CC(3) VS20

National Assembly for Wales: Communities and Culture Committee

Inquiry into the funding of Voluntary Sector Organisations

Introduction

The Countryside Council for Wales (CCW) is the Government's statutory advisor on sustaining natural beauty, wildlife and the opportunity for outdoor enjoyment in Wales and its inshore waters. We champion the environment and landscapes of Wales and our coastal waters as sources of natural and cultural riches, as a foundation for economic and social activity and as a place for leisure and learning opportunities. We aim to make the environment a valued part of everyone’s life in Wales.

CCW is fully signed up to working in partnership with stakeholders across sectors, and the wider principles of the public service reform agenda as set out in Making the Connections: Delivering Beyond Boundaries - Transforming Public Services in Wales (2006). The voluntary sector is key in terms of partnership and shared delivery of outcomes, and CCW is signed up to Better working together for the environment in Wales, a compact on partnership working between the statutory environmental organisations and the voluntary sector in Wales.

Background

This response is based on CCW’s perspective and experience as a grant provider for the voluntary sector over the last 15 years. Before we were established in 1992, one of our predecessor bodies, the Countryside Commission in Wales, also had a long track record in funding the voluntary sector. We therefore hope that our collective experience in the field of supporting environmental voluntary bodies is of value to the Committee’s inquiry.

Our funding for Third Sector Organisations (TSOs) is targeted at mainly organisations engaged in environmental (and occasionally social) objectives, which range in size from large UK bodies, such at the RSPB or the National Trust, through to small, single-issue local groups. Our approach therefore varies according to the size and capacity of the organization with which we are dealing. For larger organisations we usually aim to agree longer-term (up to 3 year) joint funding arrangements - targeted at delivering shared, strategic objectives. For smaller bodies, our approach tends to be more incremental and less strategic  - but usually our goal is to increasing their capacity and sustainability. We currently have a grants programme of approximately £7 million/year and around 50% of this is spent with Third Sector Organisations (TSOs).

Some background research - trends and emerging issues

A report by the Institute of Volunteering Research in 2007 "Volunteering in the natural outdoors in the UK and Ireland: A Literature Review” concluded by saying:

"evidence indicates that the number of people volunteering decreased slightly throughout the 1990s , the most recent surveys have shown that the total number of people giving their time throughout the UK has increased since 2001. The Environmental sector has also seen a rise in the number of people volunteering, within organisations, as well as independently …. much of this rise can be attributed to an increase in interest in and the awareness of environmental issues, both global and local.”

The report goes on to predict that volunteering in the natural outdoors will continue to grow, but included a cautionary note that if it is to reach its potential then a number of challenges will need to be addressed, including:

• Current low levels of funding to support volunteering.
• A lack of diversity of those that volunteer - with very low levels from ethnic minorities and an over-dependence on retired volunteers
• A lack of consistency in approaches towards volunteer support, management and development.

Some of these issues also emerge through "Future Focus 2, What will our volunteers be like in five years' time?” Published by the Performance Hub, August 2007 which concluded that:

"As the UK population ages and the birth rates fall, the ratio of dependents to employed citizens rises. By 2031 a quarter of Britain's population will be of pensionable age. This will provide a rise in the number of newly retired people available as potential volunteers. However, in the longer term people will work until they are older, because of the rising of the retirement age, anti-age discrimination legislation and better health. Many may need to work beyond the age of retirement for financial reasons linked to the pressure on state pensions. And while people will be living longer, for many, their ability to volunteer will be limited by age-related illnesses. This is likely to decrease the pool of people able to volunteer. Organisations that rely on newly retired volunteers may need to recruit relatively younger volunteers to try and address this.”

CCW’s approach and the context we work in

Our capacity to engage with the breadth of TSOs is limited by a number of factors, including our staff numbers and the range of issues we deliver on. Traditionally we have forged strong partnerships with organisations that have similar objectives - and we often seek to use these organisations (such as Groundwork, BTCV and BEN) as intermediaries to engage with smaller community groups. However CCW has also been strongly involved in developing the capacity of smaller groups, or networks of organisations, in the line of its work. For example, working through PONT to establish networks of graziers to improve grassland management.

Our approach to funding and working with Voluntary bodies in Wales is guided by "Better working together for the environment in Wales” - the compact between the statutory environmental organisations and the voluntary sector in Wales. The compact sets out a series of principles designed to add value to the relationship between the statutory and voluntary environmental bodies in Wales and thereby enable them all to deliver better results for the environment and people of Wales.  

Action 2.6 from the Compact's Implementation Plan requires signatories to "Make funding information open and transparent in line with Assembly's Code of Practice for funding for the voluntary sector". CCW has done this and has been acknowledged as following good practice.  

Action 5.2 requires signatories to "Make best use of existing codes of practice”, and here CCW attempts to apply the principles of the Welsh Assembly Government's Code of Practice for Funding the Voluntary Sector.

CCW’s emerging Grants Strategy and our new approach

We are currently in the process of drawing up a new Grants Strategy and revamping our whole approach to joint funding. This process is ongoing, but we are seeking, amongst other things, to:

• Provide better alignment between the outcomes we are seeking (as set out in our Corporate Plan) and the work supported by our grants.
• Establish clear performance indicators so that we can compare across TSOs as a form of benchmarking and provide incentives linked to performance.
• Categorise our approach to partners according to the size and complexity of the grant being offered. We will therefore be grouping the recipients of grants into 5 categories:
• Local Authorities/National Parks
• Strategic Partners (Larger TSOs)
• Small grants offered through our Regional Offices (less than £5,000)
• Funding for Special Initiatives and
• Other grants (usually single-issue organisations)
• Improve our understanding of TSOs’ resource planning activities and therefore align the timing of our grant offers, as far as we can, to the needs of our Strategic Partners, so that we can give them indication of our likely levels of funds for the forthcoming year at the most appropriate time.
• Simplify our processes and reporting as much as possible, but at the same time improving our financial management and undertaking risk management at a higher, more meaningful, level (eg analysis of reserves /cashflow /trustee and membership base).
• Improve our understanding of the needs and constraints of our partners through appointing 'Relationship Mangers.’ As well as dealing with grant issues, these posts will also be able to explore further opportunities for collaboration and joint working between CCW and our partner.
• Ensure that our grants dovetail with other funding streams as much as possible.

CCW is therefore moving towards an outcome-focused approach to our funding - in order to enable effective delivery and obtain real benefits. This will require us to be certain from the outset of what our shared outcomes and targets are and being able and to effectively communicate these to our partners.

CCW’s evidence

1. Ease or difficulty of obtaining funds from WAG or relevant bodies

Core support v project support

One of the main concern for TSOs is the way funding is directed at new projects or innovative approaches and not towards core support. In an environment where there is little or no revenue or core support, CCW recognises the difficulties this causes some TSOs in retaining staff; and the way it restricts their ability to secure funding and grow through increasing their membership and capacity.

Our new approach to grants attempts to address this and identifies opportunities to provide a proportion of support for core funding, where shared objectives and outcomes can be clearly identified. This will help to build capacity at the outset, particularly for our Strategic Partners. We are also able to provide start up funding and project-based funding for other partners in line with WAG guidance.

The effectiveness of core support is sometimes difficult to quantify in terms of project short term outputs, but it is often a more effective use of funding towards the delivery of longer term outcomes.  CCW’s approach therefore recognises that our revenue support toward shared objectives could be directed (to an acceptable level) at core costs, allowing organisations to draw in other funds to deliver project costs. When TSOs are involved in complex financial arrangements involving say EU or Lottery funds, then it is essential that they have the right staff with the financial and project management skills.

The larger, more established TSOs can become expert at 'chasing’ project money and develop an ability to 'jump’ from one initiative to another. However, such hurdles are wasteful and soak up staff time, which could otherwise have been spent delivering projects and achieving outcomes for the public good. Other, often smaller TSOs lack such expertise and would not have the ability to switch directions and priorities with any ease.

Paying up front

A key principle of the Welsh Assembly Government's Code of Practice for Funding the Voluntary Sector is that grants should be payable in advance - where clear need is established. CCW operates within the standard guidance across all public sector organisations (the latest being Treasury guidance published in 2007). Our current approach therefore is that we can pay TSOs in advance if they can provide evidence of need, usually a requirement for "working capital to carry out the commitment for which the grant is paid”.

Communication and transparency

We are aware of the need to keep our partners fully informed on the availability of our grant support and how it can be accessed. We have an extensive list of organisations that have worked with us in the past at some stage, and we regularly assess if there are new potential partners who could help deliver some of our outcomes. For the open-call for 'Other grants’, we posted details on our web site and alerted key partners through grant seminars and publications. The open call included a closing date and we informed partners on how their application would be assessed and processed and when they would get feedback.

2. Ease or difficulty in complying with constraints or conditions placed on funding

Working with new partners - Financial and other checks

Before offering financial support, CCW seeks to understand the legal entity and competence of a TSO that we have no previous experience of working with. This includes looking at their audited accounts and other key information. Most TSOs understand why we need to do this. However, even when all the information is available it does not tell the whole story about why we are engaging with the organisation in the first place. In order to prevent public funds being used in an inappropriate way, we spend time trying to get to understand the capacity of the TSO. Initial grant offers would usually be limited until we develop more established working arrangements and mutual trust.

Insurance

We are aware that for some small TSOs obtaining appropriate insurance cover to allow their work to proceed is both difficult and expensive and can be a constraint. Umbrella coverage can be obtained via organisations such as the BTCV, but this can in itself be expensive for smaller bodies. More could be done therefore to ease the burden of obtaining insurance cover for smaller TSOs.

Financial reporting v outcome delivery

Our new approach to grants will gradually evolve from 2008/9 onwards. In the interim, we are working with a historic system which ensures that any money we pay out is accounted for through evidence of costs and deliverables, which inevitably requires the submission of invoices, or timesheets. Financial management guidelines embodied in our Grants Handbook encourage CCW to a position that places emphasis on financial reporting, rather than outcome reporting. This can sometimes cause a negative impact on smaller TSOs, as their financial accounting systems are often not as onerous, or comprehensive enough to deal with our information requests. It can be argued that time spent on accounting and reporting to funding bodies, such as CCW, is taken away from delivery of real benefits; but at the same time, it is vital to have sound financial management and control. Funding bodies such as CCW, or one of our intermediary bodies who are distributing grants on our behalf, have an important role in helping smaller TSO to comply with financial reporting without being distracted from delivery.

For projects that are using staff time and volunteers as matching funding, it is often difficult for TSOs and CCW to be clear about how project delivery information should be presented. For instance, TSOs do not always keep timesheets and if they do its not always done in a consistent manner. This causes issues of "trust” which are contrary to a partnership-working ethos. The solution revolves around managing risk in an appropriate way, ie. taking a balanced approach between asking TSOs to provide evidence and records against being allowed to get on with delivery and spending time achieving results.

Part of the solution to this must be based on gaining a better understanding of the organisation from the outset of the partnership; and whilst this requires an investment of time in the short term, it will lead to more effective working and greater efficiencies in the longer term. Our new approach to grants will attempt to address some of the above concerns by encouraging and supporting our partners in preparing strategies, operational plans and basic accounting records. Providing clarity on these issues will improve mutual understanding and trust.

Measuring success

Similar principles to those outlined above apply to the way CCW has traditionally approached post-payment grant monitoring. We are often constrained by the need to measure physical outputs or the costs occurred, as per the project plan -ie. whether the infrastructure is still in place rather than whether it is being regularly used, and how people might benefit. In some cases we will impose grant conditions regarding maintenance of capital items, but often the real value of grant is the actual outcomes that its helping to achieve; in other words we should be monitoring the benefits to society and asking if the population is getting healthier as a result of the project, rather than what length of footpath was provided and how much it cost. Our new approach to grants is aimed at tackling some of these issues and will hopefully lead to a more consistent way of measuring outcomes and value for money.

The quality of project reporting varies significantly between TSOs due to a combination of factors, but which all suggest that they often do not possess the capacity (or expertise) to spend large proportions of time on paperwork needed to satisfy the different reporting requirements of different funders. Longer term monitoring and reporting of the outcomes achieved is even less likely to occur if funders are continually changing the information they require. We want to work with other funding bodies to explore how our reporting requirements can take similar formats.

Improving mutual understanding

CCW is seeking to overcome some of these difficulties by asking certain partners to develop partnership agreements with us that set out the terms and conditions of their funding regarding:

• An agreed formula for estimated project cost calculations, including staff cost elements, and full cost recovery.
• Shared outcomes and targets that we are jointly working towards.
• Monitoring based on a performance framework, including incentives to deliver the work efficiently.

Project funding would then be made on the basis of performance and targets met, with the funded organisation needing to provide evidence of this, and not on staff time/costs incurred.

This model will only be applied initially to Local Authorities / National Parks and our Strategic Partnerships, but it should quickly establish a firmer footing for our engagement with the Third Sector. As part of this approach we will also appoint 'Relationship Managers’ as single points of contact for our grant partnerships with the larger/more strategic TSOs. We hope this will increase communication, understanding and widen the breadth and depth of partnership working. In the longer term, as we develop our understanding, we will seek to roll this approach out to other TSOs.

Our initial strategic partners will, we hope, be:

Black Environment Network
BTCV
Butterfly Conservation
Coed Cymru
Groundwork Trusts in Wales
Keep Wales Tidy
National Trust Cymru
Plantlife International
RSPB Cymru
The Wildlife Trusts in Wales
The Woodland Trust
Local Record Centres

We will review this and further TSO will be brought into this category over time.

Secondments and increasing capacity

A member of CCW’s staff was recently seconded to the Wildlife Trust Movement in Wales to act as their Strategic Development Advisor. CCW, together with other public sector bodies, are anxious to work with the Wildlife Trusts at the all-Wales level. There are 6 Wildlife Trusts in Wales and an all-Wales body called Wildlife Trusts Wales (WTW). The success of all-Wales delivery and operation has historically been very patchy. The CCW’s secondee has been tasked with improving the cooperative and coordinated working of the 6 trusts through WTW, as a first step to developing a partnership between the Wildlife Trust movement and CCW.

This is the first time a member of CCW staff has been able to be completely integrated into the Wildlife Trust movement and still remain part of CCW’s structure. Previously CCW would have grant-aided the appointment of an outside agency to fulfil this type of role. As a consequence, we have historically lost all of the valuable knowledge and understanding gained through working within the third party organisation. This secondment has generated a greater trust of CCW and the wider relevant public sector in the Wildlife Trust movement, with significant increases in efficiency and effective working.

3. Issues related to the duration or timing of funding

Timing

In terms of resource planning, TSOs often work to different reporting years, and have internal bidding rounds of which CCW may not necessarily be aware. For example, National Trust Cymru bid not only at a regional level but also at a UK-wide level for internal resource, and they have a complicated allocation formula partly based on their membership and properties as well as project development needs. CCW’s decision on which projects to take forward could have a major bearing on the ability of National Trust Cymru to draw in funds from its own organisation.

It is important for CCW to therefore develop a better understanding of all of these issues, which are often unique for each organisation with which we engage. CCW is often bound by WAG funding timetables, which can impact on our ability to tailor our own resource planning processes to better meet the needs of the Third Sector. The timing of an offer letter can sometimes pose problems. CCW normally withholds from making grant commitments until our Grant in Aid is formally set by WAG, which usually occurs in December / January and sometimes later. We do inform TSOs of that planned funding that is in place, but we cannot make formal offers until close to the end of the financial year and this inevitably means that they cannot begin to plan the work or appoint staff until they have certainty on their funds. This has a knock-on effect in that projects are slow to get started and -  inevitably for one-year projects - there is additional pressure to complete the work within a tighter timetable.

As far as we can, we are looking to bring this process forward so that we can provide certainty to TSOs through allocation of "planned budgets” or "in principle” funding, but we formally require the commitment from WAG before we can make this official.  Again, the ability to issue an offer letter can have a major impact on the ability of an organisation to secure other contributory funding.

Duration

CCW is able to offer three year funding to TSOs, which can be helpful to ensure stability, but this can also raise expectations in terms of ongoing support and in some cases lead to a perceived dependency or reliance on our funding. For TSOs that we do not (yet) class as Strategic Partners, we need to provide clear guidance on tapering of any  long term funding, which we consider to be  "development funding” and other funding we regard as capital (ie non-revenue) items.

Short term funding does have a bearing on an organisation’s staffing and knowledge base. Staff employed to run specific projects will seek alternative employments as the funding draws to a close, thus causing the TSO a significant problem in completing the work on time. A TSO may also have invested considerable time, effort and money in getting project-based staff operating effectively, only to see them leave as the project draws to a close. Such incidents are not only wasteful in terms of the use of public funding, but create a 'stop-start’ approach to delivering outcomes.

CCW attempts to balance our approach between short and long term funding commitments, otherwise we would have no headroom to develop and fund new projects. Therefore, for non-strategic partnerships, it is important that we have a clear exit strategy that manages expectations, or that we insist our funding is used for capital items only. We have to be careful that this second option does not add to the issues about retaining staff as discussed above.

The range of funders and collaborative approaches

Funding for TSO is available from a variety of sources and generally there is no coordination between the funding streams. This causes problems for TSOs in trying to switch between the different criteria, timing and reporting rules. A large-scale project could comprise of a TSO’s own resources, coupled with CCW grant funding and then used as match funding for another external funding stream, such as European Union or Lottery funds. In these incidents, the complexity needed to handle the accounting and audit requirements becomes a substantial hurdle and again distracts from delivery.

CCW is currently managing an EU funded project (Objective One funding through the Welsh Assembly Government) within the European Agricultural Guidance and Guarantee Fund (EAGGF) programme.  The total value of the project is £3.18 million, of which Europe is contributing £1.4 million.  Although the project is managed by CCW, the operational work is being carried out by the 6 other partners: RSPB, Butterfly Conservation, Bridgend County Borough Council, Gwent Wildlife Trust, Wildlife Trust South and West Wales and North Wales Wildlife Trust. Our partners acknowledge that - given the complexity of European funding and the administrative burden before, during and after the project - most of them, particularly the Wildlife Trusts and Butterfly Conservation, would not have been able to access this European money without CCW taking on the overall management role.

In two recent cases, a Wildlife Trust has turned down the opportunity to lead on a European bid (one LIFE and one Interreg project) because they felt that they would be unable to meet the onerous administrative requirements necessary when undertaking European Funded projects. Even at an intervention rate of 50%, where half the administrative costs would be met, this would still require the Trust to find the remaining additional 50% from core funds.

A key issue therefore is the need for funding bodies to collaborate and collectively seek solutions, rather than operating in isolation and letting the TSOs work their way through the maze of rules and accountancy issues. This is particularly relevant in terms of helping TSOs to get bids prepared in the first place.

There is clearly a link between grant support from a funding body, such as CCW, and the wider spectrum of external funds. One way in which we attempt to provide support and guidance is through producing a regular External Funding newsletter. This was originally intended for our internal staff but it is now distributed to a wide range of partners. Recent feedback from Blaenau Gwent CBC confirmed that, although CCW could not provide full support for one of their initiatives  (a biennial biodiversity event called Go Wild!), by having access to our External Funding newsletters they discovered that the British Ecological Society gives grants of up to £2,000 to help educate the public. They applied and were awarded £2,000 to help towards the cost of running the event.

The issue of assisting TSOs to access funds form a variety of sources is an important point and perhaps this is something that the WAG could consider further. Whilst it is probably impractical to, for example, synchronise Lottery Funding with Structural Funds, there may be a variety of ways to support TSOs by providing professional advice, support and possibly financial assistance through a match funding pot, in a similar way to Local Regeneration Funding.

Some concluding remarks

We recognise the latent potential of the Third Sector to contribute to many areas of our work and to assist in jointly delivering the Wales Environment Strategy and other key Assembly outcomes. However, as some of the research identified in this response suggests, to grow the Third Sector and ensure that it fulfils its potential to deliver WAG’s priorities and outcomes, requires further support and collaborative approaches.

To enable more effective working, WAG should seek to provide further guidance to AGSBs and other public funding bodies on providing support for core elements of TSOs.

CCW is seeking a third option for collaborative funding of partner organisations that is mid-way between a grant arrangement and a competitive tender (which restricts the ability to develop meaningful partnerships and share capacity). This could provide greater flexibility and tackle some of the problems and concerns TSOs have shared with us.

Better communication and collaboration is needed between funding bodies about their requirement for financial and project based information from grant recipients, particularly where joint funding is involved.  More support could be given to TSOs in preparing complex bids which draw down funds from several sources.

Cyngor Cefn Gwlad Cymru
Countryside Council for Wales

November 2007