International Small Grants Programme: review

Chapter 5: Future for the Small Grants Programme

This chapter considers the extent to which the aim and objectives of the Programme are still fit for purpose and the options for the Programme going forward.

Are the aims and objectives fit for purpose?

In addressing the robustness of the aims and objectives of the Programme we considered the learning from the review and lessons from other funders. The learning from the review has identified:

Multiple objectives

The multiple objectives and lack of any clear measures of success have resulted in lack of clarity around what the Programme is trying to achieve.

The review also highlights that the stated aims and objectives of the Programme diverge somewhat from the sectors aspirations for the Programme.

Both of the above contribute to differing expectations of the Programme among different stakeholder groups.

Evidence of success

The stated purpose of the Programme was 'to build capacity and upscale small organisations and enable them to bid for funds from the IDF and other funders.' While there is evidence that small organisations have developed their capacity through the Programme, the total number of organisations that have achieved this particular indicator is small.

The Programme also aimed to 'enhance Scotland's contribution to the global fight against poverty'. While there is evidence that individual projects have achieved their project level objectives, there are no mechanisms to measure the impact at the project or programme level.

Issues impacting the capacity of the Programme to achieve its objectives

The review indicates that some of the original assumptions which underpin the design of the Programme are tenuous:

• There is a mismatch between the Programme aims and the capacity of the sector;
• Scotland's international development sector is characterised by a large number of micro-organisations;
• The aspirations and capacity for growth of micro-organisations are limited;
• The Programme assumed small organisations could sustain growth through access to other funding opportunities;
• Funding opportunities for small organisations are extremely limited and highly competitive;
• There is little evidence that small organisations can sustain growth through project funding.

Learning from other government funders

We interviewed a number of other funders to understand the rationale and objectives of other funding programmes and to learn from their experiences. The research revealed that the drivers for the establishment of small grants funds were often similar to the drivers for the development of the Scottish Government's Small Grants Programme: a call from the sector to recognise the diversity and the unique contribution of smaller organisations to international development.

Funders reported that the rationale for supporting smaller organisations was also broadly consistent with the rationale for the Programme and included:

• smaller organisations are often involved in niche work, or relationship-based work in local communities which is more likely to achieve lasting impact;
• smaller organisations will bring innovation/new ideas to the sector;
• smaller, local organisations are better at engaging the public and building support for international development.

Other funders' experience of supporting small organisations highlighted similar challenges to those experienced in the delivery of the Programme:

• The challenge in balancing proportionality and managing risk
• The lack of capacity in small organisations
• o the need to support organisations to develop governance, safeguarding, M&E which takes time and resources (higher administration costs of Small Grants)
• o the reliance on a very small group of trustees, often with limited knowledge/experience of systems and legislation in country to address issues when things go wrong)
• The requirement of small charities for core and flexible funding to support organisational costs, which reduces the proportion of donor funds going to project deliverables
• Dependency/reliance on on-going funding in the absence of other funding routes.
• Challenges in identifying the impact of small grants

These findings highlight common challenges for funders of small organisations, in particular the challenges of balancing risk and proportionality in the management of Programmes and the challenge of demonstrating programmatic impact.

Other governmental funders also identified that small grants programmes served to build better relationships with the sector and learn about the best ways to work together. In interviews, applicants and the network organisations commended the Scottish Government for its explicit support of small organisations and not only valued the access to funding but also the opportunities which Scottish Government provided to be part of 'an engaged network'. The Programme has clearly been an effective mechanism to build relationships and goodwill with the sector in Scotland.

Conclusion on the aims and objectives of the Programme

The research has highlighted that the drivers for the development of the Programme and the Scottish Government's rationale for supporting smaller organisations was broadly consistent with that of other similar funding programmes.

The Programme also exhibits many elements of good practice^[13] in the level of support which it offers to build the capacity applicants and award-holders i.e. through the funding of network organisations, through the Programme Management processes, but also through capacity building grants which have contributed to building the organisational capacity and supporting the 'core' costs of small organisations. The Programme has also striven to create processes which are, in the most part, proportionate to the scale of funding although many of the very small organisations have found the processes burdensome.

The Programme has experienced challenges:

• The balance between proportionality and managing risk.
• The reliance of small organisations on grant funding.
• The difficulty in measuring the impact of small grants and in demonstrating value for money.

These are challenges which mirror those experienced by other small grants programmes which on the one hand recognise the value of smaller organisations, but on the other, are driven to demonstrate the impact of their funding. These issues pose particular challenges for Governmental funders who must demonstrate accountability, value for money for taxpayers and are held accountable for promoting and implementing best practice.

The research by the Baring Foundation^[14] recognises that Trusts and Foundations, which are not constrained by the same levels of public accountability and media scrutiny can be a more flexible funder and are better placed to 'take risk'.

However, while the Programme rationale and Programme structure are consistent, the review has also highlighted a number of specific challenges in the design which have affected the capacity of the Programme to achieve its strategic objectives:

• the Programme has multiple objectives and did not establish any measures of success
• some of the original aspirations for the Programme (strengthening local community capacity/empowering local community groups to influence decision makers) are not explicit in the Programme objectives and it is not clear how the Programme design could achieve these.
  • this has resulted in different perceptions about the programme priorities and purpose.
• a mismatch between the capacity and aspirations of the sector in Scotland and the expected outcome of the Programme (growth/upscaling of small organisations.
• assumptions about access to a funding pipeline to support growth were also unrealistic.

These findings suggest that the purpose and objectives are no longer fit for purpose and should be reviewed in advance of any development of the future Programme structure.

Options for the future of the Small Grants Programme

We have developed four options for the future of the Programme.

Option 1: Maintain a Small Grants Programme which focuses on supporting small organisations to contribute to Scotland's International Development strategy.

This option proposes continuation of a Small Grants Programme and maintains a focus on funding small Scottish organisations to improve the quality and impact of their activities.

Option 2: Close the Small Grants Programme and directly fund small organisations in partner countries.

This option proposes terminating the current Small Grants Programme and investing directly in small organisations in partner countries.

Option 3: Close the Small Grants Programme and reinvest the budget in the Main Grants Programme.

This option proposes terminating the Small Grants Programme and subsuming the budget into the Main Grants Programme, increasing the level of funding for projects delivered through the Scottish Government's current Development Programmes in Malawi, Zambia and Rwanda.

Option 4: Close the Small Grants Programme and invest in systems change in partner countries.

This option terminates the Small Grants Programme and proposes a strategic use of funds to help governments in partner countries to lever systems change in key organisations. This could be achieved through switching the existing small Grants Programme budget (£500,000) into the Capacity Strengthening strand of the IDF to extend the existing programme aimed at strengthening the capacity of organisations in partner countries through partnership/exchange with Scottish institutions.

Analysis of the options

This section describes each option in detail and considers the strengths and issues/challenges in the proposed option in relation to:

• Fit with the Scottish Government's International Development strategy and approach
• Fit with international direction of travel in effectiveness of aid in good practice in international development practice
• The findings of the review

Option 1: Maintain a Small Grants Programme which focuses on supporting small organisations to contribute to Scotland's International Development strategy.

Programme description

This option proposes continuing a Small Grants Programme with a focus on funding small Scottish organisations. The Programme would have two aims:

• to build community to community links in partner countries which build/promote global citizenship in Scotland and support civil society in partner countries.

• to support small organisations with aspirations and capacity to develop and scale high quality new approaches to addressing poverty. The focus is on developing capacity for impact, not on growth of the organisation.

The proposal is to split the Programme into two distinct funds which reflect the two distinct aims identified above.

Fund 1: Global Citizenship Fund

Aim: to build community to community links in partner countries which build/promote global citizenship in Scotland and support civil society in partner countries

The fund would provide small grants (£5,000-£15,000) aimed at small and micro-organisations in Scotland to promote global citizenship in Scotland through development of community-to-community links which:

• strengthen local community capacity of both communities,
• empower communities in partner countries to influence local decision makers,
• take action on poverty in countries identified as low/medium on human development index through active global citizenship.

The fund would support skills exchanges and mutual learning, partnership working and small actions in support of the UN Sustainable Development Goals.

This fund would have 'light touch' processes (proportionate) which would include:

• a short form application,
• focus of reporting on results and learning from the activity.

Fund 2: Development Fund

Aim: to support small organisations with aspirations and capacity to develop and scale high quality new approaches to addressing poverty.

The Development Fund is aimed at supporting small organisations to develop, test and scale high quality approaches aimed at addressing poverty/supporting UN Sustainable Development Goals. The focus is on developing capacity for impact, not on growth of the organisation.

The Fund is aimed at:

• smaller Scottish organisations with specific skills/experience/innovative approaches which have the capacity to deliver impact in partner country,
• organisations with the capacity and commitment to professionalise.

The Development Fund would be focused on the priority countries in Scotland's International Development Strategy.

1) Explore and test grants (up to £5,000 - £15,000) to explore new ideas/test innovations /develop new partnerships/ do pre-studies to increase a bottom-up-approach and local ownership in the planning and implementation of new projects and approaches.

2) Project grants for developing new approaches (Up to £120,000 over 3 years) to test and scale new approaches to addressing poverty/supporting UN Sustainable Development Goals.

• Grants initially for 3 years with options for 'fast -track' extension for further 2 years for approaches with significant opportunity to scale/embed.
• Project grants to include sums for capacity building.
• Project grants to include 'salary allowance' in recognition of need for staff in the Scottish organisation.
• Increased eligibility to organisations up to turnover of £500,000.

Robust programme processes to support accountability/compliance but also aimed developing /professionalising organisations. The programme would include:

• provision of pre-start support to develop effective monitoring and evaluation framework for all projects,
• Programme level evaluation built into Programme management contract
• tailored mentoring and guidance throughout delivery period,
• brokered links to other resources to support development/growth of impact.

Additionally, the Scottish Government should ensure that the Programme is better connected to other initiatives aimed at supporting growth and innovation in the third sector. For example:

• Scotland's International Social Enterprise Observatory promotes social enterprise to be a more inclusive, empowering and sustainable way of delivering on Scotland's international development goals.
• Access Africa Programme (funded by the Scottish Government) enables Scottish social enterprises to explore and expand into African markets. The support offered through the Programme - developing ideas to get them 'market ready/scale ready, making local contacts, business growth support, could help to accelerate the development of Programme applicants with aspirations for growth and impact.

Rationale for the option

While the review concludes that the purpose and objectives of the current Programme are untenable, stakeholders argue that there is a clear justification for Government support for smaller organisations in international development.

• Small organisations engage people/communities and build broader support for international development
• Small organisations are a significant and enduring component of the international development sector and that they will continue to develop and deliver small scale activities through funding that they raise independently of government funds. Stakeholders argued that and the role of government was to support these organisations to improve their practice to maximise the value of their contribution to international development.
• While the review suggests that smaller organisations may not have the capacity or aspirations to 'grow', stakeholders argue that smaller organisations 'add value' in terms of their niche experience and bringing new ideas/innovation to the sector.

The proposed Programme design supports all these intentions through:

• Global Citizenship Fund which supports the development of local community capacity (in Scotland and in partner country) to take effective action to relieve poverty and support civic involvement
• Development Fund which is focused on developing capacity for impact of smaller organisations.

Fit with Scottish Government International Development strategy and approach

The proposal (for the Development Fund) reflects the recognition in Scotland's International Development strategy of the distinctive development contribution that Scotland can make through sharing of expertise and being innovative and employing its unique partnership approach for global good.

The strategy also restates the value that civil society plays as an agent of effective change and accountability. The Global Citizenship Fund supports the development of civic society in Scotland and in the partner countries.

Fit with international aid effectiveness/good practice in international development

The Development Fund is focused on improving quality and impact of approaches delivered by Scottish based organisations.

Overview of this option

Summary of Programme design and delivery model

This option creates two discrete funds, each with a different purpose.

• both funds require clear objectives and measures of success.
• the option requires retention of external Programme Managers to manage both funds

Strengths

• Good fit with Scotland's International Development strategy and reflects the distinctive contribution that Scotland can make through innovation, sharing of expertise and employing its unique partnership approach for global good.
• Maintains support for the sector in Scotland
• Programme model reflects learning from Programme Managers and the review
• Global Citizenship Fund - reflects sector/network organisations aspirations to better support civil society.
• Development Fund focuses on improving the quality of development approaches and impact – not on growing the organisations per se.

Issues and challenges

Challenge in demonstrating programmatic impact of small grants programmes and value for money.

• While this option recognises the strengths of small organisations in bringing niche experience and new ideas and innovation to the sector, the review has highlighted the challenge of demonstrating the impact of small grants programmes. This is a particular challenge for Government funders who must demonstrate accountability, value for money for taxpayers and are held accountable for promoting and implementing best practice.

Balance between proportionality and managing risk

• There is a risk to Scottish Government associated with the lack of capacity in smaller organisations around the governance capacity (small organisations are frequently reliant on a very small group of trustees) and the associated capacity to implement the necessary policies and procedures to support best practice approaches in delivery, including safeguarding, and deliver effective financial reporting and M and E.

The reliance of small organisations on grant funding

• There is a potential for ongoing dependency/reliance on Scottish Government funding in the absence of other funding routes.
• The review has highlighted the requirement of small charities for core and flexible funding to support organisational costs, which reduces the proportion of donor funds going to project deliverables.

Cost of Programme Management:

• The costs associated with this proposal include the management of two funds and the costs of Programme evaluation.

Option 2: Close the Small Grants Programme and directly fund small organisations in partner countries.

This option proposes terminating the current Small Grants Programme (ceasing funding for smaller Scottish iNGOs to deliver activities in partner countries) and developing a Programme which invest directly in small organisations in partner countries.

Programme description

Direct in-country funding often takes place where funders have strong pre-existing relationships and knowledge, or where their work is highly specific or niche. As the Scottish Government does not have a strong in-country presence or knowledge of local organisations (except perhaps in Malawi where there is a local network organisation) the delivery mechanism for this approach would require the Scottish Government to find a 'trusted partner' with in-country experience who would manage the funding programme on behalf of the Scottish Government – finding and funding small organisations which could achieve impact at the local level.

There are examples of this funding model currently being piloted by other funders in the UK. The People's Postcode Lottery (PPL) has developed a direct funding pilot focusing on girl's education and gender-based violence in Uganda. PPL has partnered with an international NGO with extensive knowledge and experience of local organisations which will carry out the due diligence on local organisations, ensure relevant policies in place for safeguarding etc, and will evaluate the pilot.

Fit with international aid effectiveness/good practice in international development

This option responds the localisation agenda, which aims to address the inherent power imbalance in funding North organisations to deliver activities in the South.

Localisation aims to support national and local actors to lead the action and receive a much larger share of the available funding directly, rather than via international funding intermediaries.

The argument for localisation is not only based on the moral and ethical grounds of the power imbalance, but there is an increasing body of evidence that localisation increases impact and improves effectiveness. This option therefore aims to improve the quality of aid and its impact on development (in light of the research findings that there is little evidence of development impact through investing in small UK based organisations iNGOs.)

Fit with Scottish Government strategy and approach

The localisation option would represent a significant change in approach for the Scottish Government. All funding under the Development Assistance strand of the IDF is currently disbursed via UK iNGOs. This option could however be a small step for testing this model of funding.

Overview of this option

Summary of Programme design and delivery model

• Scottish Government would contract with a trusted intermediary in each priority country to disburse funds at local level to small local organisations.

Strengths

• Greater proportion of Scottish Government funding goes directly to address poverty (or specific theme) in partner country.
• Research suggest that localisation increases the impact and effectiveness of aid.

Issues and challenges

The Scottish Government has little experience of direct funding in-country:

• Untried methodology for Scottish Government so there is a considerable level of risk.
• Scottish Government lose control of decisions over which organisations are supported at local level (potential risk).
• Does Scottish Government have the contacts/right partners to deliver in each country?
  • Time/resource required to engage a 'trusted partner'.
• Unknown costs of intermediary/partner services
  • cost of services must not undermine the purpose of the proposal which is to increase the level of funding to partner countries
• Mechanisms would be required to ensure the transparency of Scottish Government funding i.e. to ensure that Scottish Government funding was additional and did not disappear into the intermediary's core costs or was used to 'top-up' funding for an existing programme delivered by the intermediary.

A shift away from supporting small Scottish NGOs may have impact on the sector in Scotland and on Scottish Government relationships with the international development sector in Scotland.

• Reduced access to funding for small Scottish iNGOs. (The review has highlighted the limited sources of funding for small iNGOs).
• Reduced capacity of small iNGO's (the previous Small Grants Programme provided funding to improve capacity/skills and opportunities to build delivery capacity through project grants).
• Scottish Government loses its direct connection/funding relationship with small Scottish based international development organisations.
• However, the three Networking Organisations in Scotland, funded by the Scottish Government, continue to provide a link to the sector and a vehicle for on-going relationships between the small Scottish international development organisations and the Scottish Government.

Option 3: Close the Small Grants Programme and reinvest the budget in the Main Grants Programme.

This option proposes terminating the Small Grants Programme and subsuming the budget into the Main Grants Programme.

Programme description

This option subsumes the budget for the Small Grants Programme (£500,000 per annum) into the Main Grants Programme and increases the existing budget for the current Development Programmes for Malawi, Zambia and Rwanda. This option would not have a significant impact on the management or administration of the Main Grant Programme.

This option would remove access to funding for small Scottish based organisations, but it should be noted that there is no minimum size of grants under the Main Grants Programme. While the size of grants disbursed under Main Grant Programme are typically in the region of £1 million over 5 years, the Programme has also awarded much smaller grants.

Fit with Scottish Government strategy and approach

The option reinforces the Scottish Government's more programmatic approach to international development.

Fit with international aid effectiveness/good practice in international development

The review highlighted that there was little evidence of development impact through the Small Grant Programme. This option seeks to increase the quality of aid and its impact on partner countries.

Overview of this option

Summary of Programme design and delivery model

• The £500,000 previously allocated to the Small Grants Programme would be switched to the Main Grants Programme (increasing annual budget for Main Grants Programme)
• Guidance for the Main Grants Programme should be reviewed to reinforce the message that there is no minimum grant size for the main Programme.
• There is no requirement for separate Programme Management – the additional budget would be managed under the existing Programme Management arrangements for the Main Grants Programme.

Strengths

• Increases budget for Development Programmes/ extends Scottish Government's Programmatic approach.
• The approach is consistent with the stated preference of partner countries for larger, longer term projects.
• Although this option proposes terminating the dedicated Small Grants Programme, it also recognises that there is no 'minimum size of grant' under the main Programme. As such, this option still provides opportunities for small/medium Scottish organisations with capacity and high-quality approaches to engage in the Development Programmes.
• To encourage smaller organisations to take up this funding route, Scottish Government might wish to consider reviewing the reporting requirements for the Main Grants Programme to make reporting for smaller grants proportionate to the scale of funding received.

Issues and challenges

The shift away from supporting small Scottish NGOs may have impact on the sector in Scotland and on Scottish Government relationships with the international development sector in Scotland.

• Reduced access to funding for small Scottish iNGOs
• Reduced capacity of small iNGO's (the previous Small Grants Programme provided funding to improve capacity/skills and opportunities to build delivery capacity through project grants.
• Scottish Government loses its 'funding relationship' with small Scottish based international development organisations.
• However, the Scottish Government funds three Networking Organisations in Scotland which provide a link to the sector and a vehicle for on-going connection/relationships between the small Scottish international development organisations and the Scottish Government.

Option 4: Close the Small Grants Programme and invest in systems change in partner countries

This option terminates the Small Grants Programme and proposes the strategic use of funds to help partner country governments lever systems change in key organisations.

Programme description

The Scottish Government already supports system change in partner countries through its Capacity Strengthening Initiatives.

The capacity strengthening initiatives involve partnerships between organisations in Scotland and organisations in partner country organisations. The initiatives are needs led, responding to needs identified by partner countries. The Scottish Government seeks to meet need by matching support through partnership links between institutions in Scotland and institutions in the partner countries (and between institutions within the partner countries).

The development partnership operates through peer-to-peer knowledge-sharing through which both institutions can strengthen their knowledge, harness expertise, skills and capacity and empower their people.

This option proposes switching the £500,000 budget for the Small Grants Programme (currently within the Development Assistance strand of the IDF) into the Capacity Strengthening strand of the IDF.

This option would not have a significant impact on the management or administration of the existing Capacity Strengthening strand.

Fit with Scottish Government strategy and approach

In effect, his option increases the budget and allows an extension of the Scottish Governments existing Capacity Strengthening approach.

Fit with international aid effectiveness/good practice in international development

This option seeks to increase the impact of Scottish Government funding on partner countries.

Capacity development - building the capacity of countries to manage their own future - is increasingly recognised among the foremost approaches to international development programming and is recognised in high level global agreements as a key plank in increasing aid effectiveness.

International declarations such as the Accra Agenda for Action (2008) and the Cairo Consensus on Capacity Development (2011) and the Busan 4^th High Level Forum (2011) have recognised Capacity Development as an important component of mainstream international development activity.

Overview of this option

Summary of Programme design and delivery model

• The £500,000 previously allocated to the Small Grants Programme would be switched to the Capacity Building strand of the IDF.
• There is no requirement for separate Programme Management – the additional budget would be managed under the existing Capacity Strengthening strand.

Strengths

• This option demonstrates good fit with Scottish Government strategy and approach (expanding the Capacity Strengthening strand)
• The approach has international recognition as good practice in increasing effectiveness of aid
• Scottish Government has track record of developing successful Capacity Strengthening initiatives
• Partner country governments/institutions identify own needs and have joint ownership of development partnerships

Issues and challenges

The shift away from supporting small Scottish NGOs may have impact on the sector in Scotland and on Scottish Government relationships with the international development sector in Scotland:

• Reduced access to funding for small Scottish iNGOs
• Reduced capacity of small iNGO's (the previous Small Grants Programme provided funding to improve capacity/skills and opportunities to build delivery capacity through project grants.
• Scottish Government loses its direct connection/funding relationship with small Scottish based international development organisations.
• However, the three Networking Organisations in Scotland, funded by the Scottish Government, continue to provide a link to the sector and a vehicle for on-going relationships between the small Scottish international development organisations and the Scottish Government.