Giving Evidence is delighted to be studying funders’ application processes – to try to figure out how to reduce the costs that funders create for operational nonprofits. This is a hugely important topic, so we have written about it publicly, and have been seeking for a while to work on it: we have now teamed up with the Law Family Commission on Civil Society, run by Pro Bono Economics, which exists to ‘unleash the full potential of civil society’ because a considerable ‘leash’ (constraint) on civil society organisations is the costs they bear from charitable funders through application and reporting processes.
What is the issue here?
Charities and civil society organisations (CSOs) spend masses of time (=money) applying to funders. If they do not get the funding, most of that cost is wasted: specifically, it reduces the amount of work and good that they can do with their available resources. So we can think of it in terms of the efficiency of the process (we mean ‘efficiency’ in the mechanical, engineering-type sense, i.e., the amount of output achieved for a given amount of input, vs the amount that is wasted.) In economics-speak, application costs raise the cost of capital for CSOs.
Application processes are created by funders. Some of the costs are borne by them (e.g., their staff time reading the forms) but other costs fall on non-profits: they are ‘externalised’ by the funders, and so are invisible to the funders, and rarely actively managed by them. {There are some honourable exceptions: BBC Children in Need is one.} Hence, in a bad case, it can happen that a funders’ process creates so much work for other organisations that its costs exceed the amount being given – without the funder even realising. We have seen instances of this.
Most funders have their own application forms and processes. That increases work and wastage. And some funders invite way more applications than they need. So we seek to reduce this wastage. (Some analysis here by Time to Spare of the scale of that wastage. It thinks that 46% of UK grants cost more than they’re worth.)
Johann Sebastian Bach:
“Oh, that’s my application to the court. If I get it, I’ll have spent all of it on that very application.”
From Bach and Sons, a play by Nina Raine[1]
But it’s not trivial, for various reasons. First, some application processes are helpful to applicants, even if they do not get the funding. Second, the application process may serve some useful purpose for the funder, such that ditching it would be an error. And third, we are – always! – alive to the possibility of unintended consequences.
Now is a particularly good time to work on this topic because many funders changed their practices in response to the pandemic, becoming faster and leaner – so may be open to embedding new practices. For instance, 67 funders in London collectively created one-stop shop application processes with a slimmed-down application form, and funders in Jersey also collectively created a new collaborative process.
Our approach
Is to treat this as a behaviour change exercise. That is, we are not looking simply to document these costs, but rather to understand why and where they arise, the benefits to the various players as well as costs, and to identify the likely effects of approaches which might reduce them.
We seek to really understand the likely effects of possible fixes, as well as their likely take-up. This seems to be an innovation in discussions and work on this issue.
What we will do
Clearly we are learning from existing work on this issue and seeking to augment it. So our workstreams are:
Understanding what the current behaviours are and why they arise. We have interviewed foundations – and crucially also some operational nonprofits. We seek to understand what funders are trying to achieve with these processes, e.g., to their reduce costs, to identify the strongest applications / organisations / approaches, to reduce costs to applicants, limiting work for their teams, limiting applications to reduce costs to applicants. We have investigated how operational charities decide whether it is worth applying to a particular funder – the extent to which they take into account the costs of applying and the chances of success (the ‘expected value’ of their application). As far as possible, in these interviews, we have looked at other aspects of funding practice, such as restrictions and grant duration.
For example, here is the Hewlett Foundation describing how it designed its processes to minimise burden / maximise effectiveness of its grantees. (Yet another reason that I have a massive crush on the Hewlett Foundation…)
Discussing possible fixes with foundations and experts. We have interviewed foundations and sector experts about potential fixes, whether new or already attempted. We are aware of, for example, the #FixTheForm initiative; a study a while ago by NPC called Turning the Tables; a study by the University of Bath; the feedback about funders being gathered by GrantAdvisor; Project Streamline in the US; and various attempts at shared applications and shared reporting. The goal is to gain insights into the dynamics that they have encountered, and their views on drawbacks and feasibility of various proposed fixes.
Economic modelling: Understanding the likely effects of potential fixes. What people say they will do and what they actually do are often different! As well as listening to foundations and charities, we are doing some economic modelling, to identify the behavioural changes that can realistically be expected, the scale of savings that potential fixes might have, and to whom – and also to uncover unintended consequences (including adverse effects) which might arise from changes to the system. This approach is different from much of the research in the charity sector: we hope that it will bring additional insight.
If you have worked on this issue before – in any country – please get in touch! We would love to hear from you.
[1] This play is new and only on-stage and the script not yet published: I may have misremembered this quote a bit.
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