More time changing lives, less time filling out forms
THE work of charities is often characterised by another word beginning with "ch" – churn. This refers to the amount of time spent in identifying potential funding, preparing grant applications and filling in feedback forms. This "churn" eats hugely into the hours spent on a charity's central purpose – doing the job it was set up to do.
The scramble to get grants for one or two years has a massive effect on operating efficiency. "It can often mean they only do ten months' real work, then things come to a halt while they complete feedback forms and start applying for the next round of grants," says Helen Chambers, head of strategy and delivery at Inspiring Scotland, a body that takes a totally different approach to charitable giving.
Instead of the uncertainty of short-term grants, Inspiring Scotland hands out grants from a huge range of private and public investors – including, crucially, the government – over a period of seven to ten years. Yet this is no easy handout – the security of funding for up to a decade comes at a price.
Performance advisers from Inspiring Scotland keep a close eye on the charity's operations.
Ultimately, if they think a charity is struggling, funding can be withdrawn altogether. This is, however, the nuclear option – all the charities have been carefully chosen and Inspiring Scotland believes they can all move towards a set of clearly-defined goals.
Yet there is a strong sense of tough love, with challenging targets to force charities to reduce their reliance on IS over a period of time – the funding is on a sliding scale, dropping as a proportion of running costs year on year, until ending altogether.
The charity is encouraged to professionalise so its money goes further, to look at increasing income.
"It's important that there is an exit plan," says IS chief executive Andrew Muirhead. "The last thing we are trying to instil is a dependency culture."
To try to maximise impact, IS initially chose to focus on one sector – those 14- to 19-year-olds falling through the net. Formerly known as Neets, they are now labelled as the "More Choices, More Chances" group.
Originally, 300 charities spoke to IS and 172 put in formal applications. They were whittled down to 44, and 24 were selected and received their first year's funding in 2009.
"It was important the 24 worked as a portfolio," says Mr Muirhead. "We looked for a wide range of projects and good geographical spread – our aim was to make a difference in that group of young people who weren't making a good transition to adult life. Our proposition to charities was pretty simple – show us how you are working to move these young people into education, employment or training and we'll talk to you. We did not tell them how they should do it – there are lots of non-traditional hooks to engage that group for whom secondary education just doesn't work."
For Ruts (Rural and Urban Training Schemes), motorbikes are the hook. Caroline Ferguson, manager of the project in Newtongrange, Midlothian, says IS has made a huge difference.
"It has given us a stable base to grow and develop, but it has also brought in new skills," she says. "The performance advisers ask key questions – about how we are progressing, how we are planning for the next few years, and encouraging a much more business-like approach."
Ms Ferguson says this was a big challenge as Ruts created a website, developed a new brand identity, improved its database and put new programmes in place: "It has definitely improved what we do. It's much less hand-to-mouth," she says.
Yet Ruts, like all Inspiring Scotland, needs to show quick results. More than 70 per cent of its year two funding will come from IS, but this will drop to 68 per cent in year three, 55 per cent in year four – and just 15 per cent in year seven.
Inspiring Scotland grew out of the Lloyds TSB Foundation in Scotland – and from a sense too much charitable giving was short-term and fragmented, which led to inefficiency and a sense of under-achievement.
Mr Muirhead says: "I'd meet remarkable people and find they were spending 30 per cent of their time changing light bulbs and 70 per cent of their time filling in forms – that's not smart.
"Charitable donors put their business hats on and looked at how to maximise what they were putting in because they realised this was crazy. There were multiple funding sources and therefore multiple reporting systems and multiple timescales. A view started to emerge that funding should be determined by the business plan and achieving the maximum social impact."
To try to find the best model, Mr Muirhead looked at different models of "venture philanthropy" around the world and said his primary inspiration came from London, Sydney and San Francisco.
A wide range of funding is channelled through IS, from businesses, charitable trusts and foundations, individuals – and government. Rather than relying on what can descend into a scattergun approach to charitable giving, this "pooled resources" approach is both long-term and targeted.
Mr Muirhead said the involvement of government was vital. "Private money does wonderful things, but there is real frustration when government doesn't get it.
"In Scotland, the civil service has been great at understanding, supporting and encouraging what we are trying to do. We learn a lot from our projects and feed that back into public policy – it's a great circle."
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