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Sustainability

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Source

IVAR: Thinking about Sustainability, 2016

This study also draws upon a series of studies which has brought us into contact with 24 trusts and foundations & 200 small to medium voluntary and community organisations, operating in the field of social welfare (2012 – 2016)

Full references and acknowledgements can be found at the bottom of the page.

In recent years, we have seen growing tension between funders’ encouragement –  sometimes requirement for – sustainability, and the turbulent environment that voluntary organisations operate within. Specifically, we have seen funders use the concept of sustainability as a key element in deciding what and how to fund.

Expectations and requirements for sustainability can become a source of misunderstanding and difficulty in relationships between funders and small to medium-sized voluntary and community organisations. IVAR’s Research Development Fund has been used to carry out an independent exploration.

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What does sustainability mean?

 

What does it look like in practice?

 

How should funders evolve & adapt practice?

Assumptions

 

 

  • Business models provide suitable analogues
  • Organisational strength should be defined by balance sheets
  • Organisational survival is always ‘a good thing’
  • Fragility and transience are fixable ‘deficits’ regardless of context and size

 

Sustainability is often applied by funders as a kind of diagnostic, in which the patient has little say, while changes in communities and how VCOs work with and within them are overlooked.

 

Multiple meanings


Sustainability is not well explained and has multiple meanings. In the table below we show the different meanings which emerged from our research.

VCOs must or ought to become sustainable

Based on the assumption that sustainability is a ‘good’ thing. Often attached to statements or injunctions by policy makers, commentators, foundations or organisations.

Financial and organisational survival

Excludes all other issues e.g. mission creep, change of target beneficiaries.

Diversify (types of) income and create ‘business income’ streams

Used as a code to encourage organisations to diversify income and become more enterprising, to consider scaling up and to rely less on grants.

Avoiding over-reliance on restricted funds

For example, government contracts with highly restrictive clauses, direct fee income from clients and some types of commercial income.

A long-term organisational process

Implies that an organisation moves towards sustainability by a range of actions and, as a result, sustainability is something that happens over the long term: it is a journey.

Organisational continuity

Frequently implied, usually in relation to the existing mission.

Organisational capacity for service delivery

For government agencies, the focus has tended to be on the sector’s role in public services.

Adaptable to take advantage of the financial environment and change

Including scaling up its work, securing loan finance, social impact bonds, engaging in mergers and strategic alliances, etc.

Continuance of a particular stream of work rather than the organisation

To ensure the quality and equity of this work for stakeholders, beneficiaries and communities.

Organisational characteristics for a ‘sustainable organisation’

For example, a clear mission and aims; good governance; qualified and committed staff; sound leadership and financial management; adequate reserves; communication strategies; good marketing, etc.

Internal organisational capability

For example, internal strengths to have a reflective, critical and analytic approach, which includes awareness of organisational resources, mission and beneficiaries.

Collective local networks – strong organisational interdependence

With an emphasis on the importance of a local ecology of social actors. This includes a stock of trust drawn from engagement, networks, and relationships which give the organisation reputation and legitimacy over the long term.

Equated to other terms and ideas

For example, resilience, adaptability and viability.

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Terminology arrow""

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Terminology


Voluntary and community organisations or VCOs:
Organisations belonging to the: charitable sector; voluntary sector; community sector; voluntary and community sector; voluntary, community and social enterprise sector; third sector; non-profit sector; NGO sector; and civil society. 


VCS:
We use the term to denote the voluntary and community sector.


Funder, trust and foundation:
We use these terms interchangeably to refer to independent charitable trusts and foundations.

Sustainability

1/4

Three major themes emerging
from academic literature

 

  • The risks of diversification

  • The importance of non-financial resources

  • Unrestricted funding

Sustainability

2/4

The risks of diversification

 

  • According to some academics, scaling up is not always a good thing and having many different types of income streams can be difficult to manage. Business models and techniques are not always appropriate as VCOs do not necessarily work like businesses.
  • ‘Private sector models of growth and revenue diversification do not directly translate in the non-profit world.’
  • Revenue diversification can lead to resource dependencies through having too many ‘masters’, as well as additional layers of infrastructure and new costs to meet management requirements.
Sustainability

3/4

The importance of non-financial resources

 

Writers highlight VCOs’ other useful resources:

  • Links and mutual trust with communities
  • Legitimacy with stakeholders, the community, volunteers and the public
  • Networks and collaborative support

Some may be intangible – including the ‘very often underestimated social capital, including informal relations, local trust and voluntary engagement’. Some argue for the idea of ‘social sustainability’ – assessed through organisational and advocacy capacities, service provision, public image and reputation – or a ‘sustainability formula’ of three primary dimensions: leadership, adaptability and programme capacity.

Sustainability

4/4

The importance of unrestricted funding


As we highlight in Thinking about Core Funding ‘a lack of core funding can cause or compound other organisational challenges, including staff shortages, inappropriate premises and a lack of capacity to meet beneficiary demand’. This links to other arguments that over-dependence on restricted funds is an indicator of potential unsustainability and an inability to undertake strategic planning and development.

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What are funders trying to sustain?

 

A single definition of sustainability does not appear to be realistic. What matters is that foundations:

 

  • Are crystal clear about what they mean by ‘sustainability’
  • Design their approach to funding and engagement to support it
  • Communicate these things really clearly,  particularly in grant application guidelines
Sustainability 2

1/8

Points made by voluntary organisations

 

  • The new normal - less funding, more need

  • Keeping services running - what really matters is the work

  • The pressure on management

  • The costs of contracts

  • The experience of assessment

  • The need for core and longer-term funding

  • The fantasy of self-sufficiency

Sustainability 2

2/8

The new normal - less funding, more need

 

Profound structural changes have affected (and continue to affect) VCOs in three significant ways:

  1. Deep cuts to public services: Welfare expenditure and local authority budgets have adversely affected disadvantaged communities, resulting in increased need (e.g. for the local support services provided by VCOs)
  2. Direct funding cuts
  3. Shift of social delivery towards market mechanisms: The shift has tended to favour larger organisations, often at the expense of locally designed, community-led approaches
Sustainability 2

3/8

Keeping services running
– what really matters is the work

 

‘Sustainability is about service continuation, which depends on the charity being there. It is important because the needs of other communities continue to grow and they have nowhere else to turn if we are not there.’ - Filsan Ali & Anne Pirie, Midaye Somali Development Network.

There is a risk that less time (and even value) is given to the work itself than to organisational and financial features. Funders need to ensure that their judgements and decisions give primacy to the work.

Sustainability 2

4/4

Pressure on management

 

  • Cuts in public funding; short term contracts with more demanded for less
  • Rising needs amongst beneficiaries
Sustainability 2

5/8

The cost of contracts

 

  • Inexperienced commissioning staff
  • Difficult process: The difficulty of winning and managing public service contracts with public and private sector organisations – onerous reporting, focus on unit costs, penalties for missed targets and rigid accountabilities
Sustainability 2

6/8

The experience of assessment

 

  • Management capacity: Funders like to see improved governance, diversification of income, better monitoring of outcomes, improved financial systems and strong external networks. VCOs need funding, especially core funding, to give management the capacity to lead and adapt in a time of rapid change
  • Security and longevity of funding: In an environment where public funding is often awarded on an annual basis, longevity of funding is important because the needs being addressed require long-term engagement. Funders who expect quick transformations from short-term funding for long-term work are a particular frustration, as are those who offer no feedback to unsuccessful applicants
Sustainability 2

7/8

The need for core & longer term funding

 

‘Many funders only offer project funding. What is desperately needed is core funding. It is very difficult for grassroots organisations to plan ahead if they are inadequately resourced. Much of the work is by its nature long term, for example FGM and mental health work which requires clients to be worked with sensitively over the longer term.’  Filsan Ali & Anne Pirie, Midaye Somali Development Network

‘We do not want to be in a position where we have set something up which we cannot continue because the estate has been let down so often. You cannot make effective changes in three years and most funders only fund for 12 months. We have to think of the long-term.’ Keith Cartner, Mirehouse Residents’ Group

Sustainability 2

8/8

The fantasy of self-sufficiency

 

‘The implicit agenda seems to be “when will you stop needing to be funded by third parties”, but this is a dishonest position. Charitable activity is about helping people who can’t buy services without intervention. Some income is sustainable (e.g. from personal budgets) but mostly you are making a case to a third party who has funds so that people who cannot afford to pay can get the help they need.’ - Nick Dunne, Bede House

Sustainability 3

1/7

Points made by funders

 

  • Sustainability in the new context

  • Life beyond the grant

  • Resilience and the capacity to survive

  • Sustainability as a negative concept

  • Sustainability as a concept drained of meaning

  • Sustainability not always the priority

  • Closure can sometimes be the best solution

Sustainability 3

2/7

Sustainability in the new context

 

‘The Foundation model is bust. Foundations have been used to providing funding which is the icing on the marzipan. That is no longer realistic.’ - Paul Streets, Lloyds Bank Foundation for England and Wales

‘For me, sustainability becomes about an organisation’s ability to understand, adapt and plan for its future. That’s very different from way back when we’d ask ‘what’s the exit strategy’ and the answer would inevitably be: 'Well, hopefully they will demonstrate the impact in the middle of year two and the local authority will pick it up’. Of course that’s just not real anymore.’ - Gilly Green, Comic Relief

Sustainability 3

3/7

Life beyond the grant

 

Funders care about sustainability in different ways.

 

  • Reasonable assurance that organisations have ongoing capacity to deliver
  • VCOs to find alternative sources of funding (when the funding relationship comes to an end) and not to be wholly dependent on grants
  • Their grant and engagement with a grantee will leave the organisation stronger at the end than at the beginning, and will offer additional support to help with organisational development
  • Grantees to understand the present well enough to plan for the future, with funders taking more responsibility to encourage greater honesty
Sustainability 3

4/7

Resilience, fragility & the capacity to survive

 

Coping with changes and shocks means ‘resilience’ is often more relevant. For organisations which form a critical part of a local community or are the only local player, resilience is essential. Even seemingly robust organisations can suddenly fail with drastic changes in circumstance if they are too big or do not have enough time to adapt.

 

‘Fragility’ is not necessarily the opposite of sustainability and some foundations are willing to take more risk to try something new. Organisations are sometimes fragile because of their context. Some are fragile by choice, travelling lightly to create change and moving on when their task is done.  

Sustainability 3

5/7

Sustainability as a negative concept

 

Promoting sustainability can privilege organisational strength and survival over the work. This may promote models of practice which are not the best for beneficiaries but simply the best funded, at the expense of ‘creative disruption’ by people trying out new ways of working.

The rapidly changing social context means sustainability often carries unrealistic assumptions about the degree to which any VCO can plan a route to long-term continuation.

Sustainability can be perceived as a shorthand for a negative form of risk management, or has been drained of meaning through over-use as a ‘feel good’ word for both funders and funded – something to be ticked off on a checklist.

Sustainability 3

6/7

Sustainability not always the priority

 

For some funders, the sustainability of the organisation is not the be-all and end-all of their assessment. For experimental work, it matters that an organisation is there long enough to see the work and learning can be distilled and applied. The organisation is sometimes simply the vehicle – success might be passing the model onto others who can use it on a larger scale. 

In a fast-changing environment where funding can grow and recede with little warning, organisations may need to wane as well as wax, or merge or close rather than limp along ineffectively.  Funders can help by encouraging the most creative solutions which are in the best interests of beneficiaries.

Sustainability 3

7/7

Closure can sometimes be the best solution

 

Sustainability carries an implicit assumption that continuation is success and closure is failure.  However, many funders recognise that there are occasions when closure is the best way of securing the future of good work. For example, by transferring remaining assets to an organisation better equipped to continue or transition the work.

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This page and our publication Thinking about Sustainability draws from a review of the literature and on the record interviews with voluntary organisations and foundations.

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Funders should always…

 

  • Be crystal clear about what they mean by sustainability


  • Design their approach to funding and engagement to support it


  • Communicate what they are looking for really clearly, particularly in grant application guidelines

     

How can funders help?

 

Whatever views funders have on sustainability, all want to see their grantees do good work and deliver benefit to those they serve.

 

  1. Provide core funding: Ask what they need, be flexible on how funds are spent

  2. Provide long-term funding: Take a positive attitude to continuation of funding

  3. Allow for grantee-led support: Seek out what it is that enables an organisation to do good work, think about offering grants plus support

  4. Get the relationship right: Nurture honest, trusting relationships, create relational rather than contractual relationships which value partner contributions 

Download the report

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Research reports:

Thinking about sustainability

Richard Hopgood and Ben Cairns, with Mike Aiken and Liz Firth


Expectations and requirements for 'sustainability' can become a source of misunderstanding and difficulty. This report looks at the meanings and assumptions behind the word and what funders can do to help.

What needs sustaining?

Why is it important? What might this involve?

Possible approach

Organisation

An organisation may have a key role in a locality or sector because of what it is and what it does; its network of relationships (including the trust of hard-to-reach communities); its key people; its ability to be a nimble, challenging actor in areas of social policy and its potential to change systems; the long term impact and nature of its work; and the fact that it may have better prospects than others.

If the organisation is what needs to be sustained, then longer term core funding is likely to be the right answer.

Values

This may involve exemplary work on beneficiary voice or inclusion; a willingness to speak truth to power; and to fight for the values of local people and communities; and to strengthen the agency of beneficiaries. Those values may reflect a history and particular people or relationships which are at risk, both from market forces and the erosion of a local community infrastructure.

Again, long-term core funding may be the best form of support, perhaps allied with support for learning and sharing values and experience.

Model or general ways of working

The work (project) needs to be supported and funded in a way which provides stability and continuity. However, no work exists in a vacuum and funders should take a holistic view and be prepared to help if there are organisational problems which could destabilise the project.

The right funding mix might be project funding plus help with evaluation and, where there are acute organisational needs, some core funding (or ‘in kind’ assistance) to support the management and help the organisation to assess the future development of the work, and who is best placed to carry it out.

The focus on the beneficiary

Over reliance on targeted funding streams can make it difficult for small organisations to deliver holistic services to their beneficiaries.

Funders can sustain this broader approach by framing their funding in a way which is specific to the beneficiary and which is realistic about what needs to be funded (which may require a higher level of grant if other funding streams have been cut).

The process of evolution or development

This may apply to experimental/high risk work where the learning to be distilled and disseminated is (or might be) of particular importance.

Funding therefore needs to focus on enabling that to happen (and particularly the dissemination, which needs proper resourcing).

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Evers, A. (2005) ‘Social enterprises and social capital’ In C. Borzago & J. Defourny (Eds.), The emergence of social enterprise. London: Routledge.

 

Hailey, J. (2014) Models of INGO Sustainability: Balancing Restricted and Unrestricted Funding. INTRAC Briefing Paper 41, Oxford: INTRAC.

 

York, P. (undated) The Sustainability Formula: How Non-profit Organizations can Thrive in the Emerging Economy, TCC Group. http://www.tccgrp.com/pdfs/SustainabilityFormula.pdf (Last accessed 10/8/2015)

 

IVAR (2013) Thinking about Core Funding, IVAR: London

 

 

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