Memorandum submitted by the King's Fund
The King's Fund would like to respond to the
Culture, Media and Sport Committee's invitation to submit evidence
for the inquiry into the Operation of the National Lottery.
A. THE ORGANISATION
The King's Fund is a leading independent health
care charity, set up in 1897 by The Prince of Wales, later King
Edward VII, to support the improvement of health care in London.
We carry out research and development work to improve health policies
and services, provide training for people who work in the health
service, and make grants to organisations and individuals. In
2000 we will award around £5 million in grants. We have extensive
experience of grant making and the voluntary and health sectors
We would like to give evidence under the following
The impact of the National Lottery
upon charities and charitable giving.
The level of funds for good causes
raised by the National Lottery and the distribution of those funds
between the good causes, including whether the existing good causes
should be reviewed, whether some should be dropped and/or whether
new good causes should be introduced.
Our points are made in connection with the operation
of the National Lottery Charities Board. The points made below
relate to both of the above headings.
B. EVIDENCE SUBMITTED
1. The National Lottery Charities Board
(NLCB) is now a major player in the grant making field and has
brought in vital new money for the charitable sector. To put this
in context, in 1997 (the most recent year that comparative figures
the National Lottery Charities Board had available some £320
million to distribute to the charitable sector in the UK. The
estimated total sum given by the UK's 9,000 grant making trusts
is £1.25 billion. This figure includes £219 million
from the Wellcome Foundation. If you exclude the Wellcome Foundation,
then NLCB's giving accounts for around 24 per cent of the grant-making
sector. Given the size of NLCB against the rest of the grant-making
field, it holds an extremely important niche for grant-making
2. A persistent problem for charities, particularly
those with small annual turnovers, is the scarcity of funds to
pay for their "core" work. Funders usually prefer to
fund new projects (up to a period of three years). A typical scenario
with a three year project may be that much of the first year is
taken up setting up the project and establishing the service,
the second year provides the best work, whilst in the third year
important staff start to feel the insecurity of funding, and key
personnel may leave. Charities constantly have to re-invent themselves
and design new projects to fit it with funders' criteria, and
there are also cost implications for this type of funding.
We do of course acknowledge that it is still
important for new projects to be instigated, to encourage innovation
and experimentation to occur. However, there is little money available
to award the success of existing work, and to fund projects that
have demonstrated their importance and achievements.
3. Furthermore, the voluntary sector infrastructure
organisations face particular problems in having their core activities
funded. They fulfil an extremely important role within the sector,
but their core work may seem less interesting and pressing to
funders. Examples would be local Councils for Voluntary Service,
umbrella organisations, and national networks. These organisations
also have an important role in building the capacity of the sector,
such as by providing advice on organisational development, fundraising,
or strategic planning.
4. Grant-making trusts are often limited
by their Deed of Trust which sets down what they can fund, and
also their resources are limited and they cannot support large
numbers of charities to carry out their core activities. Statutory
funds are now extremely difficult to access and are sometimes
not appropriate for the kind of work that charities may seek to
have funded. In London, London Borough Grants is the only large
funder that provides core funds, but there is still an enormous
need for this kind of money.
5. The King's Fund receives numerous requests
for ongoing funding from charities that it has funded, or have
been funded by the National Lottery or other funders. We run a
number of pro-active grant programmes in the grant-making field,
and work to a defined set of guidelines. We are very over-subscribed
to our £2 million annual budget (the budget for 2000 is an
exceptional case), and our unique niche in the health-funding
field increases the pressure on our resources. Although we do
sometimes fund projects for over three years or extend grant money,
we are unable to start to fill the gap in core funding and ongoing
funding that exists in the charitable sector.
6. The advent of new National Lottery money
has created expectations and much new work in the charitable sector.
The challenge now is how to pay for this work once NLCB funds
come to an end. There is simply not enough money to pay for the
number of projects needing core funding or ongoing funding for
existing work. Given the size of the National Lottery, other grant
makers may be reluctant to take over funding from them, arguing
that the National Lottery should make provision to sustain the
work they have already funded. We understand that NLCB have given
continuation grants to some projects, but we still believe that
there is a huge gap in the funding arena.
7. We are very grateful for the additional
money that NLCB has brought to the sector and do see it as vitally
important. In our view they have funded much interesting and "unpopular"
work since they started operation, and this submission is not
intended to criticise or undermine their important activity. However,
as this grant maker has now been in operation for a number of
years, new issues are emerging that should be addressed and we
would like to make the following suggestion:
The King's Fund urges NLCB to consider starting
a grant programme for "core" work within charities that
have a proven track record of success. The track record could
be demonstrated either via work funded with a NLCB grant or funded
from other sources. The exact details of what would be acceptable
within this programme would need to be carefully worked out, but
the essence would be on providing sustainability, funding seemingly
less exciting projects, and rewarding excellence. The need for
increased core funding for the voluntary sector is convincingly
argued in a recent report by Julia Unwin, written for ACENVO,
which describes the current funding environment and the need for
an "entirely new approach to meeting the costs of voluntary
organisations". We believe that a NLCB core-funding programme
would be a good use of charitable funds, would be very popular
amongst organisations, and would reward good work. We think it
would be seen as a judicious and responsible move by the NLCB.
8. At the King's Fund we have direct experience
of the popularity of core funding grant programmes. Since 1997
we have managed the "Community Health Impact Awards"
on behalf of SmithKline Beecham. In this programme SmithKline
Beecham give ten grants of £25,000 nationally, to award excellence
in community health work. Organisations are not asked to submit
a new project, but to point to their track record of success,
and give organisation accounts rather than a project budget. This
programme has been enormously successful and popular and has generated
good coverage and publicity for SmithKline Beecham.
31 Dimensions of the Voluntary Sector, Volume 2, Charities
Aid Foundation. Back
Who pays for core costs? Neither rhetoric nor complaint-a
proposal for modernisation Julia Unwin for ACENVO (Association
of Chief Executives of National Voluntary Organisations 1999). Back