Foundation and Unbound Philanthropy.

4.53 As well as pooled funding, there is also the option of funders pursuing ‘aligned funding’. Examples

of this include:

a) New Beginnings Fund – This was launched quickly by Comic Relief, Paul Hamlyn Foundation, Barrow Cadbury Trust and UK Community Foundations. The fund is designed to provide support to small local groups working to welcome refugees and asylum seekers into their communities and is delivered via the UK community foundations network.

b) Migration Exchange - an informal network of independent funders, established in 2010. It

aims to improve the lives of migrants and receiving communities in the UK by informing public debate on migration and creating welcoming communities. The network is independent and non-partisan, and its activities include commissioning research to inform funders and key partners to take effective action on shared concerns; supporting bold ventures where aligning grants enables activity to take place at scale or increases the potential for success; and using the convening power of members to support, connect and strengthen good work.

c) The European Programme for Integration and Migration (EPIM), an initiative of currently 14

Partner Foundations and 11 associated Foundations, has the goal of strengthening the role played by civil society in advocating for constructive approaches to migration in Europe. This is done through grant-making, capacity development and networking.

4.54 In some cases, funders will embark on collaboration through ‘Co-produced’ initiatives and partnerships, and examples include:

a) The Child Sexual Exploitation Funders’ Alliance (CSEFA) is a group of 12 charitable funders who came together in 2012 to bring about a step change in the way child sexual

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exploitation is dealt with in the UK. Funders each made grants to organisations working in accordance with a particular model of service reform. IVAR published an evaluation of the collaboration in January 2016 19

b) PHF’s Supported Options Initiative on young undocumented migrants was developed in partnership with Unbound Philanthropy. It was set up with a clear purpose and agreed set of objectives, which included creating an ongoing space for reflection and discussion amongst grantees, stakeholders and funders. It has also allowed for the flexibility to ‘change horses’ if necessary, and has invested in a formative evaluation as part of its design.

c) PHF’s mental health initiative ‘Right Here’ was developed in partnership with the Mental Health Foundation, and blended financial inputs with knowledge and policy resources to re-design service delivery.

4.55 A more unusual form of collaboration exists as ‘pipeline funding and public social partnerships’.

This refers to funders working together explicitly, with each agreeing to fund one stage of the growth pipeline. A good example is the recent funding of Birmingham Migrants Rights Centre, spinning out of a long standing and successful Wolverhampton centre. PHF and the Barrow Cadbury Trust decided to invest at an early stage, with the hope that the Big Lottery Fund would invest at a later stage. This was not a formal partnership but an informal way of intelligently funding. However, more formal versions do exist, where statutory funding is invested once an intervention is demonstrably successful – and this is known as public social partnerships (PSPs). CBT may wish to play an active role in initiating and participating in these, as part of its next funding strategy. PSPs have been pioneered in Scotland and according to Community Links consist of the following

stages:20

a) Identify: a requirement for re-designing existing services/interventions or developing a new intervention is identified. Organisations from the third and public sectors with a shared vision for the future and the capability to commit to a PSP are identified and engaged.

b) Create: the partnership itself is created, with joint partnership goals, appropriate

governance structures and the approach to working together agreed. These are documented in a Memorandum of Understanding which defines the principles of the PSP and is signed by all partner organisations.

c) Design & Pilot: third sector and public organisations work together with people who use

services to design how interventions can be delivered and how social benefit can be maximised. These interventions are then tested for a limited time. During this period partners can adjust how the interventions are delivered to ensure outcomes are most effectively met. Throughout this process, focus is given to building an evidence base of why and how the new service delivers benefit to support discussions around service sustainability with key decision-makers.

d) Mainstreaming of Service: interventions which successfully meet the agreed outcomes and

have commitment from the public sector to provide mainstream funding will then be procured by one or more public sector partners. This typically involves the fair and transparent competitive tendering of a contract to deliver the service.

19 Funder Collaboration: Is it worth it? The Child Sexual Exploitation Funders’ Alliance January 2016 Leila Baker, Ben Cairns

20 See http://www.community-links.org/linksuk/?p=4295

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5. Conclusion 5.1 The review undertaken has highlighted a myriad of approaches to funding, and the expectation is

for the approaches used to link back to a charitable trust’s purpose, values and strategic objectives. However, it is this author’s opinion that these links are often hard to discern, with funders too often opting for familiar and long-standing ways of working, with changes to process occurring incrementally and cautiously – even if there is an evidence base available as a clear mandate for the need for change. The author came across very few examples of foundations radically changing their approach to meet new needs and issues.

5.2 Another recurring theme revealed in the research, outside of the remit of the brief, is that of

‘power’ in grant making. This broad idea is talked about in numerous ways, but the over-arching message is the same – funders must act in a way that is inclusive, transparent, rooted in dialogue with the fields they operate in, flexible, nurturing of trust and mutually accountable. This might be called ‘relationship philanthropy’, and is perhaps the antithesis of a more bureaucratic, technocratic approach. These represent a cluster of big issues, which this report references, but does not seek to resolve.

5.3 The author feels that funding processes must undergo a significant overhaul in most cases, namely

because the social challenges that foundations seek to address are becoming ever more complex, fast moving and trans-national, and in some cases more resistant to conventional responses. In addition, there is increasing need for foundations to also bring in to play (to a greater degree) their non-financial assets (including people, relationships, knowledge, independence etc.) to supplement the distribution of their monetary funding (predominantly through grant-making).

5.4 The challenge of designing funds is a technical one, but the wider challenge facing philanthropy in

the UK is one of leadership. Vision, imagination, and courage is needed if foundations are to be effective in meeting new social needs, that require long termism, substantial field knowledge, new cross sector partnerships, and investment beyond money. Leaders must take care not to reify the act of grant making, at the expense of foundations’ main purpose – to help bring about positive social change.

5.5 This report does not attempt to provide CBT with a defined list of recommendations it should

consider adopting. Instead, it hopes that the options outlined can be used as a guide to inform CBT in the design and delivery of its next funding strategy.