5 Years of Funder Plus: Lessons on how small and local charities can grow and thrive

Lloyds Bank Foundation for England and Wales recently held events in London and Manchester with consultants who support charities the Foundation helps fund. The work the consultants do is part of the Foundation’s Funder Plus programme which provides a range of non-financial, tailored support to help charities thrive.

Consultants across England and Wales shared their experiences over the last five years of what charities need to do in order to develop.

Harriet Stranks, Director of Grants at Lloyds Bank Foundation for England and Wales, reflects on the event below. 

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The small and local charities we fund are facing increasing pressures because of rising demand and ever-shrinking budgets. At the same time, many of the infrastructure organisations that used to support them – local Councils for Voluntary Services, national sector and membership bodies – have had their own capacity cut, their services merged or even disappeared entirely. That’s why Lloyds Bank Foundation decided in 2014 to offer additional developmental support to charities we fund.

Over the past five years we have delivered capacity-building support to over 800 grantees in partnership with over 100 independent local consultants and providers – piloting and testing new ways of working. But we are always looking to see how we can improve the support we offer to small charities. Over the summer, we brought over sixty of our consultants and suppliers together at events in London and Manchester to look to the future of capacity building.

We shared our collective experiences of the emerging needs and challenges for small and local charities and discussed how the Foundation could respond.  The issues broadly fell into two categories; developing people and keeping up with external changes.

Developing People

Consultants described a significant lack of investment in leadership training. Charities prioritise their budgets to deliver services; training was and still often is seen as either a burdensome legal necessity or as an expensive luxury. Many charity leaders came up through the ranks and are service experts, but there is sometimes a lack of understanding about managing the back-office functions of the charity; marketing, operations, finance and people.

The professional development of small charity leaders is critical as they are intrinsically tied to the success of the organisation. Funders invest in credible and competent people, so it is essential that leaders have the confidence to be decisive as well as the technical skills to deliver. They need space and time to think and plan, and peers and mentors to help them overcome challenges. Emerging leaders also need investment – to develop the ability to delegate well and ensure the charity continues to have energy and vitality.

Programmes for change need to take everyone in the charity, including trustees, with them on a journey of development and learning. Recruitment of skilled trustees is also a huge problem and often charities had boards which needed to be refreshed with new voices. Consultants also observed that many trustees and CEOs were planning for retirement and reiterated the need for investment in emerging leaders. This ensures the charity can make realistic progress, ultimately create cultural change and a longer-term legacy for its work.

Consultants recognised there is a widespread increase in demand for services for people at crisis point and staff across small charities were suffering from stress, affecting their mental health and wellbeing. Lots of charities told us and our Funder Plus consultants about burnout and higher staff sickness rates. This is an enormous challenge for the sector and needs to be recognised. Charities need to start having open conversations with staff about their mental health so they can get the right support.

The biggest need we identified was financial literacy. Leaders and trustees can often struggle to make data-driven decisions. This means that many charities ended up in crisis because they failed to act quickly enough. Charities need to start having conversations about mergers and partnerships much earlier.

Keeping up with external changes

Beyond the ongoing uncertainty around the economy and Brexit, consultants predict the wider operating environment will be volatile for small and local charities.

We heard how charities often don’t understand how to make the most of technology. Many small organisations are not being savvy enough when it comes to exploiting social media and new IT systems. There is a serious skills gap in the sector and it is leading to inertia because charity workers are sticking with bad digital systems rather than switch to a new system. This type of systems transformation takes a lot of time and energy which takes people away from the frontline, therefore it continues to sit on the backburner.

Many charities want a better website and digital channels but often they don’t have a clear enough ‘vision, mission and values’ which means they struggle to clearly articulate the ‘what, why and how’ of what they do. The absence of which leads to wasted resources developing an online presence that fails to cut through.

The charities we and our consultants support found it hard to keep up with the pace of change and keep abreast of legal changes affecting both charity compliance and changes in the welfare system. This affects their ability to support clients with accurate up-to-date information.

Charities frequently find themselves in the uncomfortable position where they are competing with other charities, and more recently, the private sector, while also being pressured to establish partnerships and collaborate on services and contracts. Collaboration can be a force for good, creating better responses to common issues and helping to reduce costs, but forced collaboration causes distrust and fragmentation in the sector.

How will the Foundation respond?

These are all major issues, and not ones the Foundation has the resources to solve alone! By sharing insights from experts in the sector on the major challenges ahead, we can begin to help charities try to overcome these challenges, enhance their skillset and thrive.

Our funder plus programmes will also need to adapt to meet the challenges of the future. At our events in Manchester and London we asked our consultants to make recommendations for how we should respond. Over the next year, the Foundation will continue to review the range of support we offer – in 2020 we’ll particularly focus on digital capabilities like CRM systems and the resilience and wellbeing of leaders and frontline staff.

At the same time, we’re bringing development support closer to the heart of our grantmaking approach. We want to partner with charities with an appetite to grow and improve – alongside every financial investment, we’ll co-produce a development plan to help grantees adapt and thrive for the years ahead.