Funding beyond Covid-19: Which new practices should funders keep and which old ones should they go back to?

This blog post by Matthew Mannix reflects on what we have learnt about good grant-making practice during the COVID-19 pandemic and how we can fund better going forward. It argues that many of the changes funders have made in response to the crisis should continue, but that there are some pre-crisis funding practices we should revert back to.

Matthew is a consultant at NPC, a charity think tank and consultancy that works with both funders and charities to improve the sector. Matthew advises the Disadvantaged Youth and Mental Health portfolios for the Stone Family Foundation.

Like many trusts, foundations and philanthropists, we, at NPC, have had to alter our ‘normal’ approach to grant-making in our work supporting the Stone Family Foundation (SFF) with its UK response to COVID-19.

In response to the crisis, the SFF made several emergency grants to existing grantees, brought forward grant instalments and removed grant restrictions to help them cover funding gaps and reach more people in need. SFF also collaborated with other funders through the Coronavirus Mental Health Response Fund coordinated by Mind to get money to organisations they didn’t already support and who were in urgent need.

This response was made possible by a willingness to change normal funding practices in light of unprecedented circumstances. However, now that the sector has begun to emerge from the initial crisis, and as the sector considers building back better, it’s time for all funders to reflect on which of the changes made to their grant-making should remain permanent and which standard grant-making practices they should revert back to.

Crisis funding practices we should keep

Many funders adapted their funding practices during the crisis in ways they should keep up, even though the fog and frenzy of the crisis is over, including:

  • Unrestricted funding: The removal of restrictions on many organisations’ funding at the beginning of the crisis enabled many to adapt and respond to emerging need. But the practice of providing unrestricted funding to help organisations is something all funders should have been doing more before the crisis. As well as supporting organisations to fund core costs, needed to support effective delivery, this type of funding helps them to capitalise or respond to various opportunities and threats created by changes in their external environment. And it helps them to build up the reserves they need to cope with future crises.
  • Flexible and proportionate due diligence and reporting: When the crisis hit, many charities’ activities were knocked off course. They had reduced capacity to respond to information requests and rightly shifted their focus to more immediate needs. Therefore, a response from funders  to reduce information requirements from grant applicants and give grantees flexibility with grant reporting was needed. However, even in normal times, funders should look to minimise the time commitment their requests for information place on (potential) grantees. Where possible, funders should look to obtain the information they need to make funding decision from publicly available information (e.g. the Charity Commission register), be willing to do some of the legwork of finding specific figures themselves, and only ask the questions they really need answers to. Grantees should also be given flexibility on how and when to report on the progress of their grants, and funders should be willing to adapt grant milestones when things aren’t working out.
  • Pooling resources and leveraging networks:Contributing to pooled funds, such as the National Emergencies Trust and being willing to co-fund organisations can again save a funder resource in terms of the time and money spent on identifying and performing due diligence on charities. It also saves the charity from having to put resource into fundraising in a time of crisis and can help it to bring in more funding than it otherwise would have. Funders should also use their networks to help charities to connect with potential partners who can help them to increase their impact.

Pre-crisis funding practices we should revert back to

While the attempts made by many grant-makers to adapt their practices to help the sector during the early stages of the outbreak were appropriate, not all of them should remain in place now that the dust is beginning to settle. Best practices that funders should look to start up again include:

  • Rigorous (but proportionate) due diligence: Due diligence can be arduous on grantees and funders were right to drop many of the requests for information that they would usually have asked for at the height of the crisis. However, it serves a purpose. Funders must ensure that their money reaches the individuals and communities in most need and that it reaches organisations best placed to support them. Due diligence is not just about finding reasons not to fund an organisation, it’s also about figuring out how to fund organisations well by determining where they may need extra support. Due diligence should be proportionate to the size of the investment funders are prepared to make and how likely they are to make it.
  • Multi-year funding commitments: The availability of emergency grants during the crisis was welcome. But single, one-off payments do not make organisations sustainable over the long-term. Funders should commit to multi-year funding where possible, to reduce the annual burden of ‘raise to deliver fundraising’ and to ensure that programmes last long enough to achieve impact.
  • Visiting charities: Suspending charity visits during the lockdown was the right thing to do, and we should still be mindful not to overburden charities with visits given the pressures they are now under. Yet visits help funders get a better sense of how an organisation works and whether its resources are well utilised. But the most important thing about visiting organisations is the opportunity it provides to meet with a charity’s staff, volunteers and service users to find out what they think about the organisation and to ensure their views get factored into funding decisions.

Building back better

Selecting the best of our pre- and post-COVID grant-making practices is vital for ensuring we support organisations as well as we can through the trying period charities are likely to face in the coming years. Funders must now think about which of their new funding practices they will keep and which of their old ones they need to bring back.

Funders have already shown a willingness to change normal funding practices in light of unprecedented circumstances, taking the time to reflect as we enter a new normal will help the sector to build a better funding ecosystem and to build back better.

For anyone interested in how to increase the effectiveness of their giving in response to COVID-19, have a look at how NPC’s insights and resources on Funder best practice and Pushing the boundaries of funding can help you make a greater difference to the causes you support.