No longer a grant-giver

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The Community Fund intends to move towards an ‘investor approach’, and has published a scoping report on this model. Jane Taylor asked CF’s Director for England and the UK, Richard Gutch what it all means

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Q: Can you list the main features of the investor approach?
A: First, a focus on outcomes. Secondly a recognition that we at the Community Fund have a role in providing support, or for making sure support from others is in place. Thirdly, a concern with the overall impact of our grantmaking on particular types of beneficiaries, rather than just the numbers of grants we’ve given and the amount of money we’ve funded. Fourthly, we’re more likely to want to work with others to make our funding go farthest. We like to think of the investor approach as a spectrum: at one end of it is the arm’s-length grant-giver, and at the other end is the ‘venture philanthropist’, who specifies precisely what outcomes they want projects to achieve, is on the management committee of the project, agrees precise exit strategy plans and is very closely involved, in the way a venture capitalist would be.

We’re not going to go that far down the investor spectrum. We are already working in an outcome-funding framework, but we’re asking our applicants to specify the outcomes they’re aiming to achieve and asking them to say how they’re going to measure whether they’re achieving, and to set milestones so they can judge their progress towards the outcomes.

Q: Will that require a big change in the technical competence of applicants? 
A: Outcomes are the changes to people’s lives that the project is trying to bring about, so they’re a lot ‘softer’ than outputs. So the way of measuring them is a lot more difficult than outputs.

We’re all guilty of tending to think of projects and project activities without always thinking what difference is that going to make? Is a project going to reduce isolation, vandalism in the community, or crime? It is quite a challenge and a change of mindset both for us and for applicants and grantees.

One of the key questions is: who initially defines the outcome? Some

government departments which are in a more commissioning role, will specify the outcomes they want in detail. We don’t want to go that far. We’ve set fairly high-level aims in regard to our different beneficiary groups, and in some of our grants we are indicating some of the outcomes we’re particularly interested in, but we recognise that the voluntary organisations are usually the people in the best place to be able to decide what kind of outcomes are going to be most relevant and important. This leads to another big dimension of the approach: how much help are we going to provide, and how much more involved are we going to get with applicants and grant-holders? Again, we’ve taken some first steps. As part of our grants set-up processes, we’re going to have a meeting with the new grant holder to agree precisely how they’re going to measure their outcomes. This is the end of that process, saying, let’s agree exactly how you’re going to measure it.

We’re also going to develop a guidance booklet for early next year on all aspects of outcome formulation, measurement, management. We’ll commission someone who’s done work in this field. Longer term, we’ll be wanting to see how we can strengthen sources of support, perhaps fund some training in aspects of outcomes management, because it’s a relatively new thing for many parts of the sector. We’ve found it’s something that people welcome. But they say, it is quite difficult, it’s something to get your head round, we need help…

Q: What level of extra resourcing is this approach likely to need?
A: We’ve made it clear that people can build into their grant applications the cost of measuring outcomes. Through commissioning the guidance booklet we hope to become clearer about the different approaches and the costs involved. There are some difficult methodological problems and therefore costs…

Q: Tell me about increased support at the pre-applications stage.
A: So far we’ve increased our staffing in terms of extra outreach workers, particularly in Fair Share areas, where we see it’s going to be important to provide more pre-application support. We’re also looking at how we can improve support through our website and things like that. But there’s a set of more difficult questions about how much to provide more hands-on support, look at early drafts of applications and so on, which we don’t do now. That would fall into the category of more long-term change.

Q: Is there a danger in this approach that you might shift the bias of your funding to the more established voluntary sector organisations?
A: We’re very conscious of that danger and keen to guard against it. We want to make sure first of all that the sort of processes we’re asking our applicants and grant-holders to go through will not be seen as a burden but will be helpful to them in effective management of projects. Linked to that we want to make sure it doesn’t become something you can only manage if you’ve got a huge complement of professional staff. We’re going to consult with people on that. We’re looking to set up an external advisory group including representatives of the voluntary sector, to help us make sure we don’t fall into that trap.

Q: Will you follow the literal logic of the investor approach and start making loans? A: Not short-term. We’re more likely to want to see how we can work with other organisations that specialise in loans.

David Carrington’s report ‘The Investor Approach: a way forward for the Community Fund?’ can be downloaded at www.community-fund.org.uk/ index2.htm Community Fund is seeking comments on the report and the new approach. Please send your views to richard.gutch@com-munity-fund.org.uk