Grant-makers should view charities as clients, not themselves, in their relationships with organisations they fund, a report from the Lloyds Bank Foundation for England and Wales has said.
The report, Five Years of Funder Plus, published today, evaluates the development support the foundation has funded at a range of small charities over the past five years, and calls on grant-makers to give choice and control over the kind of support they offer to the charities they fund.
It outlines five key lessons the foundation has learned, which include the importance of building trust, the need to run the right diagnostics to identify the cause, rather than the symptoms of issues, the need to invest in leaders and to build capabilities, not just capacity.
But the report says: "The most fundamental lesson of our funder plus work is that success depends on charities being in control: the grantee needs to own the development process from start to finish."
The relationship between the funder and the consultant they have commissioned to provide the support might be important, the report says, but "first and foremost" the customer is the client.
To achieve this, the report says, charities should exercise choice over the support package: who delivers it, what it looks like, how they receive it, when and how long it lasts.
"The important point here is that it’s not for the foundation to judge which of these is the right route," the report says.
"In either case, if the grantee is not persuaded that the work is necessary, it is highly unlikely to stick or achieve lasting impact."
Harriet Stranks, the director of grants at the Lloyds Bank Foundation, told Third Sector there were often issues of confidence that charities needed to deal with before they could tackle problems the consultant had identified. But she said there needed to be enough trust in the relationship for the charity to say so.
Charities were often reluctant to be honest with funders about their shortcomings, said Stranks.
"I’ve been working in grant-making for 20 years and one of the perennial problems is that charities will put their best face forward so that we’re not really having adult-to-adult conversations," she said. "The power dynamic creates dishonesty."
It was often easier for funders to focus on the applications that were best presented, not on where funding was most needed, she said, adding that funders needed to "critically assess ourselves" to understand which organisations were missing out on funding.
And, Stranks said, if grantees felt in control this could help to deal with the perceived risks of funding some organisations.
"If you build a good relationship and you’ve got a good level of honesty, you can understand the risks, mitigate against them and support those risks being eliminated," she said.
"We need to challenge ourselves as a sector to stop charities having to jump through so many hoops."
Sonia Roberts, chief executive of Landau, a supported education and employment charity that has been part of the Lloyds programme, said the approach adopted by Lloyds had empowered the charity to secure contracts it never would have tried for previously.
"I’d been used to receiving money to fund specific projects, but never anything that said ‘what do you as a charity need?’, and it was very welcome," she said.
"The really key point is that we can have that level of honest conversation and asking for support isn’t seen as weakness or a liability."
Roberts said the legacy of the support Lloyds had given was going to be longer and more effective than one pot of money could have been.
"If you want to invest in our sector we need to look at investing in the organisations, not the activities they deliver," she said.