Mission, Models, Money – Financing the future

Much of the MMM programme has focused on exploring how A&COs can become more organisationally and financially sustainable, and one of the programmes most important strands has concentrated specifically on intelligent funding. To get to the heart of the issue, interviews and focus groups took place with trusts and foundations, individual philanthropists, the corporate sector, the public sector, the social investment community, leaders and board members of A&COs, senior development professionals working at differing scales, groups of producers across all artforms, advocacy organisations, and policy makers. Three overarching concerns emerged:
– Poor alignment of missions between funders and A&COs is helping to drive the over-extension and under-capitalisation of the sector, stalling healthy growth and diverting A&COs from being mission-led.
– A&COs are under great pressure through funders preferences for funding programme activity over core costs and for short-term funding agreements, their tendency to penalise reserves, and their failure to accept full cost recovery.
– The shape, distribution and flow of financial resources have a dramatic effect on the behaviour of individuals, organisations and communities. At a time when the wider voluntary sector is developing new forms of financing, most A&COs remain heavily dependent on grants and income from fundraising.

A few simple changes to funding practices could make a big difference to the sectors chances of achieving financial stability. Here are some of the suggestions made in the MMM Provocation The Art of Living.

1) Just as it is important for A&COs to be clear and strict on mission focus, so too should funders articulate clearly why they fund what they fund and relate this to their decisions. When funders have doubts about the quality of delivery, they should be prepared to make rigorous decisions on the allocation of funding.

2) They need to encourage the deepening of organisational and financial capacity in the funded, dis-courage a dependency culture and encourage autonomy, not penalise it.

3) It is essential to fund core operations, not just the marginal costs of programmes. The price of contracts and value of grants must reflect the full costs of delivery, including a legitimate portion of overhead costs.

4) Funded organisations or individuals should be judged on their delivery against a clear mission, and funding should be withdrawn or increased based on delivery against mission rather than other secondary criteria.

5) The complex, fragmented, diverse, multi-relationship nature of the financing system, and the cost of accessing it, is burdensome and discouraging for too many people and it takes a heavy toll on our human capital. Its time to recognise this.

The negative impact of the parent/child relationship between public funders and those A&COs that are heavily dependent on public sector grants is a problem, and there is little evidence of a will on either side to change the dynamic. Funders are sceptical of A&COs ability to understand the parameters and boundaries they are working within and therefore unable to build trust, while A&COs believe that any challenge they make to the authority, mission and methods of their funders will result in a reduction or withdrawal of funds. Some of the changes recommended above, and in other areas of governance and capacity building, would go a long way to building trust and renewed confidence in risk-taking between public funders and A&COs. It is also important that more time is devoted to exploring alternative forms of finance which extend beyond the mainstays of contributed and earned income. Scepticism about these, as well as core capacity issues within A&COs, will need to be addressed if the sector is to survive and prosper in an ever more competitive funding environment.