What are the challenges facing small charities?

As ever in the charity sector, funding is an issue.  However, this is particularly an issue for small charities that tend to be much more reliant on other organisations for funding.  Due to the huge cuts in local authority spending there are a lot fewer grants and other funding available to small charities.  Added to this, because they don't necessarily have the time or skill sets to apply for different sources funding.

, the administrative burden on small charities to justify the grants that they already have is ever increasing, which costs both time and money.  This problem can stop some charities even applying for funding from some grant making organisations.

How is increased globalisation affecting this?

As people become more globally minded they tend to become less locally minded.  This means they are less likely to give money to small local charities, instead favouring larger international charities that have a more tangible impact for the money donated, such as the 

In addition, the increased hecticness of peoples lives, especially among young people, has meant that 25-34 year olds are the least likely group to volunteer according to a recent study by the 

.  Due to the community nature of their work, small charities are much more reliant on volunteer time, so this trend is worrying.

Small charities are often the life blood of any community - everyone remembers going to birthday parties at a local community centre or village hall when they were younger.  They are often an institution within a community that people trust and are happy to work with, even if they are suspicious of government.

They are often much more embedded in the community than larger charities and therefore are able to reach and know about more vulnerable people that others don't.  They are therefore often best placed to solve problems such as knife crime and homelessness.

The less money charities have to spend, the more they rely on volunteers.  Luckily, small charities have always been great at leveraging volunteer time to match their aims.  As they are very locally focussed, people are still happier to help out because they can see the direct impact of their work in their community - despite the slow creep of globalisation.

As they are mainly volunteer run, small charities have very low fixed costs, so they are much more resilient to the hard times than larger charities.  

Small charities are resilient, however, they still need some help.  Due to the transient nature of volunteering, charities are often unable to provide as comprehensive a service when they are fully reliant on volunteers.

However, the usefulness of small charities is becoming more and more recognised.  Many local authorities have set up "community chest" funds to give micro grants directly to small charities to improve community cohesion amongst other aims.

In addition, due to their lower fixed costs, smaller charities are starting to be seen as a safer bet for funding.  They are more able to keep providing the service they were set up to provide when the money runs out.

Found this interesting - the NCVO has authored a few more interesting blog posts on this topic, supported by their research that can be found 

What are the issues facing small charities, how will globalisation affect them and how are small charities solving these problems.

The problems facing small charities

Understanding the true scale of grant monitoring reports

Everyone knows monitoring reports for funders are a hassle. They take ages to complete and often are hard to understand and learn from. Because of this grantees don't like filling monitoring reports and funders don't like reading them.

This is a problem as they take up to 15.8 million hours of charities' time to complete.

This is a hidden cost imposed on grantees by funders - money and time that should be better spent. 

To work this out we combed through the websites and the publications from the country's biggest funders to work out what a typical grant monitoring report looks like. We then asked 10 people from various small to medium sized charities that together report to 6 different local authorities and over 50 different funders to estimate how long it would take to fill out this "average report". 

Financial breakdown

Outcomes

Evidence of own learning?

Attendance data

Description of project

Details of successes and challenges

Future plans

Case Study of individual/s

Organisational update

How monitoring was done

Progress made against aims

Funder's reputational risk survey

Feedback for funder

Continuation funding?

What surprised us when we first started talking to small charities about reporting was the amount of time it takes to know who their beneficiaries are. We thought that would be easy. 

But then it was explained to us. Imagine if a funder asked you for the number of total unique people that have used your service. Even if you take a register every day, you can't just add up the number of people on each register, as they probably aren't unique. So you have to start making a register from those registers, going through each one individually and adding a new name every time a new person arrives.

If you then try and break that down by demographic data (information that people often don't want to give you) and where they've come from - the time really starts to add up.

Frustratingly, it isn't just us who are surprised to hear this. When we speak to funders they are also surprised. This might be because grantees are often uncomfortable admitting to funders how long this all takes, because they think it's their fault. It isn't, it is hard and the tools that have been available to help with this are expensive.

Luckily, attendance information is one of the most commonly requested items on the monitoring reports. Unsurprisingly, this is the case for lots of the requirements:

In theory this is good news. If all funders want roughly the same thing, it must be easy for grantees to do their reporting - they only need to copy and paste information between forms. 

Funders all want roughly the same information, but they want it presented differently and at different times of the year. If one grant started in March, that grant reporting will be based on a March year end, even if all an organisation's other grants have a December year end. 

Some grants require answers to very specific questions related to them - such as a breakdown of beneficiaries by ward. This is great for making grants very locally focussed, but very hard to monitor!

To add to this, charities often have a lot more funders than you think - the number increases pretty much linearly with income.

In fact, if a charity has enough income to have at least 1 FTE member of staff, they probably will have between 5 and 10 different funders. That means between 5 and 10 different reports. Even if two funders were to have exactly the same reporting requirements, it would still take a couple of hours to copy and paste between reports. 

Even if two grants do require the same information, they will often ask for it in different ways. Grant report question writers love synonyms.

Ways reporting requirements are asked for

Some people will ask for differences, others will ask for progress towards outcomes. Some people define outcomes as targets others as changes noticed in a beneficiary.

This just adds an extra unnessesscary layer of confusion to something that is already confusing enough!

Different types of funders mean different requirements

Luckily, you can guess from funders what sort of information they are going to be interested in. 

Local authorities grant monitoring reports often ask for a very detailed breakdown of who your beneficiaries are no matter what the size of grant, as for 

. This is likely since Local Authorities have a much greater pressure to show the value of their grants than any other funders, particularly in the climate of austerity. Having said that, other Councils, e.g. 

, ask only for pictures, expenditure and some outcomes for larger grants. Common across almost all of the reporting requirements for Local Authorities is the need to use a form specific to that grant programme.

Charitable Foundations tend to be more varied in what they want. They are still interested in a breakdown of beneficiaries, but tend to be interested in outcomes and what organisations have learnt from their grants. 

The format of the monitoring reports themselves varies massively between foundations. Some, such as 

, are happy to receive their monitoring information in any format, so long as it containts the key criteria.

Foundations are also more likely to ask very specific questions related to that grant. 

 is a good example of this. They ask for "what our money can buy" as a requirement for every grant, which is a question we have not seen elsewhere.

What's worse - some funders don't even share their monitoring requirements.

But in many ways, these are the good guys - they actually publish their monitoring requirements. This lets potential grantees assess how much time monitoring and reporting will take for a particular grant.  

This is important as monitoring and reporting is a significant enough part of delivering a grant, that they should be taken into account when preparing the budget. If you don't know what that will be, you can't properly plan when bidding for funding, which is a real factor in choosing whether to apply for grants:

We've stopped applying for funding from [big national funder] because their reporting requirements are just way too onerous.

By not publishing monitoring requirements, funders are not giving potential grantees the whole story.

So monitoring reports clearly take a lot of time. In order to properly quantify quite how long, we decided to estimate how this affects the sector as a whole. To do this we had to estimate the number of grants handed out every year. This is where the 

 came in handy. First, we worked out the total income from grants by adding up income from government and foundations. We then removed grants for research and to schools, as they have different reporting requirements. This gave an income of ~£18bn a year from grants and contracts. Dividing this total by the average grant size (~£50,000), we were left with a total number of grants of approximately 391,280 per year. (If you want to see our working for this, it can be found 

Combining this with the average grant time of 40 hours, we find that charities spend 

every single year just filling out reports for funders. 

. Or approximately the same amount as the lottery gives to organisations that work in Health, Social Services, the Environment, Village Halls, Housing, Employment and Training, Umbrella Bodies, and Playgroups and Nurseries.

Clearly, this is just an estimate. In particular, local authority reporting requirements (the way many organisations are funded) are hard to find, and we have not altered the grant requirements depending on size of grant. We have also assumed that organisations are using the kind of improvised paper registers-spreadsheet combination that is very common across smaller charities.

As monitoring reports take so long to complete, they get in the way of learning

Monitoring has the possibility to make a real difference. If done properly, both funders and grantees can learn what is and isn't working, which can then be used to improve future work. 

This is due to the variety of questions asked and time taken to do:

Because each funder asks for different things, it is impossible for grantees to compare     between projects funded by different funders.

Because of the time they take, grantees seem to see monitoring reports as a tick box exercise for the funder and not an opportunity to review what they have achieved with their grant. 

, a lack of learning is a problem in the sector. 

One way to cut down the reporting time, and therefore encourage learning, has been a move to allow grantees to send in their reports from other funders.

This is great, it saves grantees loads of time. The problem is that funders then get monitoring reports in thousands of different formats. This makes it impossible for funders to learn from the reports they receive, which means they aren't learning from their grants. 

Funders not learning from grants is a real issue. They have the most input on the future of the sector and the sharing of best practice. After all, they spend the most amount of time thinking and discussing how to make the most of grants.

We think that there should be an easy to use and free way for small charities to record the things that grant reports most need - attendance and outcomes.

We think that a charity's own data should be easy for them to analyse and learn from.

We think charity's should be able to easily share their monitoring information so they can share their impact.

We think funders should be able to easily build aggregated reports from all of their charities so they can inform best practice and better understand the grants they give.

But rather than just talking about it, we have built something that does just that. If you would like to know more about it email us on hello@timetospare.com. We'd love to chat.

 application released under the terms of the 

Creative Commons Attribution Sharealike license (CC-BY-SA)

Charities spend too many hours filling out monitoring reports for funders. This gets in the way of learning. We tried to quantify that effect and understand why.

Charities spend 15.8 million hours reporting to funders - that's too much

Understanding the hidden costs of grant making

Every month we speak to charities frustrated with the difficulties of grant applications and reporting for their existing grants. Some organisations have raised the question of whether particular grants were even worth it? Would it have been better to just not apply? To answer that, we've got some numbers for you.

We wanted to estimate the "all-in" cost of a grant process - the time taken to apply, do impact measurement and other monitoring. We have also included the costs to the funder, the costs imposed on rejected applicants, and even the costs incurred by charities who decided not to finish an application. Including all these extra costs ("externalities"), means that even a grant that looks perfectly sensible for the organisation that receives it, could actually have cost the sector more in staff time than it received in money.

At this point, in many sectors, we would be at a loss - most companies don't announce exactly how they spend their money, but thanks to 

 we had really easy access to more information about funders and where their money goes. For the rest, our estimates are based on our experience of working with small charities (feel free to mentally adjust if you think we've got it wrong!).

We know this section will get the least sympathy from people in cash-strapped charities, but it is an important consideration. The reality is that writing grant requirements, sorting through grant applications and visiting grantee organisations can be a lot of work. For sure, some do it better than others, but there is a very real cost to this exercise.

To do all this, you need to employ people. Fortunately for us, any foundation set up as a charity (i.e. all of them), lists their employees and volunteers with the Charity Commission. We looked at 29 of these foundations (chosen based on their reports to 360Giving). To get their total staff costs, we took employee numbers, and assumed that volunteers would work 1 day per week.

Camden Giving

Wates Family Enterprise Trust

Wates Foundation

John Moores Foundation

Cloudesley

Somerset Community Foundation

Wolfson Foundation

Walcot Foundation

United St Saviour's Charity

Two Ridings Community Foundation

Essex Community Foundation

Barrow Cadbury Trust

Indigo Trust

Joseph Rowntree Charitable Trust

True Colours Trust

Oxfordshire Community Foundation

Trust for London

Heart Of England Community Foundation

Seafarers UK

Power to Change Trust

The Henry Smith Charity

Esmée Fairbairn Foundation

Cheshire Community Foundation

County Durham Community Foundation

Community Foundation for Surrey

Guy's and St Thomas' Charity

Devon Community Foundation

Lloyds Bank Foundation for England and Wales

Suffolk Community Foundation

FTE staff at each funder

It turns out some funders have a lot more employees than others (don't worry, we've some more insightful things coming...). More interesting is the number of employees per grant delivered. If you exclude some crazy extremes - Camden Giving we're looking at you - there's not that much variation. Interestingly, we found that statistically, funder costs in grant making are driven more by the number of grants than the size of the grants. 

So we assumed an average wage across funders (and their volunteers) of £30,000 per year, and then estimated the staff cost per grant for all 29 foundations:

Esmee Fairbairn Foundation

Staff cost per grant

Averaging across all of those funders, we got a final figure of £3,018 per grant. Because there's no need for false precision, we rounded that to £3,000.

So the first piece of the puzzle is complete, an average grant costs 

This is where things get more interesting, and a little bit less certain.

We looked at 3 types of "applicants" - organisations who received the grant, all organisations who finished the application, but also organisations who found the grant and decided not to submit an application. 

Firstly, what is the cost to the organisation that received the grant? For the small charities we spoke to, we see that reporting and monitoring of a grant takes about a week. That includes preparing for a funder visit, collecting data on beneficiaries, describing your project, collecting case studies, working out "what you've learnt" etc. While some reporting requirements are seriously over the top, in general we estimate that reporting for a grant costs a charity 

But what about the organisations whose applications were unsuccessful? We need to know 2 things: 1) The time taken to apply to a grant and 2) The number of applicants for every grant. 

 website. Most grants take 2 days to apply for. We then found estimates for the number of applications per grant from 3 different funders: 

 (6.7). So, if there's 6 applications, each needing taking 2 days of work, at a day rate of £115, that's £1,380 spent on applying. We rounded that up to 

Finally, what about the people who didn't apply? Those who read through the guidelines, eligibility criteria and the application form, but never submitted. We've estimated (read: guessed), that for every applicant, there's 10 more who decided not to apply. (aside - if any funder wants to give us access to their Analytics, we'd be very happy to do this bit properly...) How long did these organisations spend on this process? We can't know for sure, but we have a good minimum estimate: how long does it take to read all the funding guidelines? We did some adding up...

Esmée Fairbairn

Henry Smith Charity

Comic Relief

The National Lottery Community Fund

Time required to read funding guidelines and criteria

Unless you're applying Camden Giving, it's going to take you 25 minutes to read the instructions. When you include discussing the grant with your colleagues, working out exactly if you're eligible, and starting some the application, that's probably ~2 hours even if you don't apply. So: £28.80 per organisation, across 60 organisations for every success, that's 

The cost of everything put together is £6,600 per grant.

 Just under half of that cost is incurred by organisations that didn't end up getting a grant. 45% of the cost is incurred by the funder, and the remainder is imposed on the successful organisation.

Not applying

Applicants

Reporting

Funder's Costs

The "all-in" cost of a grant

How does this "all-in" cost of £6,600 compare it to the distribution of all grants nationally? Again, from 360Giving, here's the distribution of 

0-£500

£500-£1,000

£1,000-£5,000

£5,000-£10,000

£10,000-£50,000

£50,000-£100,000

£100,000-£500,000

£500,000+

Distribution of grants

46% of grants were less than our threshold.

Obviously, this calculation was done using best guesses and national averages. It would be a sensible and useful exercise for funders to evaluate this using their own data. In particular, accounting for the time cost of volunteers and time costs imposed on organisations who don't go on to receive a grant.

Now, having done this estimation of the problem, this feels like the time in the post where we suggest some solutions. But first, based on this analysis, we're going to suggest some things we don't think will work.

We don't think this problem will come as a shock to many in the sector and there have been a lot of solutions thrown around to solve this problem. However, we don't think many of the most popular ones will work and here's why:

Firstly, accepting free-form applications - allowing charities to describe their programmes "in their own words". We don't like this idea. The first problem is that just under half the "all-in" cost is already incurred by the funder. Less structured and less comparable applications will only increase this. Secondly, a lot of charities aren't big fans of this approach either. What sounds like a good way to reduce the burden, actually just leaves charities trying to find out what the funder wants to hear through other sources - e.g. by calling or emailing. In our view, this 'solution' makes the situation worse at both ends.

The second suggestion is a "UCAS for charities" or a "single application form" for all funders. This sounds a lot more sensible, but we have outstanding concerns. Firstly, to stop universities being overloaded with applications, UCAS has restrictions on the number of universities a single student can apply to. But how are you going to limit charity applications? Students can only attend one university - charities have multiple funders. Secondly, a "single application form" works when everyone is looking for the same thing. However, if you want to apply to a place-based funder or a demographic-based funder, you don't want to force them to read through reams of information about projects irrelevant to them.

Finally, our single least favourite suggestion is asking charities to justify their own impact as a condition of receiving a grant (ie they do a lot of the funders work for them). There are organisations that 

, and it is a hugely expensive, difficult and time consuming process. Expecting small charities to do this kind of analysis is frankly unreasonable. It's our strong belief that at a small scale, you can use very simple measures at a fraction of the cost to achieve a substantial proportion of the long impact measurement process. For a grant of £5,000, do you really need a double-blind randomised control trial? Or could you just ask the local community centre how many people turned up to their project? Or whether they kept coming back?

As a funder, if you're not going to change the way you do your applications, reporting and monitoring: 

But, if you want to do smaller grants, that can target the 

73% of charities with less than £100,000 income per year,

 you're going to need to be a bit different. The first step should be to make the application guidelines short, and somehow work out a way to give out a huge number of grants with hardly any staff. In our view, the second step involves replacing the application process with better reporting. 

Exactly how to do that is a story for another day, but if you want access to the trailer, drop me an email at tom@timetospare.com.

Understanding the hidden costs of grant making - how complex monitoring and unsuccessful applications can outweigh the value of a grant

46% of grants cost more than they're worth

CRM stands for Customer Relationship Manager.  A CRM is a piece of software that helps you manage your interactions with people outside of your organisation.  As suggested in the name, CRMs were originally developed for use by sales teams to help them sell their products to customers more effectively, with Salesforce being the most famous of these.  Since then, a whole host of other ways to make the most of CRMs have been found - as it turns out it's quite useful to keep track of how you're interacting with the outside world.

Charities often have a lot of people they aim to help and a workforce that is reliant on volunteers.  This can cause a regular turnover in personnel, meaning that is easy to lose track of who has turned up to what event and makes it hard for one person to maintain consistent email contact with the person they are helping.  CRMs are built to solve these problems.  

Time to Spare is a CRM that has been designed specifically for charities, to help them solve the problems that charities face - it isn't a tool designed for sales people that has been repurposed for charities.  This means that it works with the way you work, not against it.  However, what is really special about Time to Spare are the reports it can generate, which are a great way to keep your funders informed of what you are doing, without filling out any forms.

Other than a nice sounding TLA (three letter acronym), what is this CRM we keep talking about, and why do we think you should use one.

What is a CRM and why should I use it?

Good data is consistent in form between different organisations, kept up to date regularly and able to show how trends change with time.  Good data should be objective, not open to manipulation and relevant.  Good data should not be a burden to produce.

The problems facing funding organisations

Funders are in a difficult position.  They have been given money to serve a specific purpose, but don't have the capability to provide that service on their own.  Therefore, they end up giving money to other charities to implement their aims, in the form of grants and contracts.  This comes with a lot of risk for the funder.

One way is to do a lot of due diligence on the charities before you fund them, the approach taken successfully by 

.  This allows you to have more confidence in the people you fund and can improve your relationship with them.  However, this can be expensive and hard to do.

Another way is to link the funding up to a contract with defined goals that the charity has to perform.  However, this can put charities off applying for the funding in the first place, as they want to avoid the risk of not fulfilling the contract.

The best way is to get good data on the charities.  This allows you to know what they are doing and then fund the charities that match your aims - the ones already doing what you want them to.

How should funders get good data on charities?

Getting good data on charities is hard.  

The traditional way to do this is to ask the charities they fund to fill out forms and questionnaires.  However, these often take a lot of time to complete and there are issues with the data they produce.  

It's unlikely that charities will fill out surveys with the data in the same format: one organisation's "Young Person" is another's "Student". A community garden might be classed as "Environmental Protection" or it might be "Mental Health" - it all depends on the context and how different charities record their information.

In addition, due to the time delay in filling out questionnaires, the data they produce is often quite old and unable to show how trends change with time.

All of this means that it requires a lot of effort from the funder to do any sensible analysis on data coming in from so many different places.

Funders need to find a way to know what is going on at the charities they fund without adding undue administrative burdens on them.  They also need to find a way to improve their knowledge of the smaller charities in an area.  There's been a lot of hype, but in this instance advances in cloud computing and machine learning will offer new ways to collect analyse and pool data on charities of all sizes.  Therefore, it is something that funders should be, and are, looking into.

We are obviously not the first people to talk about this topic.  London plus have written a good blog 

 on the subject and Andy Ratcliffe at Impetus has written two really interesting posts too - 

.  Alternatively, if you would like to discuss this further or have anything to add, do get in touch with me by email on will@timetospare.com

Data, and big data in particular is something of a buzzword at the moment. But, why might funders need to think about the quality of their data, and how should they go about getting good quality data. 

The problems facing small charities

Charities spend 15.8 million hours reporting to funders - that's too much

46% of grants cost more than they're worth

What is a CRM and why should I use it?

Why good data is important for funders