Venturing into the unknown: emerging models of high

engagement funding

Ben Cairns and Ravinol Chambers

30th April 2009

Presentation outline

Context Gaps in knowledge Findings from the grants plus study Findings from the venture philanthropy

study Discussion: critical success factors for

high engagement funding

Context

Shifts in the method of funding voluntary organisations by public agencies: widespread emphasis on ‘outcomes’, ‘effectiveness’ and ‘performance improvement’

Similar moves within foundations to look beyond grants and to build capacity within organisations themselves

Based on an emerging view that simply handing out money ‘like charitable ATMs’ would not achieve lasting or meaningful results

Combined with a desire to ensure that the recipients of foundations’ financial support have the organisational capacity and strength to deliver services effectively

Context

Influence of ‘venture philanthropy’:

• Building organisational and management infrastructure

• Grant finance over an extended period of time

• Joint problem-solving, partnership approach

• Benchmarks of performance or measurable social outcomes to demonstrate social return on investment

Alternative descriptions/approaches: ‘high engagement philanthropy’, ‘grants plus’, ‘capacity building’

This paper uses ‘high engagement funding’ to describe the field

Summary of the key elements of high engagement funding

Core features Highly engaged partnership approach

Extended financial investment in core costs

Extended capacity building support

Strong focus on outcomes and impact

Specialist support (eg. on strategy, finances and fundraising, marketing, governance)

Knowledge transfer and networking

Focus on organisational sustainability

Benefits Increasedtransparencyin relationship

Security to make longer term plans

Increasedhonesty aboutproblem-solvingneedsand process

Increasedconfidenceand evidenceof improvedorganisationalperformance

Increasedorganisationalcapacity andaccess toresourcesotherwisebeyond reach

Access to new networks, peer support and experience

Increasedorganisationalsecurity andability torespond tochange

Challenges OrganisationalstressGoalalignment

Mission driftPower dynamic

Organisationalreadiness

Ability tomeasureImpactMission drift

StandardisationCultural fit

Co-operation and sharing

Exitstrategies

Gaps in knowledge

Shortage of in-depth case studies and other empirical data (Van Slyke and Newman, 2006)

Need for more stories to emerge from both sides (funder and grantee) to facilitate two way learning (Grenier, 2006)

Need for research that addresses how ‘venture grant making’ is experienced by nonprofits (Connolly and York, 2003; Letts and Ryan, 2003)

Need for more research to help grant makers prepare for providing assistance beyond the grant (Buteau et al, 2008; Leat and Kumar, 2006),

The grants plus study

A study of a pilot ‘grants plus’ programme by a UK charitable foundation, ‘the Trust’ in which small community-based organisations working with older people and in receipt of grant support from The Trust were also provided with free, bespoke capacity building, provided by one of The Trust’s team of freelance consultants

16 case studies of beneficiary organisations

Interviews with grants plus consultants and Trust staff

Findings i

Purpose of the programme for the Trust: ‘we don’t capacity build them to be bigger, but to do what they are doing more effectively, not do something different’

Purpose of applying to the programme for grantees: motivated more by the grant than the ‘plus’: ‘the basic reason for applying was to survive – simple as that’

Perceived benefits: systems and policies; forward thinking and planning: ‘groups liked beginning to see things from a different angle – more lateral thinking’; ‘if they went on a training course, they wouldn’t implement the learning. They needed someone to work with them, identify the issues and help them with implementation’

Findings ii

Perceived difficulties with the programme:

understanding the meaning and purpose of ‘capacity building’ and the role of consultants: ‘we never knew what it meant and what would happen’

the focus of consultants’ interventions: ‘she had no feel for what we do and how we do it; none of what she offered seemed to apply to us, the language made no sense to what we were doing’

lack of capacity to engage: ‘some just can’t cope with capacity building; they just want to hire a minibus and have outings... how do you impose capacity building on an organisation that is so informally structured?’

The venture philanthropy study

A study of the relationship and experiences of an established UK VP funder and five of its recipient charities

Additional interviews were carried out with an Irish VP funder and 5 recipient charities, an international VP funder and 2 UK VP related organisations

Interviews were with charity CEOs and VP funder CEOs or

Investment Directors

Findings i

VP funders selection criteria: VP orgs do not accept unsolicited proposals, ‘It is very difficult to go

looking for VP’ Usually have a specific area of focus or interest Looking for organisations with a successful track record, ready to scale

up, must be distinct, with strong leadership/CEO; no start-ups.

Charities understanding of the funding relationship: The value beyond the money was not clear at first: ‘We almost fell out in

the beginning. The funder seemed overly demanding for the small amount of financial support and it was difficult to see the value’… ‘About half way through due diligence we understood the package better and started to see beyond the money’

Findings ii

Perceived benefits:

Long term funding enabling strategic planning Capacity building, training, infrastructure and staff development: ‘it is

something we would have wanted but not been able to pay for’ Tremendous support and commitment from funder; a sense of partnership:

‘very empowering’; ‘they won’t let you fail’ Learning new disciplines, access to new networks: ‘benefits will be better

than anything you thought they could be’ Increased confidence and profile to attract new funding: ‘felt knock on effect’

and ‘stamp of approval’

Findings iii

Perceived challenges:

Relationship building and developing trust Coping with change: ‘VP is about change, there are easier ways to get

money’ Remaining focused on mission: ‘it is important for the charity to drive the

direction’ Perceived superiority of the business model: ‘it felt at times that business

models were being forced on a sector where there are different sensitivities…consultants mismatched, not having a good understanding of the sector’

Difficulties around impact: ‘bigger is not always better’ Exit and sustainability: ‘still remain difficult’

Discussion: critical success factors for high engagement funding (i)

Design Organisational willingness and readiness: importance of voluntary participation -

some organisations do not need it

A critical mass of people (paid staff and trustees) able to engage in discussions and debates about strategy and planning throughout the process

Importance of correct match from outset in terms of focus, goals, interest and expectations

Need to manage staff expectations and plan for change in advance

Delivery Collaborative assessment and design between funder/grantee and capacity

building agent: individually negotiated packages of support

Coordination and supervision of capacity building agents

Culturally attuned and sensitive delivery of capacity building support

Allowing regular time for reflection on how the relationship is going and what is best at each stage for the organisation

Specific support for the implementation of change

Discussion: critical success factors for high engagement funding (ii)

Dynamic

Importance of correct match from outset in terms of focus, goals, interest and expectations

Need for more two-way learning to promote respect, trust and understanding

Being realistic about exit and planning for it from the beginning

Importance of findings ways to demonstrate impact other than just scaling up

Need to educate funders and donors that change takes time in the third sector

It is important that models are adapted and are not prescriptive; need to see beyond business models and recognise the different processes and goals of organisations active in civil society