Funders get what they ask for: the good and the bad
Traditionally, there has been something of a power imbalance between service providers and funding organisations in the social sector. You could reason that this is to be expected, as funding providers are ultimately held accountable for how they allocate and use the limited funds they are entrusted with.
But do organisations that commission programs, whether it be through grants, tenders or philanthropic donations, fully appreciate the important leadership role they play in the sector?
My observations here are based on a few recent experiences of ours and I should start with a big fat disclaimer: the initial inspiration for this post came from some work we did to develop a service model for an organisation to pitch for funding that was eventually unsuccessful. Sour grapes this is definitely not, as I’m not for a second saying that this one idea was of more merit or would have created more social value than any other. I repeat: this is not a critical post.
This experience along with many others have helped us identify some good and not so good examples of the critical role that funders play in creating social impact. My aim here is to prompt thought around how to bridge the typical funder-provider disconnect and lead to better outcomes resulting from any form of social impact investment.
At the risk of over-simplifying things, I will highlight using three hypothetical ‘types’ of funder:
Some funders take a commissioning approach, where they seek a particular evidence-based service or an outcome achieved. For example, 'deliver x number of widgets', or 'increase positive social outcome by x%'. This type of funder bases their funding decision on who can best deliver that result. This type of model reflects the role that most PHNs across Australia have been playing in commissioning primary mental health care services for vulnerable and under-serviced groups.
Some funders take a sector leadership/development approach, where they might commit to:
funding innovative service models with potential to scale up
partnerships at a local level
resourcing smaller, emerging organisations to build their capacity.
This type of funder appreciates that most of society's wicked problems like unemployment, homelessness, chronic disease and mental illness are unlikely to be solved in a single round of funding, and contribute to the progression of the sector as a whole. Many philanthropic funds endeavour to play this sort of role.
And finally, some funders appear to direct money towards programs with an already high profile and usually already with sizable investment in an attempt to demonstrate their support for the good work. This role begs a few questions: Would the program have been delivered anyway? Is it the best investment decision? Is it just displacing other possibilities? As a funder, did they have a clear idea of what they were seeking?
It’s this third ‘type’ of funder that can create that sense of disconnect between funders and providers.
To help prevent this, we believe there are two key activities that all funders should undertake:
Publishing the evaluation findings from each of the programs they fund. These reports would be invaluable in helping the sector learn from previous experience and gain a better insight into what works and what doesn’t
Reporting on their own evaluation findings from the funding program overall, particularly with respect to their perceptions of value from their investment. This would help inform future service planning by providers and guide future investment decisions by the funder.
Each of these activities is relatively simple but reflects a more proactive and deliberate approach by funders. Making this information publicly available would help contribute to a more engaged, connected and effective sector. Not only that, it would directly benefit funders as they would expect to see higher quality proposals and more evidence-based, innovative and comprehensive service models in future rounds.
This is an area where funders and investors in social programs can lead. By taking a more proactive approach, they can bring service providers along on the journey. As they say, “he who pays the piper calls the tune”.