Who to fund is full of tough choices

This blog first appeared on www.thirdsector.co.uk on 12th September 2016.

The decision-making meeting for funders is typically difficult, writes our Chief Executive Paul Streets.

Paul Streets
Our Chief Executive, Paul Streets

At the Foundation, we make grants three times a year, and there’s always more worthwhile work to fund than money in the pot. Yet far from feeling bleak, the decision-making days are uplifting, because they’re about more than sums. The fierce board table discussions among our staff connected with charities on the frontline day in, day out reveal a great deal about the state of the sector, and why local charities remain so worth fighting for.

Far from feeling bleak, the decision-making days are uplifting, because they’re about more than sums.”

Our latest decision-making meeting was typically difficult. Long after we had sifted out ineligible charities, we were left with 106 applications to consider, which between them needed £6,274,492. We had just £3,551,262.

As our regional staff presented their strongest charities, it was clear that they were already emotionally invested in the difference funding could make. Having visited, spoken with staff and met people each charity could help, they fought hard against their critical peers, aware all the while that every win was a loss for another charity somewhere else.

They fought hard against their critical peers, aware all the while that every win was a loss for another charity somewhere else.”

The 106 applications reflect the frontline of disadvantage today: helping women in abusive relationships; refugees; young people leaving care; people escaping mental health, drugs, alcohol, homelessness, prison and more. What’s less obvious at first glance, but abundantly clear from our discussions, is that charities come to us to fund an issue but it’s never siloed in that way. One problem layers on another and another.  As do their responses. But it’s this devotion and depth of intervention that makes small and local charities unique, and grant-making decision days so motivating.

It’s this devotion and depth of intervention that makes small and local charities unique, and grant-making decision days so motivating.”

They bring into focus a world that can look bleak at a distance; illuminating a rich picture of determination to tackle the intractable.

Fighting against the tide of homelessness are small charities such as Emmaus North East, which has just two staff and 20 volunteers in Gateshead. It is responding to homelessness levels that are twice the national average and has seen the steepest increase in deprivation in the country in the past five years.

They are charities such as Kent Refugee Action Network in Dover, which offers help to young unaccompanied asylum seekers and whose numbers have increased by 250 per cent in the last year, and organisations such as Action Foundation in Newcastle, Gateshead and Sunderland, which supports those given refugee status.

Our grants are also supporting new and emerging issues. For example, in Kensington and Chelsea, London, we’re helping the Cara Trust to support the first generation of older people living with HIV find suitable housing. And we’re funding innovative approaches like that of Recovery Cymru, which launched a pioneering addiction aftercare programme: the first of its kind in the UK.

So, what does this snapshot tell us about the sector? Isn’t this a typical grant application portfolio? Maybe – but perhaps that’s the point. Every grant-making day leaves us certain that small and local charities remain at the cutting edge of tackling disadvantage.

Every grant-making day leaves us certain that small and local charities remain at the cutting edge of tackling disadvantage.”

We’re consistently presented with charities who, because they’re agile, can respond to socio-economic issues as they arise. Who, because they’re community focused, are the first port of call for people in need, and who stay with them even when other service providers have given up on them.

Even as they fight harder for funding in the face of rising demand and massively reducing income from local and central government, they continue to provide hope, for those they reach and for society. As one door closes, they find another; bringing fresh initiatives and energy to generate new income and provide for those they serve.

That’s why when I’m asked whether it matters whether the smallest are swallowed up by larger counterparts my answer remains resolutely in the affirmative.

It’s a privilege to support some, and heart-rending we can’t support all. We awarded 58 grants totalling more than £3.7m. We went over budget. Wouldn’t you?

Governance crisis? What governance crisis?

This blog first appeared on www.thirdsector.co.uk on 15th August 2016.

Our Chief Executive, Paul Streets OBE, considers the issue of governance from the perspective of small and medium-sized charities. 

Charities face different governance challenges depending on their size, writes the chief executive of the Lloyds Bank Foundation

At the recent launch of Charity Futures, I’d say Sir Stephen Bubb, the head of the new governance and leadership programme, chose the right title by calling his lecture Charity Governance in Crisis.

But from my conversations with small charities, I’d argue that much of the debate about governance risks finding the wrong answer to the wrong question because it starts from the wrong place.

Variously cited as driven by Kids Company, fundraising problems and commerciality, the answers lie not with the unified board structures and trustee payment discussed at the lecture, but common sense, a decent ethical framework and a long-term approach towards supporter relations.

Before we fix the many for the issues of the few, let’s tease out a taxonomy for trustees – as helpfully suggested in response to Bubb’s challenge by Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations.

First for the many: the 97 per cent of charities that are small and largely local. Operating at the margins, they often depend on a small number of depleting income streams, including a 40 per cent decrease in government funding between 2008 and 2013 and face rising demand for their services.

With few staff they need great trustees to help navigate this challenging environment and spread the load, sometimes shouldering responsibilities on HR, income, strategy, communications and more. But volunteering is at their core and payment would be completely counter to their ethos. Last month, I visited Rainbow Haven, which works with refugees in Salford, and I found the treasurer doing the books – before going out to break up cardboard boxes for the recycling bin. The model may look curious, even risky, to those observing the purist executive/non-executive boundaries in larger charities but – at its best – it works.

But we also know – from the number that close – small charities carry the greatest governance risk.

The second group are the hundreds of household charity names funded largely by public donations such as Christian AidWWFMind and MS Society. They don’t have a governance problem that a sensible approach to long-term supporter value can’t, or isn’t, fixing. With their brand and reach, most attract great trustees with that perfect mix of voluntary, public and private sector experience to complement the chief executive and senior executives.

The third group is the small number of large charities that have experienced a 40 per cent increase in government funding between 2008 and 2013, deriving most of their income from statutory sources. Perhaps more akin to housing associations, industrial and provident societies or non-departmental public bodies (NDPB), these large organisations could retain their public service ethos without being charities.

Perhaps the right question for them is should they be charities at all?

As recipients of large public contracts for public services, we might all benefit if they had commercial or public body governance models. When I was chief executive of an NDPB, I was the accountable officer in law and felt the fierce scrutiny of parliamentary select committees that might seem appropriate for organisations similarly in receipt of significant amounts of public money.

Setting them aside would leave the system of trustee and charity governance unsullied for the vast majority of charities. And leave us to focus on the real charity governance crisis: the shortage of trustees.

We need more than one million trustees willing and able to be small charity trustees. But without the caché associated with big names, trustees with the right skills can be hard to find, recruit and retain. As Yvonne Hope, head of Barnabus, a charity working with homeless men in Manchester, told me: “We’re not attractive to people who don’t know us. It’s much harder to love our guys – they’re broken.”

And yet this is a problem sector leaders and the Charity Commission risk contributing to by appearing to coerce and chastise, making trusteeship sound even more onerous. Instead we should be praising, promoting, supporting and honouring the selfless unglamorous public service of the small charity trustee.

This crisis is chronic – not acute. It’s tough and a hard grind. A bit like being a trustee of a small charity.

Paul Streets is the chief executive of the Lloyds Bank Foundation. @PaulStreets_, @LBFEW

Demystifying Grant-Making

Our Grant Manager Emma Beeston explains the steps we have taken to redress the power balance between funders and those seeking funding by working in partnership with the small and medium-sized charities we support.

There is always a power imbalance between the one with the money – the funder, and those seeking funding. At Lloyds Bank Foundation we have  been taking steps to redress this balance and do more to work in partnership with the small and medium-sized charities we support.

Already we have involved grantees in developing our strategy and sought their views to inform our policy work and national programmes. We do this because we want to make sure we’re doing what our grantees want and need. Through what we learned in 2015 from the 800 charities that contributed to our Expert Yet Undervalued and On The Front Line report about the risks and pressures they face, we’ve taken action to champion their role in the voluntary sector. We want to ensure that independent funders and government understand their responsibility to step-up and provide better support because our grantees told us this was important.

Our latest step has been to include grantees in our decision making. This summer we recruited four of our grantees as voluntary Grant Making Advisors and we’re delighted to welcome them in their new roles:

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Peter Laing Chief Executive of Bonny Downs Community Association
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Mir Juma Chief Executive of Emmaus Leicester & Rutland
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Alison Goddard Chief Executive of Lincolnshire Action Trust
Alex Fairweather
Alex Fairweather, Chief Executive of Greater Manchester Youth Network

 

 

 

 

 

 

 

 

Our Grant Making Advisors will review  applications considered at our Peer Review meetings three times a year, and contribute their opinions on the merits of each application. They’ll also play an active role as observers and advisors at the final decision making stage of Grant Panel meetings – where decisions as to which applications will be funded from the budget available are made.

Our hope is that they will:

  • Increase the transparency of our grant-making process and strengthen our partnerships with grantees
  • Provide us with feedback and challenge us to make sure we’re best serving small and medium-sized charities
  • Add the perspective of small and medium-sized charities to our decision-making

And we hope the Grant Making Advisors will get something from their involvement too.  They told us they wanted to do it because:

“the idea of utilising peer advisors within the grant making process to give a different perspective to the process, appealed to me”

“to see at close quarters the other side of the equation, i.e. the processes by which grant applications are considered, discussed, interrogated, and ultimately determined”

It is early days in this new venture. We expect that there will be learning and change along the way as we get used to different dynamics and viewpoints within our grant making process. So far though, our new approach is looking promising. This is what our Grant Making Advisors made of our  Peer Review and Grant Panel experiences so far – we can’t argue with their first impressions:

“At some level I had expected grant giving to be the easier side of the coin, I mean how hard can it be to give away money? Well, how wrong I was! The sheer volume of applications was daunting, and all with real merit.”

“Each application is thoroughly considered at a number of stages and by a number of people.  With the volume of applications received, I would have assumed the process was not so involved or so in-depth.”

So, how will Grant Making Advisors change our approach to Grant Making? Watch this space as the initiative evolves – we’ll be sure to share more about our learning. But the implications are bigger than this alone – it’s about drawing on the knowledge and experience of our grantees to shape what we do as a Foundation, building the partnership relationship we strive for.

For now, what we already know is that if feels good to be taking the mystery out of a grant-making process that can seem like a ‘game of chance’ from an applicant’s point of view. We know that with charities, very much like the ones we’re assessing, joining us around the table, we’ll be forced never to look on what might be considered ‘standard’ service delivery as anything less than the ground-breaking and life-changing work it truly is.

Follow @emmabeeston01

 

 

 

Commissioning – and Making A Success of It…

opinions

If we did a Word Cloud of responses when we talk to small and medium-sized charities about commissioning, no doubt ‘complex’ and ‘unfair’ would feature pretty boldly. Not just because they’re competing for funding in an increasingly tough market but because they’re up against large organisations in commissioning systems that don’t just favour scale, but which actively thwart small and local.

As our Chief Executive Paul Streets outlined in his blog for Third Sector earlier this week, with a new Prime Minister in place who is charged with the task of delivering the referendum mandate of ‘taking back control’, maybe now is the time to call for taking back control of commissioning systems that leave smaller charities out in the cold.

Maybe now is the time to call for taking back control of commissioning systems that leave smaller charities out in the cold.”

With change afoot, is there an opportunity to shape proportionate and effective processes so individuals can access the services they need?

Last year our charities told us that commissioning was one of their greatest challenges. We are now asking them to share evidence of what specifically makes it unfair and complex. Gathering these real life examples helps get government to listen and identifies what needs changing.

Already some common themes are emerging from our survey:

  • A lack of transparency at all stages of commissioning processes
  • Excessive financial and other requirements with ever larger contracts and ‘one-size fits no-one’ processes
  • A lack of understanding from commissioners about what services are actually needed.

Sound familiar? This list is by no means exhaustive. There seems to be no limit to the extent of poor practice, whether it is marking bidders down for questioning a poor contract, changing the goalposts after tenders have already been submitted, demanding services merge as part of the contract or tendering for services at a value that wouldn’t even cover the mileage incurred in delivering the service, let alone paying for the worker or overheads.

Inevitably, the end result of this is often a reduction in access to quality services.

Yes, we’re in an increasingly difficult financial situation but that means it’s more important than ever to get the highest value out of each and every public pound. And it can’t be done without commissioning the right services. For starters, that means making sure commissioning is:

  • based on a thorough needs assessment and understanding, including consulting with existing charities
  • open and honest with timely and effective communications
  • proportionate and appropriate to the need and service

No doubt, if you’re reading this, you know it already. The small and medium-sized charity sector is by and large singing from the same hymn sheet. Now it’s about getting the government to join in and put proposed solutions into practice. As Kathy Evans from Children England has said, we need to build processes which work for the little guys and then add complexity as you climb up the tree, not introduce complex systems for all and trying to manipulate them to work for smaller organisations.

Time and time again we hear how bigger organisations are writing the rule book that smaller charities have no choice but to follow”

Time and time again we hear how bigger organisations, sadly including large charities, are writing the rule book that smaller charities have no choice but to follow, if they deign to communicate at all. Commissioning processes not only allow but encourage this. It’s not limited to bid candy either. There are examples of big organisations demanding that smaller charities don’t negotiate with other bidders, only to leave them out of their final bid, and sub-contracting processes that appear never to have heard of the words ‘accountable’ or ‘transparent’ – all in the name of information being ‘commercially sensitive’ despite its irrelevance. There may be plenty of rhetoric about working with smaller charities but it hasn’t translated into practice. This has to change.

That’s why we’ll use the evidence we gather in our survey to compile an anonymous report that allows charities to speak up and share their experiences without fear of reprisals from commissioners. We’ll take the report to Ministers and officials in Government to bolster the conversations we’ve been having on the need to reform commissioning. We know they’re considering how they might “bust through the barriers” to improve commissioning for smaller charities. We want to be able to cite real life examples of poor, widespread practice and demonstrate how it could be better. If we can find them, we’d also like to include examples of good commissioning, where processes haven’t hindered organisations with a lower turnover. So far, these good examples are harder to find!

If commissioning issues have affected you, now’s your chance to tell us and help us build the case for change. The evidence we’ve collected so far is a testament to the fact that the need for this work is unquestionable. And the bigger the evidence base, the greater impact it will have when it lands, so thanks for taking the time to add your voice to the discussion.

Time to tell the government what we want

no 10

This blog first appeared on www.thirdsector.co.uk on 18th July 2016.

Our Chief Executive, Paul Streets OBE, outlines what we should be asking from the new government.

For years the voluntary sector has been on the back foot, reacting to a narrative set by others – from the soundbite over the substance of big society to fat-cat pay levels, fundraising and failing governance. In the meantime, David Cameron talked about social reform but delivered it on terms set by George Osborne, Iain Duncan Smith and Chris Grayling. Austerity; the work programme; universal credit; transforming rehabilitation – all were disasters for the disadvantaged. The mismatch between rhetoric and reality would have done George Orwell proud.

The mismatch between rhetoric and reality would have done George Orwell proud”.

But when Theresa May, our new Prime Minister, says she means to fight the “burning
injustice” of being born poor, black or working class, it is time to get on the front foot to frame a narrative we know only too well.

Let’s start by restoring some pride and with some facts that establish our credentials. The voluntary sector in the UK is made up of predominately small and local charities – there
are 28 for every large one. These are run mostly by scrawny, underfed alley cats, living life
on the front line of disadvantage or need, picking up the pieces pre-Brexit society has
ignored for years. There are 175,000 small local charities reaching millions who face
disadvantage, disability, prejudice, poor health, terminal illness, old age and isolation. They are at the heart of burning injustice: society’s Samaritans, crossing divided roads.

There are 175,000 small local charities reaching millions…society’s Samaritans, crossing divided roads.”

When Philip Hammond, the new Chancellor of the Exchequer, signals he will “scale back on austerity”, we need to be at the table showing how we can help May unite her divided Britain.

And as we reframe Britain internationally, let’s celebrate the fantastic large charities woven into the fabric of our society. They embody the best of Britain at a time when we fear for the worst. Imagine a world with no Amnesty International, Cancer Research UK, Oxfam, RNIB or RNLI, to name a few. Massively successful, respected brands run by leaders who embody public service values over private wealth – earning a small fraction of the salary of a FTSE chief executive.

Our sector is respected and copied worldwide – it is a great British export. So when Boris
Johnson, the new Foreign Secretary, talks about Britain with a “new global identity”, we’re a part of that, something to be proud of when we might otherwise cringe on the world stage. We are a sector committed to the disadvantaged, to internationalism, refugees, development and human rights, funding worldleading research and collaborating globally. We demonstrate how public service meets voluntary action for the common good. We are a
model for western economies struggling with exactly this in the face of low growth,
globalisation and declining state coffers.

So what should we ask for?

  1. Place us at the heart of policy as a partner. We are part of the solution, not a problem to be overregulated and chastised.
  2. Divided Britain won’t be healed by siloed, standardised, vertically commissioned services. Let us help think through how to reach people as they live, in the communities they live in, rather than through the services by which they are so often defined.
  3. Recognise that we’re mostly small and we’re local. Ninety-seven per cent of charities have incomes of less than £1m. That’s why we work and why we can reach our divided nation and you can’t. Support us to stay that way through grants that trust us to know it better than you will ever do, rather than contracts suited to Serco and G4S.
  4. Think longer term. Reconsider Treasury rules that focus on singular outcomes and short-term fixes. The divisions in society are deep – without a funded focus on prevention, we’ll never sort it.

Of course, there’ll be those who say I’m clutching at straws. Perhaps – but let’s work with
what we have. May is a Prime Minister who has prioritised tackling violence against women and girls and modern slavery, and who has challenged the police on how they address domestic violence. I gather she wiped clear all of her Home Office diary commitments on appointment as PM – except meetings on domestic abuse.

Let’s make sure we’re still in the diary while she’s in No 10.

Meetings with remarkable people

Our Chief Executive, Paul Streets argues that we need to be proud of the achievements of those leading our smaller charities.

This blog first appeared in Third Sector on 20th June 2016

I’ve led four national organisations but my meetings with countless chief executives of the smaller charities we fund have led me to conclude that overseeing a local charity is something else.

Chief executives of large charities may be pre-occupied with questions of how to maintain contracts and fundraising growth in a post-Olive Cooke world but, as austerity bites, small charity chief executives have seen income from local and central government halve, but demand rise and gets more complex.

Whereas the chief executives of larger organisations are well paid and are supported by a suite of directors, leaders of small charities need to be involved in all the roles and multi-task in ways that would challenge Ganesh. And the pay is poor.

It is surprising anyone does it.

And yet most of the small charity leaders I meet are unfailingly enthusiastic, dedicated and upbeat:

There are the innovators with ambition such as Suzanne Knipe at Norton Hall Children and Family Centre, working in Birmingham to revamp an old community centre and regenerate a run-down park. Or Matt Bell at Exeter Community Initiatives whose core work with homeless people has spawned community spin-offs.

There are the strategists driving cross-sector collaborations such as Carole Dixon at the Education Futures Trust in Hastings, who is engaging local leaders to support young people and persuading cash-strapped schools to fund it. Or Monica Stark atLeicestershire Cares, who is engaging local business to employ the previously unemployable.

We have passionate advocates with an inner fervour that wouldn’t look out of place in religious orders, such as Joanna Kennedy, an ex-commercial lawyer who is chief executive at Zacchaeus 2000, which is fighting poverty cheek by jowl with prosperity in West London. Or Becky Rogerson at My Sister’s Place, providing one-stop domestic abuse services across Middlesbrough.

Then there are the entrepreneurial phoenixes who see opportunities where many would see obstacles. These include Kim Shutler-Jones of the mental health charity The Cellar Trust near Bradford, which is helping to fund its services through its café, conference facilities and wood workshop. Or Tracy Freeman, who is tackling homelessness at First Stop Darlington through the creation of a bike shop.

These are remarkable people in anyone’s book – and they do all this without the caché or benefits associated with running high-profile national organisations.

Most have rich life experience and many have been there for years. Often they’re first-time chief executives stepping up from the frontline, or were the founders, making them instinctive rather than learned in how they lead.

The determination and sheer bloody mindedness that drives them to do these tough roles may not always make them easy to deal with, but it does mean they are prepared to move heaven and earth to make a difference for the people who come through their doors.

You won’t see many of them at sector shindigs in Whitehall or Westminster, but lots of them exist. We fund nearly 1,000 of their organisations but you could multiple that by 46 if we covered all charities with incomes of between £25,000 to £1m a year.

They, and what they do, are what we should be most proud of as a sector.

These great leaders I meet have traits other sectors would give their eye teeth for: a commitment to cause over contract; an inner-reward system geared to sustainable results over short-term fixes; and a proximity to customers that public and private organisations can’t get close to, even with complicated user-engagement mechanisms and expensive focus groups.

It is no coincidence that most of the people I’ve referred to are women – as are the majority who lead the 97 per cent of charities with incomes of under £1m a year. So while public and private sectors endlessly set unmet targets for diversity, those leading our small and medium-sized charities are striding ahead.

Read into this what you will, but it is something else we should shout about as a sector if only we stopped looking over other shoulders and started to look over our own.

Has the behaviour of large charities damaged the whole sector?

Our Chief Executive, Paul Streets participated in NPC’s morning #CharityTrust debate about the consequences of recent high-profile charity scandals on Wednesday 15th June. Here he outlines his main arguments. 

This post first appeared in NPC’s blog on 15th June 2016. You can follow NPC’s Storify of the event here.

Of the 180,000 charities in England and Wales, around 175,000 (97%) have an income under £1m. Just 621 have an income of over £10m. So for every large charity like Cancer Research or Oxfam, there are 28 smaller ones that are far more representative of the sector.

Many of these small charities are so focused on the frontline you probably haven’t heard of them. This is in contrast to their larger counterparts whose fundraising activities literally bring them to every high street and household—and which, rightly or wrongly, have generated a lot of newspaper headlines lately. Yet there’s a danger that these issues and concerns around big ‘charity’ have come to define and indeed tarnish the public perception of all charities.

Small charities are being squeezed

As a funder of smaller charities (under £1m), we know they’re different, and we know they’re up against it. Our day to day experience and recent research has shown:

  • demand is rising and getting more complex, while commissioning is failing them and those they serve;
  • they have been hardest hit by drops in central and local government income since 2008/2009, with a massive shift from grants to contracts. Government income to the largest charities has risen by almost half, for those under £1m it has fallen by almost half.

…but sometimes it’s larger charities doing the squeezing

No organisation has a right to exist. So would it matter if larger organisations took over? If they provided long-term support that thoroughly addressed multiple disadvantage, it wouldn’t. But too often, they don’t. Too often larger organisations see success less in purpose, mission and values but in size, volume and market share. And they can be ruthless in achieving it; including putting small specialist charities out of business or co-opting them as bid candy to entice commissioners, then passing only the hardest cases down the supply chain, without the funding to match.

Their input can be superficial and short-lived. Time and again we’ve heard of larger charities poaching contracts from established and expert smaller charities, and then when their contract ends and they move on, the now weakened smaller provider has to pick up the pieces.

Small charities have a lot to offer

By contrast, small and local charities are typically:

  1. Deeply embedded in communities, with local staff and volunteers developing trusted relationships, reaching those others can’t
  2. Cost effective, keeping overheads low and adapting staff to volunteer ratios as income fluctuates
  3. Responsive to the climate, identifying new needs and opportunities, raising and stretching resources and reducing costs (though not without impact on the services they offer)

…and larger charities can help

The question around small and large charities shouldn’t be either/or. We can be proud of the many fantastic large charities that help to shape a better UK and world. And when small and large organisations work together, likeCatch 22 and Only Connect, they can strengthen each other. Similarly, where commissioners understand and address the issues facing smaller charities, they can ensure local needs are properly met, as Imkaan and Women’s Aid have supported London’s Tri-borough of councils to do.

We must stay focused and not turn against each other

But while the sector and those that represent it are focusing on the headline-grabbing issues that don’t actually affect the vast majority, it deflects from the real scandal; that Government, centrally and locally is withdrawing funds from smaller charities lock, stock and barrel.

If the voluntary sector is really about championing those most at risk to those with power and resources, it’s surely time to focus our efforts on the threats affecting the 97% of the sector. And that needs to include how larger charities themselves behave, compete and collaborate. If we don’t, the tab will be picked up by the poorest and most disadvantaged in our society. And the damage won’t be easily reversed.