As long as it takes...
Short-termism in government and philanthropic funding is failing the mission for impact and sustainable outcomes. Patient capital, whether from government, philanthropy, or impactinvesting, is a key to bright, new horizons writes CCA CEO David Crosbie in Pro Bono News.
In a panel on impact investing facilitated by Perpetual this week, Paul Ronalds pointed out that the average grant received by Save the Children is for just 18 months.
Ronalds is former CEO of Save the Children Australia and now leads impact investing for Save the Children globally. As Paul highlighted, it is not realistic to expect to establish, implement and evaluate a new human service program in 18 months.
Every charity leader in Australia and around the world knows that having the time and resources to deliver sustainable outcomes is one of the most important components of success. And yet, in an increasingly impatient world, there is little evidence that governments or philanthropists are willing to offer longer term grants that enable charities to learn from their mistakes and build and sustain effective programs and services.
Most government agencies and philanthropists continue to operate within a framework of short termism embedded in one-off grant rounds where funding might be provided for a year, or two, or even three, but rarely five or longer.
While the “pay what it takes” argument is regularly advanced by charities, the “for the time it takes” argument is a less conspicuous theme in debates about charity effectiveness. It is not that people are unaware of this issue, but very little progress is being made.
CCA has consistently called for the length of government contracts to be extended over the last ten years. The current government agreed in its election platform: to review and reform the funding models for contracted services to support longer-term planning and better service provision.
The CCA pre-budget submission called for the following initiatives to be part of that review:
- an agreed notice period of six months prior to the ending of any major government contract, incentive or concession, with limited exemptions for cases of fraud, other criminal actions, etc.
- increasing the length of government contracts where possible to at least five years,
- more transparent and accessible processes for reviewing the performance of NFPs,
- more transparent and accountable processes for government funding decisions relating to NFPs,
- a commitment to covering the full direct and indirect costs of delivering services,
- funding practices that recognise non-profit organisations are better positioned than for-profit corporations to provide community services, including via provisions in funding agreements with States and Territories. (An example is prioritising the involvement of NFP community providers in the boost to VET funding, valuing their established outperformance of for-profit providers in engaging disadvantaged and vulnerable communities.)
The business investment world tends to take a longer-term view on investment and returns, knowing that achieving success can take many years. They know building value in a company is not a short term activity. Investment in charities is not seen through the same lens.
All too often charities are expected to establish a program and have it delivering results within ridiculous time frames like three to six months. When we are talking about achieving sustainable changes around entrenched behaviours in individuals, families and communities, the expectations are unrealistic at best.
The other side of this theme is the question about how long we should take before we call something a failure and close it down. Effective leaders in our sector know that letting go of programs and services that are not working well is often critical to success. There may well be better ways to use the same resources to achieve the change and impact we seek – but letting go can be very difficult when charities, their leaders and their Boards have invested time, resources, heart and brand in a particular program or approach.
It is a similar story for those making grants, especially in government. The inability to acknowledge and learn from failure can (more often than we might like to believe) see the continuation of practices that have been shown over time not to produce the desired change or impact.
Success is dependent on our ability to invest the time required; and to call time when it is clear we are not achieving the results we want.
In this area of program performance monitoring there have been many recommendations, including the Productivity Commission recommendation to establish a National Centre of Excellence for the sector so good practice can be documented, shared and adapted across multiple communities.
Charities often do good work, but trying to operate in a short-term environment reduces the capacity to invest in better infrastructure, monitoring and documenting, training and development, and other areas that directly contribute to organisational effectiveness. Patient capital, whether from government, philanthropy, or impact investing, adds a new dimension to organisational effectiveness.
While we await government announcements about the review of contracting, we should all be vigilant in ensuring we do not sell ourselves short – of time.
Read on Pro Bono News: as-long-as-it-takes