[*A caveat to start: I recently wrote a blog for Blagrave Foundation and Llankely Chase Foundation on resilience and speaking truth to power, which in our case, is mainly about speaking truth to funders. You can read it here. I was nervous about it, because it’s a risk to put your head above the parapet, especially now, in these ever-more scary times, but my conclusion then was as now: we have a duty to explain how these processes actually play out if anything is ever going to change for the better.]
Yesterday, the government finally announced a package of support for charities at the front-line of the COVID-19 response. Sector bodies are understandably wary of criticising it (see the above speaking truth to power point) but what they should be saying is that it is woefully inadequate. The detail is not there yet but even the basics are ropey – it offers limited support to a limited number. It would seem so far that it will support only charities not social enterprises, and it focuses only on immediate COVID-19 responses rather than recognising the massive contribution of the voluntary, community and social sector in any kind of meaningful way.
It’s the equivalent of the government having grudgingly said to private sector businesses that it would only support them during the next couple of months if they diverted their efforts to COVID-19 related production. Instead, it simply handed out cash to private companies because their survival has value regardless; why not the same approach to charities and social enterprises which have both economic and social value?
And it is being channelled through gatekeepers – the lottery, foundations, government departments – again, unlike private businesses, where no-one has had to ‘prove their worth’ to be awarded funds. The message from government on what it thinks about social enterprise and charitable work is clear, even if it is hidden behind a shiny press release.
The reality is that social enterprises, community businesses, charities, and voluntary and community sector organisations of many kinds deliver huge value – tackling societal inequalities and vulnerabilities, boosting the economy, creating jobs, driving forward culture and engagement and helping to protect the environment. They also operate in a complex funding model, that is often ill-understood. Here follows a brief explanation of how our particular variant works and how the current crisis has had an impact on that (with apologies if it sounds in any way patronising to explain this).
Like any well-organised, forward-thinking, resilient business, we have two types of work that are always on the radar. 1. Current work and 2. Future work. The income that enables this work to happen comes from customers of four main types. 1. the general public through direct purchases, 2. contracts from businesses and the public sector, 3. funders of various types in the form of grants. Many social enterprises, and even more charities, also raise funds from a fourth source - donations or public fundraising. Unlike most of the private sector this means that our ‘customers’ – those who pay for our work – and those who we help through that work – our ‘beneficiaries’ - are different people.
A mixed funding model is complex. It’s a balance between earned income and grant income. Grant funding, especially, is a slow and long-term process that usually runs 6-18 months ahead. i.e. we think about, plan and apply for grants now for work that will start many months, even years, away. Even very simple funder processes take 3 months. The average, including the planning and preparation to be ready to apply, and needing lead-in between award and starting the work that is funded, is probably more like a year or more.
In the current crisis, various things have happened to up-end this planning. Firstly, the work has increased. We now have 1) current work, 2) future work and also, 3) extra work as a result of COVID-19. For us this means coordinating the community coronavirus response that is providing much-needed support to vulnerable people on the ground – from food deliveries, to technological help, to emotional support.
But, the income streams for all this work are now in disarray. The income from the general public through direct purchases has all but disappeared because everyone is at home (just like for shops and pubs etc.). The income from contracts is on-hold or cancelled, as customers all rethink what they will or will not pay for now. Where donations are an important income stream for others, this has mainly fallen off a cliff. This leaves funding bodies (trusts, foundations, lottery etc.) as the final and vital piece of the funding puzzle.
The response from funders too has been mixed. Most are working extremely hard to figure out how to help and how to do that quickly and well. Some are succeeding. Some less so.
To illustrate, several examples, all of which are amalgamations of various responses, so please don’t try to work out we mean you, just work out how your processes are impacting the frontline.
Funder 1: Don’t worry, you can use the funds we gave you for current work to help you to fund all the extra work you’ve got with COVID-19 instead.
Social enterprise: Great, but what about the current work that we still need to deliver now or afterwards which that money was due to fund? It still exists. Those needs haven’t gone away.
Funder 1: Um, not sure, we’re just thinking about emergency responses right now.
Funder 2: We’ve stopped all our normal grant programmes but soon we’re opening a new programme where you can apply to us for emergency grant support to help cope with your reduced income if you are struggling with immediate cash-flow problems.
Social enterprise: Great, but we don’t have an immediate cash-flow problem because we are a well-planned organisation.
Funder 2: Oh, then in that case, no, you’re not eligible.
Social enterprise: Um ok, but haven’t you been encouraging everyone in the sector to be more resilient and long-term about what they deliver and how it is paid for?
Funder 2: Well, yes, I guess so, but it’s a crisis and we need to help the ones in most immediate need right now.
Social enterprise: Yes, entirely agree, but what about the cash-flow problem and vital work that I won’t be able to deliver in 3-18 months – aren’t you just moving the cliff edge?
Funder 2: Um, not sure, we’re just thinking about emergency responses right now.
Funder 3: We know we agreed a grant with you but you can’t deliver that how we wanted you to anymore, so we’re pulling that grant and giving it to something else entirely.
Social enterprise: But if you do that our budgets will fall over. Don’t you realise we’ve been planning this for years and it’s all a careful and lean balance? Don’t you recognise that the needs that you awarded us the funding for are still there and will still be there after this crisis?
Funder 3: Ok, yes, so can you instead develop a whole new plan of how you will deliver the same outcomes in the next three months using technology, preferably can you do that by tomorrow, and can you commit to these huge target numbers and outputs, even though you have no idea what is happening at the moment?
Social enterprise: Um, no, not really. Can you please trust that we are doing our absolute best and that we care deeply about the beneficiaries that we help? Can you recognise that ensuring the survival of organisations like ours is going to be critical to recovery and the longer-term? Can you be flexible and understanding like others?
Funder 3: Silence.
Funder 4: What do you need? How can we help?
Social enterprise: Thanks for asking. We need funds to pay for the extra work that we are doing that doesn’t come at the expense of the funds you have promised us for the current work that we already do. And we need you to provide clarity on future funding programmes so that we can plan ahead, because otherwise there is going to be a cliff-edge in 6 months instead of now. And we need you think about recovery funds because some of the things that were funded by you, especially capital projects, are now going to cost more.
Funder 4: OK. So, here’s what we’re doing. Have an immediate emergency grant, no need to fill in a long form - we know you and trust you, it’s why we have invested in you already. Spend it on whatever you need to spend it on to make sure you survive and your beneficiaries are helped. You’re best placed to judge that so please do.
And rest assured, we understand that we will need to consider how to help you recover or that there might be additional costs for the current work you have in train over the next couple of years because of this crisis – let’s talk about that soon, when things are a little clearer and calmer. And of course, we will publicise as soon as we can what will happen with our normal grant programmes because we understand how charities and social enterprises work in the long-term and the major complexities of the funding processes that we put in place.
Social enterprise: Oh my god, thank you.
Funder 4: That’s ok, we believe in you, we have your back.
Funder 5: We don’t have any funds available unless you are in immediate cash-flow crisis but we can offer you some pro-bono advice about how to manage your cash-flow and how to think about long-term resilience. You know, you have lots of valuable knowledge that is needed more now than ever and you should think about properly charging for the services you provide.
Social enterprise: But we don’t have those needs because we have already thought about those things, which, incidentally and somewhat ironically, is why you won’t help us now.
Funder 5: Great, can you do a webinar to explain how you did that for others please?
Social enterprise: Um, ok, we’re quite busy with the current, extra and future work, but sure. Can you pay us for our time providing that service?
Funder 5: No, sorry.
Not to worry though, elsewhere in the private sector, where income streams have disappeared, the government has entered the fray to provide money to businesses to keep them afloat and ready to do the future work when we come out the other side.
Government: Don’t worry, you can furlough your staff, we’ll pay.
Social Enterprise: But we can’t furlough our staff, we have all our current work to do, and all this extra work to do, and the future work to plan, which is now all up in the air.
Government: Oh, then you get nothing to help. We won’t pay you to do vital work, we’ll just pay you to stop doing it.
Social Enterprise: But in the public sector you’re continuing to pay staff to do vital work. And in the private sector, you’re continuing to pay staff not to work. Can’t we get a compromise, since we are the community front-line that has held the reins through this period of austerity where the state has shrunk and the market doesn’t care?
Government: No, you can volunteer for someone else though.
Social Enterprise: But that’s economically totally inefficient. It makes no sense. All we need is for you to allow us to furlough staff and be able to keep working, just like the package you’ve given freelancers and the self-employed?
Government: No, but today we will maybe announce a package that will give you some emergency funds to help with the extra work, but only if you can prove what you do is important and that it is directly related to COVID-19 responses.
Social Enterprise: Right, but what about all the other work we do and that will continue to be needed after the crisis is over, especially during the massive depression that will follow?
Government: Wait, I remembered, you can have a grant, we’re giving £10k to all small businesses to help them, even if you can’t furlough, that’ll help?
Social Enterprise: But the way you have designed it means that we are not eligible because we don’t get Small Business Rates Relief, we get CIC relief.
Government: [Fingers in ears] lala lala lala.