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JANUARY 1999 - REF 149 ...
JANUARY 1999 - REF 149

Locally based voluntary organisations, supported by charitable and public service funders, work within a range of funding regimes. Commissioned by the South Yorkshire Community Foundation, researchers from South Bank University and Sheffield Hallam University looked at sixteen organisations in London and Sheffield and examined their experiences of the funding regime over a ten-year period, in relation to their capacity to survive and to sustain their work.

-The different funding regimes within which voluntary organisations worked ranged from reliance on one major funder to support from a portfolio of agencies.

-A majority of organisations had experienced or were seeking significant upward shifts in scale, focus and activity, linked to large levels of funding support - a number involving extensive property development.

-There was a heavy dependence on relations with local authorities. These were often problematic, with organisations devoting substantial time and effort to maintaining them.

-There was often a major reliance on the performance and commitment of one key (paid) worker who was critical to organisational viability.

-Organisations were exploring a variety of ways of generating income independently, with only a minority able to take the 'social business route'.

-The value of local networking with other organisations was important in coping with crises; the fact that organisations might be competing with each other for the same source of funding was not a major concern.

-There was general concern at the negative effects of annually based 'panic fund-raising'. This absorbed organisational resources and made it chronically difficult to plan strategically.


Prior research has shown that voluntary organisations exist within an 'ecology of funding', with income coming from different sources. Funders are moving towards making more conditions on the use of grants and requiring greater accountability. However, some public funders in particular are not developing strategies for the developmental needs, as well as the immediate project-based needs, of local voluntary organisations. Other funders (mainly UK central government and the EU) are emphasising the goal of local community 'capacity building' as a funding criterion. This has particular relevance for locally based voluntary organisations. In this study, the researchers also explored the extent to which community capacity building as a goal was emerging as an important issue.

The case study sample and results

Case studies were developed to explore and further understand the experiences of funding regimes on organisational structure and sustainability.

The research identified five critical aspects of internal organisational capacity:

-human resources -the nature of funding sources -income generation, -networking, and -robustness in the face of change and provided policy messages for both funding agencies and voluntary organisations.

The most important issue for the organisations was their short- or medium-term survival and their immediate problems in delivering services. In these situations, organisational planning and development received secondary attention.

Organisations tended not to be concerned explicitly about their managerial effectiveness or to be directing their efforts towards the broader notions of capacity building. Yet fourteen of the sixteen had nevertheless survived through ten years of a complex and changing funding and policy environment.

Table 1 shows the organisations' patterns of income. The average income of the London organisations was significantly higher and was far less represented by grant income than that of the Sheffield organisations. The relative contribution of grants to other income for each organisation, for the latest year available (1995/6) is shown in Figure 1.

Table 1: The case study sample as a whole

Total income,£000Grants,£000%Other income,£000%

Total (n=16)3,7972,368621,42938

Average (n=16)237148628938

Sheffield Average (n=8)119102861614

London Average (n=8)3561945416546

NB: Figures relate to the latest year available; in most cases 1996/7

What is meant by 'funding regime'?

The study adopted the notion of 'funding regime' to refer to the experiences of organisations as applicants for and recipients of income from a variety of sources. Three broad funding patterns were identified: portfolio funding (two or more funders are of similar importance to the organisation); single predominant funder (one main funder contributes); and major funder/minor funder (two main funders, with an imbalance of importance between them).

No one archetype emerged as offering a 'preferred' pattern. Reliance on one major funder created vulnerability to shifting funding priorities, for example, and a more diverse funding base gave organisations a stronger position from which to cope with such shifts. However, having a range of funders in support also meant workers and volunteers expending much time and energy dealing with them all and managing different demands and operational timescales.

The importance of 'capacity-building'?

There was some confusion amongst respondents about the notion of 'capacity building', whether it related to the internal capacity of organisations (actual and potential), or to the less tangible idea of improving communities' capacity in general. The study developed a simple typology, to help locate organisations' capacity building strategies:

-unfamiliar - not aware of capacity building, -unable - aware but unable to contribute, as lacking information or other resources, -incidental - capacity building occurring as a by-product of organisation's work, -committed - aware of significance and conscious effort to capacity build.

Very few organisations studied saw their role as 'committed' to capacity building in its widest sense. Most saw the development of (their own) internal capacity as a key practical goal, and one which might be linked to the nature of funding support. Some organisations were sceptical about the commitments of funders to translate rhetorical commitments to capacity building into practical funding policies.

Messages to funders

The case study organisations tended to view funders collectively. They were often referred to as a whole, even where the practices of specific funders were being described. They were also seen as having important links with each other; for example, swiftly terminating funding when a new funding source appeared.

Organisations looked to funders to:

-Help provide funding for core functions to assist organisations move from survival to sustainability. -Provide greater clarity about funders' 'grand goals', such as capacity building, so positive and appropriate applications can be made which fit well with those goals. -Improve communication between funders with a shared interest in organisations, to help reduce the need for organisations to engage in costly juggling exercises in pursuit of funding. -Collaborate with fellow funders over evaluation and monitoring processes, helping to avoid unnecessary procedural burdens and costs in funded organisations. -Offer opportunities for medium-term financial planning by organisations, to help reduce the emotional and practical pressures of annual 'grant chasing'. -Support organisations strategic planning by funding future planning work and 'thinking time'. -Keep under close review the use of consultants to support and develop complex funding bids, with a view to encouraging good practice.

Messages to organisations

The experience of funding as a 'regime' over which organisations often felt that they had little control suggested that many would find a more realistic and proactive approach to the pursuit and maintenance of funding beneficial. Organisations needed to give priority to:

-Developing a medium- to long-term planning cycle beyond the current funding timetable. -Developing and maintaining links to local networks, especially where these can provide support for key functions. -Avoiding over-reliance upon key workers and developing 'succession planning' for when those staff leave. -Securing and maintaining representative and active management committees in line with expectations of funders. -Seeking collaborative funding packages with agreed and effective procedures for monitoring and evaluation.

About the study

The case study sample was selected from the records of three different funding agencies on each site: a local authority funder, a large grant-awarding trust and a small local trust. Postal surveys took place, to discover the purposes, patterns of development and funding modes of organisations, and to seek their participation. Approximately 60 per cent of organisations responded to this survey. Sixteen organisations (eight in each city) were subsequently selected from organisations being funded in 1986. Of these, two are now defunct.

Fieldwork involved semi-structured interviews with key organisation members, and observations of meetings and other key activities. Detailed documentary analysis of annual reports, accounts statements and other documents for the years 1986-1996 also took place.

Two forums were developed, for feedback of findings and clarifying emerging issues. These were focus group meetings of the participating organisations in London and Sheffield; and a seminar of representatives of funding bodies held in London, under the auspices of the Association of Community Trusts and Foundations (ACTAF).

How to get further information

The full report, Making funding work: Funding regimes and local voluntary organisations by Pete Alcock, Jenny Harrow, Rob Macmillan, Jeremy Vincent and Sarah Pearson, is published for the Foundation by YPS (price£12.95, ISBN 1 899987 91 6). It is available from York Publishing Services Ltd, 64 Hallfield Road, Layerthorpe, York YO31 7ZQ, Tel: 01904 430033, Fax: 01904 430868 (add£1.50 p&p per order).

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