Should charities that are struggling be given the grants because they need them the most, or should grants be given to organisations that are already running efficiently and effectively?
You may have a different view depending on where your charity is at. Whether you agree or not, the old adage applies to grant funders: no-one is going to throw good money after bad. It is organisations that are already effective that get the grants.
What are grant funders looking for from the organisations they fund?
Take The Esmee Fairbairn Foundation as an example. Esmee Fairbairn is one of the biggest funders in the UK. They have a total of over 900 active grants at any one time. They give away around £37M to 300 organisations a year. They are keen to learn from every grant they distribute. Not only are they interested in the achievement of outcomes by the grantee, they are equally interested in how well the grant funding process itself works. They are a learning organisation. They learn by having open and honest conversations with the organisations they fund, as well as internally with their own staff. They want to know how well they are doing as a funder and what they can do to improve. They have recently published theirfirst report analysing their own performance.
One of the things they have learned is that they need to be more selective in choosing which organisations to fund. They want to fund organisations that are in the best position to benefit from the funding. As the Learning Insights report says,
‘Our application assessment process is demanding and if we see an organisation is struggling, we are less likely to give them a grant.’
A key question they therefore ask is, ‘How effective is the grantee organisation?’
They look at the organisation’s governance and staff, processes and approaches, sustainability and exit strategies. Then they give it a score on a four-point scale:
- Improvement Needed
The definitions below are taken from Appendix: A framework for making effectiveness judgements, in their recent Learning Report.
The organisation has a strong team. Its work is ‘best in class’.
Its model might have been replicated, or influenced others’ work, or is changing policy at local or national level.
It is well supported by an appropriate mix of funding or is self-sustaining through revenue. Strong reserves.
The organisation is making improvements. The operational team appear to be efficient.
The quality of its work is good though perhaps not outstanding nor innovative.
It has an adequate funding plan and reserves.
The organisation is vulnerable to staff changes and its operational team (and board) shows struggle.
The quality of its work lacks consistency. It may be routine or not very receptive to change.
It has no clear exit or sustainability plan. Its funding plan is not strong and the organisation has low reserves.
The board does not appear engaged or involved. The organisation may be losing its staff.
It is unable to effectively demonstrate the impact of its work and has not used funding to build resilience.
It has not approached other funders and has minimal reserves.
How do we become an effective charity?
Esmee Fairbairn is not the only funder that wants to ensure that the funding they distribute is given to effective organisations. It applies to all funders. The research that has been undertaken and the criteria they have developed can help you become a more effective charity that will appeal to all funders.
Clearly, charities who can demonstrate that they meet the ‘Excellent’ or ‘Good’ criteria will stand the best chance of funding. The charities that meet the ‘Improvements Needed’ or ‘Poor’ categories stand very little, if any, chance of funding.
Becoming an effective organisation is something your board needs to tackle. The board could take The Esmee Fairbairn Foundation criteria and assess your organisation against it. Where you match the criteria in the ‘Excellent’ and ‘Good’ categories, document the evidence to prove it. Where you match the criteria in the ‘Improvements Needed’ and ‘Poor’ categories, document the barriers and solutions. Then develop an action plan to move your organisation into the ‘Excellent’ category. Doing this will help you move towards becoming an effective organisation. And being an effective organisation will put your organisation in the best possible position to attract grant funding.