Alliance Online - March 2007

Balancing on a wobble board

Caroline Hartnell

In September 2005, 18 months ago, Impetus Trust and Charities Aid Foundation (CAF) embarked on a four-year co-investment in Naz Project London (NPL), an organization that provides sexual health and HIV prevention and support services to Black and minority ethnic communities. The investment package was to consist of a total of £275,000 core funding over the four years, plus some targeted capacity-building from both Impetus and CAF. An Alliance Online article published in March 2006 looked at the background to the co-investment and the experience of the first few months. How has NPL fared since then? While making progress on its programme aims, unanticipated shortfalls in funding have caused NPL some problems. On the consultancy side, a clear lesson has emerged: fewer consultants are needed, but they need to be better targeted to NPL’s needs and more engaged with the organization.

This article is based on attending one of the monthly meetings (on 9 November 2006) with NPL Chief Executive Bryan Teixeira; Nat Sloane, co-founder and vice chair of Impetus; and Victoria Anderson, CAF Head of Grantmaking, and separate telephone conversations with all three in early February 2007.

Programme aims partly achieved …

In September 2005, NPL identified two main aims: to expand its work within existing communities, especially among young adults, and to launch a peer education programme with schools and youth clubs.

The peer education project is going as planned, with 17 young people going through the training process. They will work in schools for a few months and then an evaluation will be done. Expanding work with existing communities has been slower than expected, largely because it has taken a lot longer to put the funding together.

NPL has pro bono support from Cranfield Trust to identify a new ethnic minority to work with. Once a decision is made on this, the next step will again be to develop a business plan and start raising money for the work.

… and progress made on organizational issues

On the marketing and communications side, the due diligence had suggested that a large section of their target community didn’t know of NPL or understand that NPL had moved beyond its original focus on the South Asian community. However, NPL subsequently discovered that recognition and appreciation in the target communities was better than they had thought. They now need to reinforce this by demonstrating how effectively their goals are being met.

It turns out, in fact, that their greatest need is for internal marketing: the NPL team need to be clearer about what messages they give to the outside world. As Victoria emphasizes, good communications will be needed for fundraising. Marketing will reinforce strategic vision and make it easier to communicate to potential funders. But Bryan wants to delay any work on strategy/messaging until they are clearer about the strategic vision and performance measurement. ‘The content isn’t clear enough yet.’

Another issue on the table was premises, the key issue here being whether to relocate or to renovate. This decision has now been taken: they will relocate. It has been discovered that the lease ran out many years ago, and the building will be sold in 2009. In the meantime a low-cost refurbishment has been completed with the advice of Ethical Property Foundation, linked with NPL through CAF’s Collaborative Grant Programmme.

Great advances in performance management

From the very beginning, NPL, CAF and Impetus identified the whole issue of measuring performance as a crucially important area to address, and it was agreed that this would be an overriding priority to tackle early in 2006-07.

For Bryan, in terms of consultancy, there has been ‘lots of value’ around performance management, his absolute priority for the year. NPL now has a much more solid system, using the balanced scorecard, so a key objective for 2006-07 has been met.

Two consultants have been working with him on this. The Impetus business associate has been introducing the balanced scorecard at organizational level. Bryan had always been unhappy with ‘lives touched’ as an indicator: ‘How can you compare someone who’s received counselling for six weeks and someone who’s received a leaflet?’ So looking for better quantitative indicators and more systematic qualitative indicators is central if they are to capture information more systematically. Now 15-18 indicators have been identified, though the process for tracking them is not yet fully established. In three months’ time, observes Nat, ‘you will find some indicators helpful and others not so you should be prepared to adapt the scorecard as you use it.’

The CAF consultant is developing a logical framework approach to measure effectiveness at a project level. The plan is to use the peer education project, the PCT workplans (see below) and a planned Big Lottery Fund application as guinea pigs in the learning process. This will support the balanced scorecard.

Too many consultants?

One big issue at the meeting was having several consultants working with NPL at the same time. Having two consultants working on performance management has worked well, largely because Bryan ensured they met each other before they started so they shared terms of reference and felt they were working on a common project. But collaboration hasn’t always been so successful, and the numbers have sometimes got out of hand. By November, Bryan had worked with nine different consultants, and three more will be coming in to help build a leadership team within NPL.

For Bryan, Victoria and Nat, managing the consultancy side of the arrangement better is a priority. ‘We need fewer consultants who work with us over a longer period of time so they get to know us, develop a relationship, engage with us, pick up some of the passion of the work we’re doing, who really add value,’ says Bryan. ‘Maybe the ones who worked with us last year could work with us this year on a different topic.’

One of the problems, he says, is that consultants want to work to their strengths. ‘Some consultants are able to give me what they’re good at but not what I need.’ The key for him is being able to tell them to limit their input to what they’re being asked for – and ultimately knowing when to pull them out. ‘I’m getting a bit tougher,’ he says. Part of the problem, according to Nat, was some initial uncertainty about who was in charge with consultants. ‘Should Bryan deal with them directly after we had made introductions? It took a while to communicate among ourselves on the best way to handle this but it’s now established that he should.’

Bryan contrasts some of the frustrations he’s felt with consultants with the ‘ongoing value’ of the monthly meetings with Nat and Victoria. ‘Having two people with that kind of background to bounce ideas off and give suggestions is immensely valuable,’ he says. And they do all sorts of things in between as well: they help raise profile, find board members, etc. ‘They bring added value,’ says Bryan. Added value is something he rightly insists on.

But Victoria admits that Impetus and CAF may have a propensity to over-rely on consultants. ‘It’s possible that both Impetus and CAF go too quickly to a consultant or advisory solution,’ she says. ‘How many consultants can Bryan work with before he goes completely insane?’

Funding setbacks

While all three are confident that they’ve learned valuable lessons about managing consultants and will do better in future, difficulties in the external fundraising environment are not so easily dealt with. Bryan describes these as ‘the most significant thing we’re living through’.

The UK health system is £600 million or £700 million in debt – and ‘some of that debt has been downloaded on to us, admittedly a minuscule part of it’. This has created a ‘very uncertain world’, and some Primary Care Trusts (PCTs) have reneged on verbal agreements and cut grants to NPL in order to reduce their own debts. The situation has been made worse by a private foundation paying a grant six months into the fiscal year and refusing to backdate the grant, although they knew it was for an ongoing project, thus leaving six months of an NPL programme unfunded.

These two things together have left NPL with a £40,000 to £50,000 funding gap this year out of a budget of around £600,000. If the money doesn’t come in, NPL will need to dip into its reserves. These are around £100,000, now earmarked for the relocation and for starting up a staff pension scheme.

Dealing with this situation has inevitably thrown NPL off course. The new fundraiser, who started in May, had been doing well in getting out proposals for the next year but was then sidetracked to an emergency fundraising plan. Together with one of the consultants, and with help from Bryan, she put together a list of 150 foundations that would accept an immediate application. In order to do this, they had to divide NPL’s work into £5,000 chunks to offer to funders. This took up almost three weeks of the fundraiser’s time plus a good bit of Bryan’s and the consultant’s. As of early February, this mass fundraising drive had brought in around £20,000. Even so, says Bryan, who admits that he is ‘always pessimistic about end of year’, the gap might still be £30,000.

These funding problems highlight how vulnerable non-profits are to the vagaries of the funding environment and how the best plans can be blown aside by external factors like this. At the best estimate, NPL will have to take around £20,000 out of its hard-acquired reserve. This might delay relocation for a year and delay adoption of a pension scheme – or it may mean lower employer contributions to the pension.

While the CAF/Impetus investment has allowed NPL to maintain its cashflow at a time when this would otherwise have been difficult, inevitably the funding setbacks have lessened the potential of the investment.

Future funding

Another problem with the emergency fundraising scheme is that, although some money came in as unrestricted funds, some very small amounts came in earmarked for specific purposes. Bryan has now resolved that tiny restricted grants are not worth having: anything less than £20,000 must be unrestricted.

Victoria is now working with NPL to help them plan fundraising more strategically rather than ‘chasing after little bits of money’, and to look at how they might package their work up to attract different types of donor. NPL plan to develop a target list of key funders – foundations and corporations in particular.

‘You can’t work miracles in the external funding environment,’ she says, ‘you can’t make other funders support NPL. But what can you do is strengthen the organization and enable them to deal with the situation and look for different ways of earning income.’ What is needed now, she says, is ‘a step change, to use an Impetus term, in terms of looking for other types of funding. There’s got to be a leap of faith in the organization to achieve it.’

Will things be better next year? Bryan thinks so. The PCTs should have paid off their debt, and several large grant applications will be made. One will be to the Big Lottery Fund for £400,000 over three years for people with HIV, to include development of leadership within communities.

The co-investment experience

Both Victoria and Nat feel that the model of co-investment is working. ‘From the outset there was a fit, it felt right,’ says Victoria. On the CAF side, it has helped inform a change in the way they do things. ‘One lesson is that we should work with fewer organizations over a longer period.’

Clearly one reason why it has worked so well is that Nat and Victoria work well together. ‘So it’s easy to raise issues and concerns with Bryan without hesitation,’ says Nat. ‘There’s no sense of territoriality and the resulting need for sensitivity and diplomacy.’

Would it be a problem if one of them left? Neither of them think so. ‘Both Impetus and CAF have made a set of organizational commitments,’ says Nat. ‘The chemistry might not be as good but from the organizational point of view there’s sufficient momentum on both sides to keep moving things forward.’ ‘It can’t be too much about me and Nat,’ says Victoria, ‘it is about Impetus and CAF, and the focus is on NPL.’

Nat also mentions the mix of skills and capabilities that CAF and Impetus bring, and the range of associates they’ve been able to connect NPL to. Co-investment with a partner that is also highly engaged with the investee is quite different from where the level of engagement is less, he says, and the other organization is basically providing co-funding.

Achieving a clear picture of what each organization can offer is clearly crucial, both for Impetus and CAF and for NPL. Initially, says Nat, some consultants overlapped, ‘and it was unclear to Bryan, and indeed to Victoria and me, how they worked together.’

In some cases, stresses Victoria, it may be that neither organization will be in a position to help NPL. ‘We need to look at what we’re good at and what we’re not good at and be honest if we’re not the right people to advise. We need to recognize when we have something to contribute and when NPL really knows what it’s doing and doesn’t need our help.’

So how does the future look? Most of the elements of the planned step change are happening. Getting the right mix of consultants, properly briefed and coordinated, has certainly been an issue, but it’s an issue that has been dealt with. The main issue now is raising funds for the next couple of years of development. However good shape an organization is in, the funding environment remains a challenge.

For more information
www.naz.org.uk
www.impetus.org
www.cafonline.org

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