A failure of judgement

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The National Audit Office presents its recommendations for changes to Community Fund procedures

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It was the Community Fund that invited the National Audit Office to review its handling of its two awards to the National Coalition of Anti-Deportation Campaigns, in the wake of last autumn’s media furore.

The NAO interviewed current (but not former) CF staff and board members, and NCADC representatives. The NAO’s main aim was not to challenge the CF’s decisions but to try and learn lessons both for the CF and other funders. The report makes 13 recommendations for change. It is now up to the parliamentary Public Accounts Committee (the NAO’s political master) to decide whether it wants to hold hearings to pursue this report any further. The CF says it will ‘act upon all of the recommendations’ and that it has already put many changes in place.

NAO findings
In essence the report identifies two types of failure: judgement and competence. It is far more concerned with the first category than the second. The NAO found the Community Fund’s decision-making methods overly mechanistic – so that they weren’t able to take all appropriate factors into account – and it found their monitoring process to be too crude to be of much value. Both deficiencies could have weakened the judgements the fund made about whether to back (and continue to back) projects. The NAO also identified several shortcomings in the grant-handling process which look to be the result of incompetence. In short, the NAO confirmed that the CF had acted correctly within its own rules and procedures, but drew attention to several crucial weaknesses in those rules and procedures. 

NAO recommendations
A: Grant application and assessment
1. All future grant application assessments should review both the objects of the applicant body and the contextual framework of applicant activities within which it pursues the achievement of those objectives. Such policy should be communicated to all grant officers through additional training and a revision of the current grant procedures manual.

2. The Community Fund needs to issue guidance on political and doctrinaire activity as soon as possible to both applicants and grant officers and to support the launch with a programme of training for grant officers.

3. The Community Fund should develop a policy that makes the requirement to review an applicant’s website compulsory for all grant assessment reviews. Such a policy could be an important element in assessing the existence of political and doctrinaire activity on behalf of an applicant, and should be communicated to all grant officers through additional training and a revision of the current grant procedures manual.

4. The Community Fund should ensure that sufficient prominence is given to the continuing financial viability of applicant bodies as part of the grant assessment process, particularly where the application is for a second grant.

5. In performing their application assessments in respect of organisations with a strong campaigning objective, the Community Fund should encourage staff to take account of the wider impact of such campaigning work, together with the relevance of that campaigning activity to the management of the applicant.

6. Committee members should be encouraged to exercise appropriate judgement in reviewing and approving grant awards, and not over-rely on any points system. The Community Fund should continue to stress the importance of looking beyond the numerical assessment of an application, particularly as it explores alternative methods of application assessment and review to replace the current points system.

7. The Community Fund, as part of the process of developing an alternative to the current points system of assessment and review, should perform a fundamental review of the risk profiling that currently informs its assessment, review and award criteria. This should involve a move away from the narrow definition of financial and objective risk currently employed, to consider the wider context of risk that the applicant operates within, including stakeholder influences, and to consider more overtly the risks to the Community Fund itself.

B. Grant review and approval
8. While the decision to accept or decline Leading Counsel recommendation is one that the Community Fund itself must take, where additional terms and conditions are offered for discussion and acceptance, any proposals and further definition of such terms and conditions should be formally documented and presented to the applicant body at the time of acceptance.

Where this is not the case, this should be made clear to the body concerned and a process of formal discussion entered into. Further, the Community Fund should consider the impact that such circumstances may have on any related press release, making it clear that where relevant, the award decision is dependent upon further negotiation.

9. The Community Fund should consider drafting formal guidance for staff as to what is expected in dealing with threatening correspondence and calls. In certain cases, standard responses may be appropriate and guidance should also take account of any legal implications, including the requirement to refer certain correspondence to the police.

C. Grant monitoring and end of grant review 
10. In performing its fundamental review of the risk profiling that currently informs its assessment, review and award criteria, the Community Fund should ensure that this wider context of risk also impacts upon the risk weightings it employs to determine which grants are subject to in-grant monitoring procedures. By doing this it should achieve consistency between its award and monitoring decisions, and ensure that grant officer time is targeted at those grants considered to be of high risk, not just from a narrow financial objective, but in terms of the wider context of risk that the applicant operates within.

11. The Community Fund should move away from determining grant assessment visits on the basis of purely financial criteria, and as part of the move towards a more developed risk analysis, determine the need for assessment visits within this wider context of assessment.

12. In performing its review of risk profiling to inform grant assessment and visit decisions, the Community Fund should also apply the resultant risk weightings to determine which grants are subject to more robust corroboration and review of in-grant self assessment submissions. Any decisions made in this area of grant officer activity should also take full account of the current balance of their work between grant assessment and grant review and the potential change in emphasis that may be occasioned by a move to the Investor model of grant funding.

13. The Community Fund should review the general standard of end-of-grant-review reports and ensure that they provide sufficient context in respect of the grant and applicant body. This will be increasingly important as it moves towards an Investor model of grant award with its emphasis on grant outcomes. In addition, the Community Fund should also consider the need to formalise monitoring officer and assessment officer handover meetings, and with the move to the Investor model, review whether the current model of grant officer monitoring and assessment segregation remains suitable.

‘Community Fund: review of grants made to the National Coalition of Anti-Deportation Campaigns’, NAO Report HC519, 2nd April 2003, can be downloaded (pdf) from www.nao.gov.uk/whatsnew.htm