What is wrong with funders?

Most funders operate in a bubble, where nearly all the feedback that they receive is positive, this can mean that funders are not challenged to improve and cannot learn from the customer experience, whether that be good or bad.

Many applications systems are designed with the requirements of the funder at the forefront, this can place a huge burden on the precious resources of voluntary sector organisations. Especially when an application is rejected without feedback given as to why, or when a voluntary sector organisation has 25 different funders all asking for different information and a different, at times complex, way of collecting this information.

I think we need to re-visit the purpose of funders. Is it to support voluntary sector organisations to help people in need, or to simply be a transactor?

Why would we want voluntary sector organisations to spend so much time on processes to suit the funder’s requirements when that money would be better spent on their philanthropic purpose? It is so frustrating, in a time of increasing demand and complexity of need, to have to focus instead on making applications and reporting on funding.

So what would an ideal system look like if it was designed from scratch?

1. Well firstly, organisations would align their impact with their mission. They would use data to make decisions, drive improvements to delivery and to report to their board. They would use the same data for all funding sources and their annual report.

2. Funders would actively pursue two-way trusted relationships, delivered with honesty and integrity. Funders need voluntary sector organisations to be able to deliver their desired social impact, putting this first and foremost in their minds will help change the power imbalance.

3. Funders would commit to greater equality, diversity and inclusion in everything that we do from our own working practices to the work we deliver so we can effectively respond to the needs of the charities we support.

4. Funders would give core costs to support the mission of the whole organisation rather than a discrete project and they should trust their grantees to do the very best that they can, as most do.

5. Funders would stop linking impact to funding and acknowledge that it is a fallacy to claim impact per grant when the funder is only a small piece of the funding jigsaw.

6. Funders would be customer focused when designing their processes and seek to align these with other funders through data initiatives like 360 Giving.

7. Funders would scrap arbitrary waiting periods between a grant coming to an end and applying for a new grant, forcing charities to make hard staffing and budgetary decisions between grant rounds.

8. Funders would share learning back to the sector to help others improve.

9. Funders would champion the work of their grantees and advocate for them, providing a voice where they have none.

Sounds simple? Well it’s not, unfortunately. But why not?

1. Funders answer to their boards, who have their own particular interests.

2. Some funders don’t know that they cause these problems as they think about their processes in isolation rather than considering the culminative impact.

3. The third sector is encouraged to be frugal and so has not invested in innovation and change.

4. The funding sector is fragmented, it would take strong leadership and influence to tackle this problem, which is a very daunting and risky task, it could take years and still get nowhere.

5. Just like voluntary sector organisations, funders are each unique and don’t want to be homogenised.

Some funders or social change agencies are actively leading the way to change the status quo, speaking up for voluntary sector organisations and highlighting the unnecessary duplication and waste of resources. For example, Lloyds Bank Foundation, The Blagrave Trust, Esme Fairburn, Tudor Trust, 360 Giving, Brevio, Guys and St Thomas’s, The National Lottery Community Fund and many more. 

These are green shoots of change; this is not a simple problem with a simple solution, but at least if we acknowledge the problem we can work towards influencing change.