Does the Fund have the courage?

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Jo Habib believes the NAO report raises some tough questions

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The NAO analysis of the Community Fund’s grant to NCADC is as interesting for what it doesn’t say as what it does. It fudges the fundamental question of whether, had the Community Fund known all the facts, the grant should have been made. The NAO considers the grant, among other things, in terms of NCADC’s activities and in terms of the Community Fund’s reputation. On activities, although it doesn’t say so explicitly, it seems to imply that ‘philanthropic and benevolent’ groups like NCADC should, if they receive lottery funding, be constrained by the same rules concerning political activity as charities. There are two issues here: does ‘philanthropic and benevolent’ mean anything other than ‘charitable without registration’, and when does ‘political’ activity become ‘political and doctrinaire’ – the phrase it and the Community Fund use to describe unacceptable activities. It would be a pity if the fund now adopts a more ultra-cautious position than it is legally required to take in respect of organisations that are critical of government policy.

From a reputation angle the report recommends that, as it is already starting to do, the Community Fund must become much more adept at assessing risk – risk to the Fund’s reputation as well as the financial and organisational stability of an applicant group. Does this mean that any grant that attracts the anger of government or is vilified by parts of the media (as the NCADC grant did and was) is a threat to the Community Fund’s ‘reputation’ and should be rejected? Let us hope not.

The need for the Fund to move to better risk assessment stems from an over-reliance in the past on the points system of grant assessment. (The points system is why the Fund didn’t formally ‘know’ all the controversial facts about NCADC’s activities although relevant material was to hand.) The Fund’s determination to be fair, transparent and not swayed by ‘who you know’ has always made it wary of ‘judgement’. Safer (‘there is an audit trail’) for grant officers to tick boxes (‘yes, they have an equal opps policy, score 2’). Difficult, then, for grant committees to turn down high-scoring applications (‘but they’ve met all the requirements, how can we fault them?’). As the NAO report acknowledges, the Fund has already recognised the limitations of this approach and is moving towards a system based more on outcomes and on judgement. In my view this is to be applauded and, if the Community Fund can bring it off, it really will ‘make a difference’. But can the Fund bring it off? Can box-ticking grant officers turn into wise – and street-wise – assessors? Can such a high-profile grant-maker, liable to be pilloried in the press or hauled before the Public Accounts Committee at the drop of the slightest clanger, really take the risks that matter? Will the Fund have the courage to reduce its reliance on the paper-trail, abandon the one-size-fits-all process, increase the discretion exercised by its grants committees and then robustly defend unpopular or unsuccessful grants when it makes them? The independence of this stream of lottery funding is currently threatened by the proposed ‘merger’ with NOF. To my mind the NAO report demonstrates why, in the interests of the beneficiaries, the Fund needs to fight for its independence, operate less like a government department and more like the best charitable trusts. I just hope it doesn’t have exactly the opposite effect.

Jo Habib is director of FunderFinder and a member of the Community Fund’s external advisory group on outcome funding. Contact her on jo@funderfinder.org.uk or 0113 243 3008