Select Committee on Culture, Media and Sport Minutes of Evidence

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 lottery funding.

  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 16);

    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" bids; and

    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 service users.

  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 in Bolton

  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 needed.

  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.

Example 3

  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.

Example 4

  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.

Example 5

  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.

Example 6

  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.

Example 7

  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.

Example 8

  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 costs.

  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.

Example 9

  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.

Example 10

  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 source.

  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.

Example 11

  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.

Example 12

  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!


  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.

Example 13

  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.

Example 14

  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.

Example 15

  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 were successful.


  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.

Example 16

  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 while.


  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.


  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 requirements.

  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 small groups.

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 Cross Lewisham

  An Awards for All grant helped this group which was set up for excluded young Black boys in a deprived area of Lewisham.

  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.

December 2000

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