Supplementary memorandum submitted by
the National Council for Voluntary Organisations
Most of NCVO's experience and knowledge is with
the National Lottery Charities Board (NLCB) and to a lesser extent
with the New Opportunities Fund (NOF). Both our written and oral
evidence reflects this experience and knowledge. While we continue
to disseminate information from the other Lottery distributors
to our members, our main links remain with NLCB and NOF.
When we asked members for their comments in
relation to this inquiry they focused on NLCB and NOF since this
is where most of their experience derives from. This also reinforces
the point made to us by one CVS that the resources needed to provide
advice, information and support across all the Lottery distributors
is lacking. They told us that in their experience community and
voluntary organisations found it difficult to access lottery funding
other than through the National Lottery Charities Board or through
the Lottery's small grants programme (Awards for All). They reported
that few organisations were aware of the larger-scale funding
opportunities available through arts, sports and heritage lottery
schemes or how to access them. However, they also pointed out
that this might in part be due to the fact that as an infrastructure
agency they have not had the resource to disseminate information
on and provide support for organisations to apply for specialist
Consequently we have more information to share
with the Committee on NLCB (and to a lesser extent NOF). This
is not to suggest that charities and voluntary organisations do
not receive funding from the other Lottery distributors, or that
the other distributors do not present any problems. It is simply
that the majority of the experience lies with NLCB.
Members raised the following issues in their
evidence to NCVO:
1. the failure of Lottery distributors to
provide continuation or development funding for projects or services
set up with Lottery grants (examples 1, 2, 3, 4 and 5);
2. the refusal of NLCB to pay core costs
(examples 6, 7, 8, 9 and 10);
3. goal-posts changing during the application
process and poor/conflicting feedback on unsuccessful applications
(examples 11 and 12);
4. the required partnership element of NOF
bids is not working with voluntary and community groups being
included as a token gesture or not being included at all (examples
13, 14 and 15);
5. little evidence of NOF funding reaching
voluntary and community groups;
6. questionable advice from the Lottery boards
raising questions of consistency, quality and transparency (example
7. medium-sized organisations are being squeezed
out of NLCB funding;
8. the wish for smaller, more sustainable
projects to be supported rather than "all-singing, all dancing"
9. positive feedback from members on their
relationship with Lottery funders including what Lottery funding
is achieving where other grant programmes are failing (examples
17, 18 and 19).
The following pages describe each issue and,
where appropriate, provide illustrative examples.
A common complaint from members involves the
failure of Lottery distributors to provide continuation or development
funding for projects or services set up with Lottery grants. NLCB
has always provided a source of revenue funding for projects but
the Board continues to fund new projects while not supporting
successful projects or services beyond a maximum of six years
(but often only three years). Groups are expected to secure alternative
funding from local authorities and other funders for example.
This creates a number of problems.
Staff often leave for more secure
jobs towards the end of the life of the Lottery grant. This can
make it particularly difficult for projects to secure continuation
funding from any source as new staff take time to settle in.
If a service or project is forced
to close because it cannot secure continuation funding this can
place pressure on existing agencies and organisations to pick
up the pieces.
Beneficiaries of services or projects
will often have had their expectations and aspirations raised.
Failing to meet these can be harmful, especially to vulnerable
NCVO understands the danger of grant programmes
"silting up" if existing projects continue to receive
funding, however, Lottery distributors need to be more supportive
in developing exit strategies. There may, for example, be a case
for the NLCB to fund some strategic projects on a longer-term
basis (say 10 years) to allow them to make a significant difference.
Example 1: Youthopia on the Johnson Fold Estate
Youthopia was a project for young people on
a deprived housing estate in Bolton. Led by the tenant's association,
it provided ITC training, advice and support for young people
on the estate. It was quickly successful but its grant came to
an end at the beginning of 2000. The co-ordinator left before
the end of the grant to take up a more secure job. The new co-ordinator
did not have time to put together a quality bid and left the post
after only a short time. The project subsequently had to close,
having not been able to secure continuation funding beyond the
life of the NLCB grant.
As a result young people who had been encouraged
to branch out lost access to computers and support for the initiatives
they had been encouraged to pursue. For example four young men
had been encouraged to apply for funding from the Millennium awards
scheme to set up their own recording studio. They had no support
in developing this initiative after the Youthopia project closed
and they were badly let down. Young people on the estate had nowhere
to go which in turn placed pressure on the local youth service
and the CVS to pick up the pieces.
Example 2: Peartree Play Scheme, Derby
The scheme offers playscheme facilities over
the summer holidays mainly to children from Black and ethnic minorities
in a deprived area of Derby. The scheme has been running for years
on a shoestring and the management committee has been doing the
round of applications every year to get funding to keep the scheme
running (eg Children in Need, Local Chamber of Commerce, Lloyds
TSB etc). It is a highly successful scheme with a long waiting
list, well managed, run mainly by a few volunteers and a few paid
seasonal staff. Both the local educational and Early Years departments
have endorsed the scheme as one of the best in the city and much
The group applied to NOF as soon as the childcare
scheme came on stream. They were funded under the first wave of
schemes. They built a good relationship with staff at NOS who
were pleased with the scheme and nearly used it for one of their
promotional features. Throughout 1999-2000 the group was given
repeated reassurances that the scheme would be funded a second
time for their summer 2000 playscheme as it met the right criteria.
They applied to NOF and also continued to apply for other sources
of funding to complement the NOF grant. In July 2000, a few weeks
before the scheme was due to start, they were finally told that
they would not be funded again because their scheme was not in
one of the 10 most deprived wards in England. Staff had changed
by then and an appeal did nothing to change the situation. The
group was forced to reduce the scheme by a few weeks and to turn
away a lot of children.
As a result of the experience with projects
like Youthopia, Bolton CVS will now not encourage groups to apply
for Lottery funding unless they fulfil the following criteria:
they have the capacity to handle
the application process (financially etc);
they have the capacity to manage
and monitor the project if successful; and
they have in place a strategy for
sustaining the project beyond the life of the grant.
The CVS works with groups to help them produce
a strategic plan for future funding. Alternative sources might
include trust and foundation funding (if available), contracting
with local statutory agencies where appropriate and possible,
or generating earned income. The CVS also asks groups to consider
the potential harm that could be done if the service was forced
to close after three years.
One CVS reported awaiting the outcome of a continuation
bid for funding. They made the point that there is no similar
funding available from their local authority for the work if the
NLCB are unable to provide more funding. This CVS supports a number
of other groups through this project, who in turn are enabled
to access Lottery funding. However, few other local grants are
available in place of this lottery funding and local trusts are
under increasing pressure for funding and support. Most of the
groups this CVS supports are small, unfunded, volunteer-run organisations
who need regular support to enable them to access funds and information.
If continuation funding is not available to allow the CVS to continue
this work then they feel that much of the hard work of the last
three years will be undone.
One CVS was informed at a recent NLCB briefing
that the National Lottery Charities Board is likely to become
more directive about exit strategies in the near future. Organisations
receiving three year grants will be expected to begin detailed
work on an exit strategy at the end of year one of their project.
Whilst forward planning is extremely important, many groups need
support and training to develop the skills necessary to sustain
projects and develop exit strategies.
In cases where continuation funding is made
available, some problems remain. Voluntary Action Manchester reported
that new bids for existing projects cannot take account of increased
salary levels as a result of re-grading during the life of the
project. Salary costs in continuation bids must be pitched at
the same level as the original bid. They criticised this policy
for not allowing natural development and progression, placing
a heavy burden on organisations who are unable to top up salaries
from their own resources.
Due to the reduction in the NLCB's funds from
2000-01 the competition for continuation funding is going to become
more intense. A number of CVSs reported that NLCB were giving
feedback on some unsucceessful grant applications for continuation
funding on the basis that there was not enough money. In some
cases grant officers had assured organisations that they would
be refunded but they subsequently had been turned down because
of inadequate funds.
Voluntary Action Leicester (VAL) received funding
for a Development Officer for Black groups for three years. During
the period the number of Black groups VAL worked with, offering
support, training, advice and information, increased from 144
to 250. The expectations of the community were raised and continued
support was required in order to develop their capacity further.
Research has established that there are many more new and emerging
groups that also need to develop their capacity. When VAL applied
for funding to continue the project, the application was turned
down on the grounds of insufficient funds.
A constant complaint from members, and in particular
Councils for Voluntary Service who provide funding advice locally,
was the refusal of NLCB to pay core costs. These have included
management and administration fees, rent, insurance costs and
fuel costs, even where these are additional and entirely related
to the project which is being funded by the NLCB.
If an organisation has 10 staff and two finance
officers and applies to NLCB for another 10 staff and two more
finance officers, they will pay for the finance officers. If,
however, you apply for only one more staff member and 20 per cent
of the cost of a finance officer, they will not pay unless you
are adding 20 per cent FTE to your payroll. This means that if
you have several NLCB funded projects, your core activities become
overloaded and unsustainable. The same is true of rent. NLCB will
pay for an extra room, but not for a share of your existing room.
So once you have accumulated several new projects with no money
for another room or another finance officer, the next project
becomes the one at which workload/space overflows. You need another
worker or another room and NLCB will not fund either as the next
project does not need a whole finance officer or a whole room
when considered in isolation.
NLCB also refuse to pay salary increments. This
often leads to differences in the terms and conditions of staff
within an organisation, depending on whether they are paid for
by the Lottery grant or from core income, unless the organisation
funds the increment from other sources.
Bolton CVS made a bid to the NLCB to set up
a Volunteer Bureau. They included in the bid an amount to cover
one fifth of the Assistant Chief Officer's time on the basis that
if the bid was successful the ACO would be managing five projects
of which the Lottery-funded Volunteer Bureau was one. They did
this to make a political point knowing that NLCB would not pay
this portion of the bid. As expected NLCB cut this amount from
the bid before agreeing to fund it. The ACO's time will now be
paid for out of the CVS's reserves instead. The alternative would
have been cutting the post to four days.
Voluntary Action Stoke-on-Trent received a grant
offer in October 2000 from which the figure for rent over three
years had been excluded. It was considered a core cost because
no new office space was required for the project (NLCB felt that
it could be accommodated in their existing office). The charging
of a rental figure to projects (inclusive of electricity and services)
has been a standard practice of this CVS (and many other voluntary
organisations). They have a core staff of four people and while
they do not require an office of the size they have just for their
core operation, additional space is required for office-based
projects. Projects are therefore expected to contribute to office
One CVS pointed out that the only way for them
to build up their core work was from management/administration
fees attached to projects. Without this element of project funding
the irony is that the organisation's core activities will be sacrificed
at the expense of a variety of projects which no longer have the
management and administration support at the core to sustain them.
Organisations can secure project funding but not the core funding
to run the project.
One CVS has won a £206,000 NLCB grant to
set up a furniture recycling scheme. They applied for this grant
after applying for a grant under a different programme for core
funding and capacity building. They subsequently discovered that
the bid for capacity building and core funding had been unsuccessful
but that the second bid had been successful. However, they now
have no core funding to run the furniture recycling scheme.
Community First was offered a grant in April
2000 to support its Credit Union Development project. NLCB granted
less money than Community First had originally sought. They deducted:
"£2,100 for rent as the
organisation owns the property where the project will be based;
£1,181 for inflation in year
one as our policy is only to award inflation costs in the second
and third year of a project; and
£11,000 for the predicted funding
you expect from your Local Authority (in the first year)."
Community First charges rent to all their projects
as this is one way of covering core costs including running and
maintaining the building. If they did not accommodate a project
in the office they would be gaining rent income from an outside
They include inflation in the first year because
they use Local Government Pay Scales which have a cost of living
rise each year. The first year of the project would have been
after the next cost of living award.
The £11,000 for local authority income
was deducted following discussions during the assessment stage.
It was not included in the original application as Community First
was experiencing difficulty in getting such funding for the project.
They felt it would have been helpful if the NLCB could have been
more flexible on the outcome of these funding negotiations. In
fact Community First only achieved £7,000 local authority
funding specifically for credit union development in the first
year of the project.
There is a belief within the sector that NLCB
prefers to fund projects which are attractive. Funding "hidden
costs" is not particularly attractive.
Some organisations highlighted the development
costs of new projects. They told us that Lottery bids take a significant
amount of time and resources to put together and that they believed
these costs should be payable as a contribution to core costs.
A number of our members pointed to the higher
cost of developing partnership or consortium bids. Partnership
bids do not, in themselves ensure sustainability. On the contrary
working in partnership brings with it an additional burden of
management and workload. Having said that most organisations welcome
partnership working where it avoids duplication of effort and
uses scarce resources more efficiently.
As a solution one organisation suggested that
NLCB could consider funding "office managers" along
the lines of GP practice managers. This would free up the "practitioners"
(for example community development workers) to practice rather
than chasing funding.
NLCB funds "projects" exclusively.
This is considered by many in the voluntary sector as far too
narrow a view. Many believe that the NLCB need to make a longer
term contribution to the funding of voluntary organisations.
There are many reports of Lottery boards moving
the goal posts during the application process and in particular
when they give reasons for a grant application being turned down.
In one case a Citizens Advice Bureau applied
to the NLCB for a grant to run a benefits take-up project. Similar
projects were being funded in other areas by the NLCB. Feedback
on the first, unsuccessful application was that the management
costs were too high. The group revised the bid, reducing the management
costs. The bid was turned down a second time with the feedback
that the service was provided by the Benefits Agency and was not
therefore additional. This in fact missed the point of the service
but also varied from the original feedback.
In Lewisham the CVS worked extensively with
groups interested in bidding to NOF under the Healthy Living Centres
programme. Although information was forthcoming from NOF at the
outset, this deteriorated and the goal posts appeared to change
as NOF appeared not able to decide what they wanted (eg physical
centres or networks of groups). NOF had advised that stage one
bids should not involve consultants and yet stage one bids required
a level of information which would have had major resource implications
in terms of putting it together. A number of groups did engage
consultants as a result. However, NOF asked a number of groups
for more information following submission of stage one bids which
raised expectations for bids which were subsequently turned down.
In addition NOF then issued revised stage one bidding forms and
expected groups to fill these in. At this stage many groups in
Lewisham simply gave up!
IN NOF BIDS
A number of CVSs made this observation. Either
the lead bodies (usually local authorities or health authorities)
do not have enough understanding of the voluntary and community
sector to support them to become involved effectively, or the
voluntary and community groups just do not have the resources
to become involved. There is also very little coordination from
the local authorities. Voluntary and community groups are sometimes
only being included as a token gesture or where they are already
operating within formal partnership initiatives.
One CVS suggested that many of these small groups
need funding from NOF to enable them to take part in partnership
bids. This could pay for staff time spent on these bids, attending
meetings, staff training costs and consultation costs for example.
The Community Development Learning Fund administered by the Home
Office was one suggested model. This fund is available only to
small groups and in a certain area of England but it provides
funding towards networking, visits to other projects, and other
activities that support the group's capacity to get involved in
local partnerships and initiatives on more equal terms.
The Out-of-School Learning Scheme in one area
of the East Midlands was being coordinated by the local education
authority with no extra staff resources. They had little understanding
of the voluntary sector and therefore only supported schools through
the scheme, and not voluntary and community groups.
One East Midlands CVS reported that Healthy
Living Centre projects in their area had been such big projects
that voluntary and community groups did not have the resources
to be involved fairly. They were not given adequate funding or
the time and support needed to prepare their part of the bids
for example. They reported that voluntary and community groups
had often only been included as a token gesture. The initial concept
of Healthy Living Centres was that there should be a variety of
projects of all sizes and all working differently. The experience
is in direct contrast to this.
A CVS in North Tyneside was made aware of a
voluntary group which had made, what the CVS thought to be, a
strong proposal to the Living and Cancer programme which would
have provided a great deal of support in a cost-effective way.
However, none of the projects proposed by voluntary groups locally
were successful. Only those projects proposed by hospital trusts
5. SMALL PERCENTAGE
OF NOF MONEY
A number of CVSs reported little evidence of
NOF money going to voluntary and community groups. NOF need to
evaluate how their funds are distributed so we get a clearer picture.
Some NLCB advice has been questionable and raises
questions of consistency, quality and transparency.
In one case an organisation attended an NLCB-run
advice day. The organisation was advised to employ a consultant
to prepare an application. The organisation was put in touch with
a consultant. The consultant increased the bid from £219,000
to £679,000. The funding adviser of the local CVS thought
this was more than the group needed (although the group would
have been able to handle the larger grant). The consultant charged
£80,000 in professional fees or 12 per cent of the bid. The
bid was unsuccessful. The organisation felt let down having taken
the advice of the NLCB officer.
Medium sized organisations are being squeezed
by a perceived disparity in funding by the NLCB. NLCB is good
at funding grants in the £5,000 to £6,000 bracket and
then again in the £100,000 to £1,000,000 bracket but
is not good in the middle bracket. Medium-sized organisations
might be losing out because of this. In addition, the same levels
of information are required for applications in both the lower
bracket and the higher bracket. This is thought to be unreasonable
and unrealistic on those applying for relatively small amounts.
In consequence some groups apply for more to make it worth their
8. SMALLER IS
Many believe that smaller, more sustainable
projects should be supported and encouraged rather than the "all-singing,
all-dancing bids" encouraged by the NLCB at present. These
are thought much more likely to be successful and indeed sustainable.
Groups should not be encouraged to bid for more than they need,
or can handle. A London CVS reported that smaller NLCB grants
and Awards for All grants were supporting some very good community
regeneration work where groups had been unable to apply for New
Deal for Community money or SRB money due to the complexity of
the application process.
9. POSITIVE FEEDBACK
A number of CVSs praised certain aspects of
NLCB funding. One funding officer described NLCB funding as "good,
stable and not over the top in terms of monitoring requirements".
Its independence from Government freed it from Government funding
requirements laid down by the Treasury and the Audit Commission.
For example, NLCB only require annual monitoring returns while
SRB funding requires quarterly monitoring.
NLCB funding programmes are stable in that they
remain the same over a length of time. This is in contrast to
other government and Lottery funding programmes (eg NOF programmes)
which are less stable (ie new programme announced, deadline for
applications shortly after, then programme closes) and therefore
less accessible to community and voluntary groups. These groups
need time to build confidence in the funding programme and learn
the process before many of them can successfully apply. In addition,
more complex programmes transfer more of the risk onto the grant
recipient through more onerous application forms and monitoring
processes. In contrast NLCB takes on more of the risk by issuing
relatively simple application forms and having less onerous monitoring
NLCB programmes are good for small voluntary
and community groups as they are broad in nature, stable and transfer
less risk onto the applicant, by contrast to SRB, New Deal for
Communities funding or NOF programmes. There is an irony that
the Government appears to want the involvement of community groups
in its regeneration programmes, and yet most of the funding is
simply not accessible to such groups. NLCB is actually supporting
some very effective community regeneration and development work.
Example 17: Anya Dwe Children and Families Association
The CVS in Lewisham spent two years with this
group working up an Awards for All small grant application for
them to run a women's health awareness day. In total, 150 Ugandan
women attended the day which was a great success. The group has
reached the stage where it is ready to have a full time worker
and an office. Although they could apply for funding under the
New Deal for Communities programme, the CVS has advised them not
to, but rather to go for Lottery funding. The CVS does not believe
that the group has the capacity required to apply under more onerous
and complex programmes like NDC and SRB.
While the CVS is doing its best to support groups
like these in applying for other grants, and in some cases applying
on their behalf, the organisation does not have the resources
to do as much of this work as it would like. The CVS plans to
set up a community chest with funding from the New Deal for Communities
programme for small groups like the Anya Dwe Children and Families
Association to apply to. The CVS will take on the risk rather
than the small group.
The Awards for All small grants scheme is highly
praised. It took a long time to get off the ground and for information
to filter down to community and voluntary groups and before they
developed the confidence to apply to it. Nevertheless it is now
a simple, stable, independent, low risk source of funding for
Example 18: Turkish Elders Group in Lewisham
With an Awards for All grant this group was
able to increase the number of days it met from one day a week
to two days a week. The group is an excellent example of a local
self help group.
Example 19: Moonshot Phoenix Football Group, New
An Awards for All grant helped this group which
was set up for excluded young Black boys in a deprived area of
Nevertheless CVSs complain at how little they
are consulted when funding programmes are being set up. They also
complain that NOF did not learn from NLCB experience with grant
making. There is a wealth of experience within the NLCB and within
CVSs about grant making, and particularly grant making aimed at
small community and voluntary organisations.
Voluntary Action Stoke-on-Trent highlighted
the problems many voluntary organisations experience with developing
proposals for capital projects, particularly for those venues
that are likely to be multi-purpose and serving a variety of needs
through a range of activities. However, they reported that the
Lottery distributors in the West Midlands have, over the last
18 months, been undertaking some interesting work developing a
process for cross-distributor community building applications.
This work will become a formal pilot in mid-2001.