What can we do about so many wasted grant applications?
5th May 2010
DSC have just released new research on the number of grant applications made every year and the number of refusals. This supports their Great Giving campaign (NB: Other campaigns to encourage charitable giving are also available). The nub of the argument is that almost a million applications were received by foundations: over a third of these were ineligible - and therefore a waste of effort. But it's also worth noting that a similar number were eligible, but unsuccesful. So the first story for me is that broadly speaking two thirds of all grant applications are unsuccesful regardless of the reason.
DSC are right to highlight the waste caused by applicants failing to adhere to grant criteria. They offer sensible guidance to funders and applicants on how to minimise this. But I wonder if all this will produce is a shift in applications from the 'declined - criteria not met' to the 'declined - insufficient funds for distribution' category? To see what this future looks like, look at the stats for the UK Research Councils. They routinely don't fund the best research proposals (rated as 'alpha') because there simply isn't enough money to go around. By the way, if you think life stinks trying to get a grant from a foundation, try being an academic trying to get a grant from the ESRC: stats for their 'responsive' fund (which is open to any new proposal) are 16% - ie half the success rate for applications to foundations. But as the following example shows, lower success rates doesnt necessarily imply wasted effort.
Is there a better way to deal with the number of ineligible applications? The increasing use of prize challenges, where only the outcomes are specified, might be that way. Have a look at one of NESTA's new reports on 'mass localism'. I think this is a great piece of work. It reports on their Big Green Challenge process, essentially a way of crowdsourcing innovation and grant funding the best ideas. In this case the innovations are about CO2, but the process below could work for any grantmaking foundation (see below).
The potentially interesting lesson on process for foundations is that the only criteria specified is outcomes - many of the applicants didnt work in the field, some formed especially to apply. I cant find any rules about eligibility, so in that sense there weren't any wasted applications. Some winners found the process so useful they carried through the projects despite not being funded.
Of 350 applications, 4 were successful: so one response might be that this is a terrible solution to the problem highlighted by DSC's research. But these 4 winners shared a £1 million - i.e. they got grants of a sufficient scale to make a difference. I'm currently reading "Billions of drops in millions of buckets" by Steven Goldberg, in which he argues that philanthropy/grantmaking doesnt mend social problems. One of his opening arguments is that scale is a problem: the average grant from a top 100 grantmaker is $50,000, an amount Goldberg argues is a small proportion of a typical nonprofit's operating costs. If DSC's research is right, then the average grant from the top 2,500 foundations in the UK is roughly £7,500.
So is the real problem not too many ineligible grants, but too many eligible - and successful - grants from foundations? And can we learn from NESTA about a more effective process to deal with this? Over to you.
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Comments
As useful as the top level piece of work we've done is in highlighting the fact that ineligible applications are an issue, we've a long way to go in terms of adequately understanding and addressing both the underlying issues and the impacts relating to them.
For example, mail merging and spamming trusts with generic applications undoubtedly contributes to the levels of ineligible applications - but whatever your view on that as an approach, it works, so fundraisers are unlikely to stop doing it. Also, very few trusts outside of the top 400 have websites, so there is an over reliance on regulatory information which is often insufficient to make a quick and correct decision about funding priorities and eligibility.
The point we're trying to make with the report is that this is an issue - and that it creates an opportunity for funders and fundraisers to examine the way they do things within a specific context. Not least because we're entering a period where I think independent grantmakers are going to be even more important to the bulk of the sector.
Interesting stuff from NESTA - starts from a pool of eligible applications so it's a slightly different kettle of fish, but underpinning it are a lot of the same issues. There are a million variables in terms of how a funder could run a programme - with a finite pot of money and set objectives, the operational decisions about how many grants to make, what size they should be, what organisations should be targetted etc. are all part of the diversity of the sector - especially when looking at charitable givers. The key issue from DSC's perspective is transparency, and how clear the practical implications of those decisions are. That's what enables fundraisers/grantseekers to make the right decisions at the beginning or even before the application process so that they are applying for the best funds, and ensuring that funders are getting the best and most relevant applications for support.
Ben - interesting point about grantmakers being more important to the bulk of the sector. One of the things I hadn't considered was that upwards of 316,000 grants are awarded. That's an astounding figure given your points re eligibility: we reckon there are 170,000 'general charities' across the UK. I'll assume that T&Fs spread their largesse more broadly: if we assume 900,000 civil society organisations, most of whom are small/below the radar, that still implies every third organisation is receiving a grant.
As you point out, there's a lot of detail to this system we dont understand (the implication being that our data for policy development need to improve? That's certainly my feeling). But I suppose with these sorts of numbers its easy to see why writers such as Goldman and Dan Prives argue that philanthropy doesn't allocate resources effectively.
Whatever your view on the allocation argument (and related issues, such as the 5% disbursement rule) I think all of this suggests that trusts and foundations are going to move up the political agenda.
Cheers
Karl
Hi Karl -
We would agree, I'm sure, it's impossible to read DSC's summary findings and not think there is something problematic about the way, broadly-speaking, trusts are operating. The 'what' is wrong piece is much more subjective...
I'm concerned by the implications of a couple of the ideas here, but please clarify if you feel I've misinterpreted something...
1) re: the comment that roughly 1 in 3 organisations receives a grant. As we know many (possibly most?) organisations that receive one grant, receive several. Also, we know that most civil society organisations turn over considerably less than the average grant amount. These facts make it seem unlikely that distribution of trust money is nearly as equitable as the comment suggests.
2) re: smaller grants (average £7,500) may not be "of a sufficient scale to make a difference". This seems to imply that only larger organisations are in a position to facilitate change. As most charitable organisations (and nearly all community groups) turn-over less than £10K/year, £7,500 could be an absolutely massive sum, that could be allowing countless groups to have a far more significant impact in their particular area, than they otherwise would.
Many others have argued (rightly or wrongly) that larger organisations - due to the costs of offices, management, etc, are in fact diverting funding away from the causes where it is most needed. Vast numbers of independent community groups do not have many of these overheads and thus can use grant money to more directly remedy a situation, albeit, each in a very small area. That Goldberg could suggest that a $50,000 grant could be seen as a small part of a 'typical' organisation's operating costs, reflects a survey of a absolutely tiny percentage of potential recipients (in the UK, roughly a little over 400, of 900,000 potential organisations?), very much skewing any suggestions that follow the assertion.
The suggestion that giving fewer grants, worth more, to fewer (inevitably already-large) organisations, would increase the value of the spend, seems to discredit the innovation and impact that happens at the grassroots (with very small amounts of money), and the importance of organisations firmly rooted in their own communities.
Have I misinterpreted your opinions, or was this comment just meant to get people like me arguing about the issue? ;)
Either way, thanks for putting it out there!
Cheers,
Liam
---
@hackofalltrades
http://www.concretesolutions.org.uk
Hi Liam :-)
First and foremost, I am not of the view that vol sector funding is a zero sum game: its a dull research answer, but the 'funding ecology' is pretty complex. I'm also not of the opinion that fewer, larger grants is 'the' answer. I do think its important that we have discussions about scale, resource allocation, and how change happens.
On your well-argued points:
1) re: the comment that roughly 1 in 3 organisations receives a grant. I dont for a moment believe that the distribution of trust funding is equitable. Not should it be: it should go to where most needed. Our discussion in the abstract can shape that distribution at a policy level, but its down to individual organisations to demonstrate need. We/You should also shape that distribution by levelling the playing field when it comes to demonstrating need so that the chance of receiving funding is more equitable.
2) 2) re: smaller grants (average £7,500) may not be "of a sufficient scale to make a difference". It seems to me that there are two schools of thought here: on the one hand, those who argue that social change (whether from political pressure or innovation) only comes from the grassroots or from small organisations; and on the other hand, those who think change can actually make a difference if it is scaled up and replicated. Hence the argument of Goldberg, who celebrates the truly fantastic results of Teach For America, admires greatly its mission (one day, all children in this nation will have the opportunity to attain an excellent education), but then is frustrated that after 17 years they are only able to reach 3.3% of the 13 million 'educationally disadvantaged'.
So I wonder if the argument here should not be about are there too many small grants, but that there are simply not enough really big grants for organisations that have demonstrable outcomes? I can see why so many social entrepreneurs and philanthrocapitalists want scale - they see huge social problems. In answer to the reverse point, small grants for innovative organisations I agree make a difference - there are numerous examples - but do we have the mechanisms in palce to identify them? I dont know.
One final point: on the overhead costs, our evidence suggests that the programme ratio - ie money spent either on income generation/fundraising or admin - is broadly the same for all sizes of organisation, but the mix changes. Big charities spend more of it on fundraising; small orgns spend more on management and admin.
Cheers
Karl
Hi Karl -
That both clarifies some of my queries, and raises new ones (as is the nature of a good discussion)...
In regards to the 2 schools of thought you speak of, I think it's much more complicated than the absolutist, 'only small, local orgs can create change' OR the more-open 'it is possible big orgs can too'. I would broadly agree with you on the 2nd position, but think it's important to recognise the ways in which the grant funding system, almost across the board, is weighted in favour of larger organisations (through application forms/processes which most larger organisations are both more equipped, people-and-money-wise, and more experienced in dealing with).
Therefore, if there is a view that BOTH small, grassroots groups and larger voluntary organisations CAN facilitate change, there needs to be greater effort on the part of funders and policy makers, to redress the current imbalances, and ensure there are grants that are more accessible to groups who have less money and experience of trust fundraising to begin with - a new means of applications and evaluation, perhaps...
So while I agree that large organisations most definitely CAN facilitate change, and that small-scale ideas can be 'grown' into bigger programmes, there is a more basic issue about how most grants are allocated, which still favours big and established orgs, before judging merit or qualification...To me, this is the most fundamental question, as until it is addressed, all funding which flows from most trusts will continue to be unfairly distributed.
...Which ties into 2 of your points about both 'levelling the playing field' and wondering if we have the mechanisms in place to identify grassroots innovation... I don't think, for the most part we currently do, but think that greater efforts by a range of parties to 'level the playing field' could make a considerable difference. I'm reading a book right now called "Getting to Maybe: How the World is Changed", which, among other themes, talks about how funders can successfully identify and support new social innovations - really interesting read, if you haven't come across it!
And thanks for the info about overheads - hadn't realised that before...
Appreciate the debate!
Liam
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@hackofalltrades
http://www.concretesolutions.org.uk
All things being equal, I agree bigger organisations are more able to apply for grants: that's never going to change; and to be provocative, should it? Funders want/need organisations with enough capacity to do the heavy lifting of social change. But that shouldn't crowd out small organisations from grant funding. I've just come from a meeting on this with missionmodelsmoney, a fantastic bunch of people grappling with these issues in the arts sector. I'll blog about that later, but the message from that meeting is once again the need for intelligent funding: funding that recognises the organisations at different points in their lifecycle need different types of support; that large/medium/small/micro organisations have different capacities to generate income or apply for grants; and that we need to be able to identify - and measure - characteristics such as innovation of we are to not only route resources to where they are most needed, but also to keep giving precious resources to those organisations that are achieving the best outcomes with them. But that's another debate...and there is a large glass of elderberry wine next to my PC that needs drinking.
Thanks for the book spot by the way!