I recently gave a presentation in Christchurch New Zealand with Iain Hines from J R McKenzie Trust to “Seed” – the bi-annual conference of the Combined Community Trusts.  Here are the key points, and the presentation is below.

As funders, we need our processes for finding, selecting and reporting on funding to be in the “Sweet Spot” – both robust and reasonable.

But sometimes – sadly too often – we become over-zealous and too demanding, and the organisations we fund spend too much of their time serving our needs rather than serving communities.  Despite being motivated by the worthy intentions of choosing well and understanding impact, we end up being the cause of, in one CE’s words, “untenable hours and stress.  You get jaded, disillusioned – it’s head-bashing stuff”.

If we put a dollar value on fund-raising and reporting time by community organisations, we can calculate the real value of the funding and begin to work out whether our funding processes are in that sweet spot.  This requires us to consider:

• Funding Burden: Time and costs spent applying for and reporting on grants
• Net Grant: Money received minus funding burden
• Net Funding: Total money provided by a funder minus funding burden for all applicants

I recently helped the well-respected J R McKenzie Trust to go through this exercise, surveying their grantees to get qualitative and quantitative feedback on their application process.  Key findings included:

• On average it takes 9 hours to put in an outline application (the first step in their two-step process), while shortlisted applicants spent an average of a further 39 hours on the full proposal
• There was a huge range in how long applicants took to apply, with almost a quarter of applicants spending more than 30 hours on their outline application
• After taking into account the cost of applying, J R McKenzie’s net funding as a percentage of their total funding is 93% – in other words 7% was lost to funding burden. (This figure only includes the cost of applying, and not the cost of reporting or J R McKenzie’s internal costs.)
• Most applicants thought that J R McKenzie’s processes were “better than most,” however there were clear areas for improvement, and the trust has implemented these.

Based on the feedback to J R McKenzie and other observations, here are some practical things funders can do to ensure processes are in the sweet spot:

• Be curious
  • Try filling out our own forms
  • Be committed to ongoing learning and improvement
• Gather information
  • Ask for feedback and time taken in our forms
  • Commission applicant surveys
  • Ask for applicant input on changes we make
  • Double check what our decision makers really need
• Review our processes
  • Be clear what we want to fund, and how much is on offer
  • Weed out questions we don’t really use
  • Use a two-step processes and/or processes proportional to what is on offer
  • Ongoing, multi-year funding is better for both grantees and funders
  • Align application forms and share reporting with other funders

Here’s the presentation:

PS.  If you are a funder who is curious about your funding burden and would like assistance to investigate this, please feel free to contact me.