Seb Elsworth: The challenges and opportunities of place-based funding

As the government looks to level up the country, boosting the social economy in local communities couldn’t be more timely

Place-based funding has been increasingly popular with foundations over the past few years.

This has been driven by a number of factors. A recognition that resources are limited and that impact might be better achieved by working in a deeper and narrower way is one.

Others include the opportunity to support and change the whole system in a place and not just support a number of individual projects, and the opportunity to play into the increased role of devolved authorities, tailoring public policy to the specific needs of a place.

The ambition of the government to “level up” the country with policies that focus on investment in “left behind” communities should present an opportunity for this place-based focus to align with government thinking.

The need is all the greater given the disproportionate impact of the pandemic on certain communities.

But delivering place-based funding effectively is hard, especially when it comes from an organisation that is not itself of that place. Building community infrastructure takes time and needs a good understanding of local context, networks, people and power structures.

Any perception that “we are from London and we are here to help” will rightly raise heckles from local stakeholders about whether, as a funder, you can know enough of the context of whether you’re in it for the long haul.

From the funder’s perspective there are additional challenges around working in specific places. You can lose some economies of scale in your operations – problematic in an environment where the costs of delivering funding often come under intense scrutiny.

And while the strongest organisations might be funded through national programmes anyway, other projects may need more support to get them to a point where they are ready to take on the funding available.

This is a particular issue when making repayable investments. Overall, it might take longer to deploy the funding than it would if you ran a more generic process.

But despite the challenges of place-based funding, the opportunities are significant. If done well, place-based funding can not only support organisations delivering significant impact that would not otherwise be reached, but develop the broader social economy in a place over time.

At Access we are in the early stages of learning how to support place-based funding. We have been hugely grateful to a range of other funders with many years of experience and who have helped shape our approach.

The Local Access programme, in partnership with Big Society Capital, is working with six places around England to grow the local social economy through establishing dedicated enterprise support and blended finance initiatives.

Local partnerships in each of the places are developing detailed delivery plans against a headline allocation of funding, which are adapting to the changing role of the local social sector in the recovery to Covid-19.

These six (Hartlepool & Redcar, Bradford, Gainsborough, four boroughs in Greater Manchester, Bristol, and Southwark) were chosen from a shortlist of 12 places who developed local partnerships in order to bid during the latter part of 2019.

A recently published evaluation has highlighted some early lessons for all funders seeking to work in place:

Local partnerships require time and resources

We provided development grants of £10,000 to each of the 12 places – and this was probably not enough. While we wanted these partnerships to develop organically, they were influenced by decisions we took about who we first approached in each place (in some cases local VCS infrastructure for example, in some others the local authority).

This might have led to the perception of there being a “lead partner”, resulting in some complex power dynamics, especially when seeking to engage front-line organisations.

Pursuing innovation can result in a lack of clarity that can be liberating – or discomforting

Our bidding process deliberately did not include detailed scoring criteria like a tender document, because we did not want to reward places who would simply be good at drafting proposals. We were also not well placed to set those criteria for the place.

Instead the process was broad and open-ended. Whilst some places thrived with the ability to create ideas from scratch, some wanted more definition to what a proposal should look like.

One respondent described “terrifying free rein to do whatever we wanted”, and about a quarter of respondents to the evaluation said that this lack of clarity was unhelpful.

There is a constant tension between giving up control but providing support

Trying to balance a programme being place-led, yet still having overriding aims and objectives is a constant challenge.

Most places appreciated this flexibility and used it creatively without drifting away from the programme’s purpose.

However, in some instances where places took the opportunity to develop their plans independently, it resulted in plans that did not align to Local Access objectives to support the local social economy, potentially wasting time and effort.

The six Local Access partnerships have a long way to go and we all have much more to learn. But as the government looks for ways to level up the country, boosting the social economy in local communities couldn’t be more timely.

Seb Elsworth is chief executive of Access, a foundation that helps to widen access to social investment for charities and social enterprises

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