Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


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.


  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 in London.

  We would like to give evidence under the following headings:

    —  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.


  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 are available[31]) 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 policy.

  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[32], 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.

September 2000

31   Dimensions of the Voluntary Sector, Volume 2, Charities Aid Foundation. Back

32   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

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