What’s wrong with charitable giving?

By Nigel Ball and Freddie O’Farrell

Yesterday, West London Zone attended a breakfast roundtable to mark the launch of the Smarter Grants Initiative, billed as “a new annual initiative programme held to explore major issues and identify and reward best practice in charitable grant-giving and funding in the UK”. Chaired by Peter Wheeler, EVP of Nature Conservancy, the panellists were Dawn Austwick, CEO of Big Lottery, Dan Corry, CEO of New Philanthropy Capital (NPC), Jake Hayman, CEO of Ten Years’ Time, Maya Prabhu, Head of Wealth Advisory at Coutts, and Debbie Geraghty, CEO of Plymouth Music Zone.

The discussion was lively and honest – and we found ourselves agreeing with much of it. Too much time and money in our sector is wasted – one fact that stood out from this morning is that charities lose £100m a year on applications which are either rejected or ineligible. The system for accessing funding is complex, time-consuming and most of all, it is competitive where it could be collaborative. As the discussion progressed, deeper issues of power and accountability emerged.

There is a danger, however, that this all remains at a rather abstract, discursive level. Certainly, progress in this area is not equal to the frequency with which the problem is discussed. One solution proposed yesterday included a radical, online “Air Bnb” style platform where charities can present their needs and share their impact data, and which funders can then browse to find a match. Whilst we would welcome a platform where people could “swipe right” (hopefully) for West London Zone, what can we do in the here and now to begin making charitable giving fit for the 21st century?

At West London Zone, we are doing three things which we think contribute to this effort.

  1. First, we are increasing our accountability by aligning the money we receive to deliver our work with the outcomes we achieve. We do this via our innovative funding model – the Collective Impact Bond. Our mix of private and public commissioners includes “philanthropic outcome buyers”, a pioneering new approach to charitable giving for individuals, trusts and corporates, whereby funders can drive a coordinated strategy via a partnership of providers and can leverage public spending to do so. Importantly, WLZ gets only paid when we show evidence we have achieved the results we aim for.
  2. Second, we are increasing incentives for charities to collaborate through our partnership model. By using on-the-ground Link Workers to help charities identify the children and young people who need their support the most, and leveraging finance to pay for it, WLZ leaves charities to do the work they do best – actually delivering that support. Our partnership model recognises that the social issues we are tackling are complex and that multiple charities have a role to play, reducing the impulse for charities to claim to have the ‘silver bullet’ solution and compete for funding.
  3. And finally, WLZ is working in a place-based way. The potential of locally-focused strategies was raised by Dan Corry of NPC. Local people and organisations understand the need in their area better than anywhere else, and local givers are more likely to stay engaged if they can see the results of their giving – meaning that money brought in from the local area can be far more effective and more sustainable than money dropped in from above.

Many forward-thinking funders are also seeking to change the way they work. After the event, we spoke to the newly established Fore Foundation, who have promised to keep applications short and focus on smaller charities who might usually struggle to access funding.

Both charities and funders are capable of increasing efficiency – the question is more one of how bold we are willing to be, as is often the case when dealing with entrenched ways of doing things. If we can effect change in the system, less money will be wasted and more can spent on improving outcomes for those we are all trying to help.

together, every child and young person can flourish.