Co-designing a new third sector funding scheme in Argyll and Bute

In 2011, the Children and Families Service Department of Argyll and Bute Council was tasked with ensuring savings of 15% of its budget (£1.86 million of its £12.4 million budget) over the next three years. The Council provided over £650,000 in funding to third sector organisations in 2010-2011. In this uncertain climate the Council was keen on turning a crisis into an opportunity to change the way it works with its third sector partners.

Early in 2012 the Children and Families Service Department took the decision to co-design a new funding scheme together with third sector organisations in the local area, rather than just asking the views of service providers when the new funding scheme had been determined by the Council. Even though this dialogue took place in a context of cuts, it was framed in a positive way – not “How should we make the cuts?” but rather “How can we make the funding scheme better?”

A systematic review of the services of the Children and Families Service Department was undertaken internally, which showed the need to change the funding scheme for third sector organisations.

This service review highlighted several problems in relation to the existing funding scheme:

• The application process had multiple mechanisms and budget streams, making it confusing and inefficient. The processes required were described by one organisation as a “jigsaw of different funders which don’t always fit well together.”
• Activity was often emphasized at the expense of outcomes.
• Funding priorities were not systematically reviewed to ensure alignment to changing priorities.
• Funding was generally allocated on an annual basis, which tended to work against innovative initiatives, which the Council was keen to encourage.

To address these issues Argyll and Bute Council aimed to develop a new funding process which would be more appropriate for an era of collaborative working. The Council prided itself on its commitment to listening actively to its community and enabling them to influence decisions. Consequently, it committed to co-designing the new approach with third sector organisations in the local area.

At this May 2011 event, participants also discussed the steps that local organisations could take to respond to the reduction of funding, and how they could work more collaboratively between themselves and with the Council.

A key part of the May 2011 event was that participants suggested the criteria they believed the Council should used when making funding decisions. These criteria included:

• the match between the organisation’s activities and the Council’s service priorities;
• the outcomes targeted and the organisation’s capacity to deliver these ;
• adherence to the principles of GIRFEC/Early Years Framework ;
• financial viability ;
• quality of service delivered ;
• impact achieved.

The consultation day made it clear that the new funding system should include:

• a more streamlined and efficient grant system;
• funding being more closely aligned to service priorities;
• greater focus on outcomes;
• no limit to the funding requested;
• support to groups so that they could better consider what they wanted to provide and how that would meet service priorities;
• stronger personalisation of Children and Family Services.

To further improve the funding process three more workshops were held between the Council and local third sector organisations, undertaking work to implement the decisions taken. These workshops focused on redesigning the grant process, agreeing a suitable time line, considering assessment criteria, redesigning the application form and agreeing the supporting documentation which would be required.

The new funding process was completed and launched in October 2011.

This meant that the whole consultation and change management process had been accomplished within a year. As Mark Lines highlighted, this had put the Council under strong pressure at times. Nevertheless, this meant that the consultation had avoided the danger of many similar consultations, which take so long that everybody loses interest and trust.

The new funding process has minimised supporting documentation and leaves discretion to third sector organisations about the amount of information they wish to provide – with the principle of proportionality being applied.

The consultation has also resulted in application forms becoming more user-friendly. Indeed, learning from the consultation around this project has resulted in new forms being adopted for all grants throughout other Council services.
    
On the issue of three year funding, the new system included an ‘in-principle’ agreement that three-year funding could be provided. Applications for three year funding would, though, need to be supported by a three year business plan and would undergo a more rigorous evaluation. The Council still had some concerns, moreover, that once a significant number of three year funding decisions had been taken, they could not be revisited for several years, so that non-funded organisations might feel locked out of the process.

The suggestion to set up an online application process and portal proved to be too costly in proportion to the size of the grant process, so has not been implemented.  

A final learning event to evaluate the efficacy of the new system was held at the end of April 2012. Again, the Children and Families Service Department invited all third sector organisations in the local area to participate. Governance International facilitated the one day event. Tanya Macdougall, Director of the Family Mediation Service, Argyll and Bute outlined to the group her experience of applying for a grant under the new process. Overall she felt that the new process was much better than the previous one; the application form was more user-friendly and there was the welcome possibility of applying for three-year grants.

Her main complaint related to the operation of the assessment panel (a view reflected by other participants), which she felt had been too large and not clearly introduced to the applicants (so she did not know how to pitch an answer when asked a question). Moreover, she felt that she hadn’t received sufficient information prior to the panel to allow her to prepare more effectively. Finally, she felt she had to invest a lot of time for just a 5 minute presentation and 10 minute questions and answer session.

In the subsequent discussion, participants made it clear that they were highly satisfied with the consultation process, particularly its transparency, and felt that their insights had been taken on board throughout the consultation. The main problem had been the crowded timescale due to the thorough consultation process during this first year. They accepted that, now that this process was in place, the timetable would probably be much more comfortable in future years.

This initiative was designed to improve the impact and effectiveness of reducing funding as opposed to delivering direct savings. Increasing focus on outcomes and on alignment to Council service priorities ensures funding decisions are more effectively focused on reducing resources in delivering strategic priorities.

Streamlining the grant application process, redesigning the application and reducing requirements for supporting documentation have delivered savings for both the Council and provider organisations.

Co-designing a new funding scheme delivered a significantly better result for both the Council and third sector organisations than would have been achieved by a traditional consultation exercise. Who would know better than those applying for funds what an easy-to-use funding scheme should look like? The co-design process surfaced the ideas and suggestions of all third sector organisations on key principles that should inform their grant funding. These principles have now been incorporated into other funding schemes of the Council. 

Third sector organisations also responded very positively to the full, frank and open presentation of issues from the Council and to the Council’s demonstrable commitment to working together. Clearly, a co-design process meant compromises and negotiations, as not all suggestions made by third sector organisations could be taken on board.

The exercise enabled the Council to reaffirm its commitment to grant funding and to clarify the relationship between grant funded and commissioned services.

Governance International (2012), Evaluating Third Sector Provision: Making it Work Together. Report of the Children and Family Services Consultation Event in Inverary on 23 April 2012 (pdf download).
    
Website of Children and Family Services of Argyll and Bute Council - click here.