Acting on behalf of the new Lottery Distributor, the Community Fund has asked consultancy Action Planning to arrange a meeting of around 100 major funders, including statutory, Lottery and trust funds, in order to explore whether it would be feasible to require charities to apply for grants based on expected outcomes.
JUDITH BRODIE, chief executive, Impetus Trust
There is surely no question that outcomes should be a criterion for grant-funding and other forms of charity investment. Outcomes focus the charity on exactly what they are trying to achieve - the difference they want to make to people's lives - and help them when they need to make choices about service change and development.
It is right, therefore, that in making decisions about investing in a charity, funders should look at the difference their contribution will make, and not just what it will pay for.
Funders should not be using outcomes as the only criterion for delivering safe, easily measurable outcomes. When funding innovation and experimentation, the potential return should still be clear.
Measuring outcomes is often not easy. But taking predicted outcomes into account when considering a charity investment makes good sense.
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If I could see into the future and predict outcomes I'd be richer than Bill Gates. It's a charade to rely on predictions alone. Worse, it can encourage an aversion to failure. If you don't fail sometimes, you are not being innovative or taking risks.
I am all for outcome-funding that is based on actual performance. But when it comes to prediction, I am interested in funding models that represent a judgement on the capacity of an organisation or individual to deliver. A project focus alone can unpick the effectiveness of an organisation. An outcome focus based on forecast alone can unpick the effectiveness of a project.
But donors do need three essentials that fundraisers don't yet give us - a balanced account of outcomes achieved in the past; a fair, comparative assessment of effectiveness compared to others; and transparency on progress, as work proceeds.
I accept this is not easy, but we need to end the game-playing that bedevils funding and creates inefficiencies and conservatism.
KATHLEEN DUNCAN, director general, Lloyds TSB Foundation for England and Wales
Charities have charitable status because of the benefits they provide for their beneficiaries.
Funders have limited funds and have to assess applications on merit.
Considerations include how the work fits into the grant-making criteria, how well the charity is run, and what the charity wants to do with the potential grant.
Explaining what a charity wants to achieve in terms of how it will make a positive difference to the lives of the people it exists to serve can help the charity achieve a focus for the activity and keep its eye on the 'big picture'. About 60 per cent of the Lloyds TSB Foundation's funding goes towards core costs, particularly salaries. Outcome funding is about asking charities more than, say, how many helpline workers they would like to employ with a grant, but exploring further and asking what changes the postholders will bring to callers' lives.
Sensitive funders will be sympathetic if things do not turn out exactly as anticipated - if there are good reasons, why not? Unforeseen outcomes might sometimes be better than those anticipated.
DEBBIE HOLMES, director of fundraising, Terrence Higgins Trust
It presents a challenge because funders and some charities may have to rethink the way they assess and review their work. Funders will need to manage their expectations regarding the measurability of outcomes, which could be less tangible than a traditional output.
But it is essential that funders are confident their grant is making a difference, and that funding is clearly in line with the mission statement of the charity.
At the Terrence Higgins Trust we are very much led by outcomes. For example, our health promotion work with young gay men uses hard-hitting, often sexually explicit, publications aimed at a specific audience. The output alone is the type of material many funders might feel nervous about, but the outcome - heightened awareness of safer sex and good sexual health - is critical in reducing the spread of sexually transmitted diseases.
The potential to change attitudes and behaviours is key. Consistency and clarity across the sector's funders is vital to avoid marginalised causes becoming unfundable.