The mysterious case of the £2m grants and the missing 999,936 volunteers

The National Audit Office (NAO) this week published a report on its investigation of grants made by the Big Lottery Fund (BIG) and the Cabinet Office to the Big Society Network and the Society Network Foundation totalling more than £2m. The investigation was triggered by questions raised by former Third Sector Minister, Gareth Thomas MP. The findings make uncomfortable reading for those associated with BLF and the Cabinet Office.

Let’s start with the good news (if you’re a tax payer, concerned citizen or a senior official at BIG or the Cabinet Office)…In awarding the grants they did follow their procedures. However, in case you think that’s the same procedure that many of you will have been through when applying for Lottery funding, think again. These were not applications which were submitted and assessed along with all the other hopeful applicants. These were solicited applications – BIG invited the proposals and the funding was (I believe) ‘top-sliced’ from the general grants-pot. No need to battle it out with the hoi palloi.

The three grants under investigation included two by BIG to the Big Society Network for the ‘Your Square Mile’ project (£830k) and almost £1m for the Society Network Foundation’s ‘Britain’s Personal Best’ project. A further grant made by the Cabinet Office for just under £300k for the Society Network Foundation’s ‘Get In’ project.

Although these are – at least on paper – two different organisations, the reality is somewhat different. The Big Society Network and the Society Network Foundation were both set up by the same people in what might be described as a ‘web’ of for-profit companies and a charity, which made for some very murky governance. The NAO deemed it necessary to include a diagram of the relationship between the different projects and grant recipients, which is fairly telling.

NAO figure

Among the findings NAO report were:

That the Cabinet Office meddled with the administration of the Social Action Fund that it had commissioned Social Investment Business to run. They told SIB to ‘look again’ (subtext – until you find the right answer) at four bids it had deemed ineligible, including one from Society Network Foundation. And just to make sure the correct answer was arrived at they changed the eligibility criteria after the closing date for applications.

When the project was going badly, they put more money in to ‘try and bring the project back on track’….rather than accepting they had made a horrible mistake. They also made further payments even though Society Network Foundation’s own figures showed that the project hadn’t spent the money they’d already had.

The Lottery, for its part, didn’t think to question the business model for Your Square Mile which relied on recruiting 1m paying subscribers to sustain the project going forward. The actual number of paying subscribers that were recruited was somewhat short of that figure….999,936 short in fact. They had just 64.

Yes, you read that correctly. Sixty Four.

In April 2013, two years after the first grant was awarded (and by which time it was abundantly clear that Your Square Mile was a complete disaster) BIG awarded an even bigger grant to the same people for another ill-conceived project. Nearly £1m. Despite, as NAO makes perfectly clear, the fact that the same people had offered up the same high risk delivery model, with a track record of utter disaster.

“The Big Lottery Fund did not…take into account the fact that senior staff at the Big Society Network who had scoped the Your Square Mile project (a project which was struggling to achieve its objectives) had also scoped the Britain’s Personal Best project, and the projects shared similar delivery risks”

The scope of the report was fairly narrow and was only concerned with whether the Cabinet Office and BIG had followed their own procedures in making the award and monitoring progress. It did not, unlike practically every other NAO report I have ever seen, seeking to assess value for money of the grants. In fact their own blurb about themselves states: ‘Our studies evaluate the value for money of public spending, nationally and locally’. Except this one…perhaps they didn’t feel that a value for money study was necessary since the evidence clearly speaks for itself.

BIG’s response to the investigation is also rather bemusing, stating that they are “pleased that it (the NAO) finds these grants were awarded in line with the Big Lottery Fund’s procedures “. Perhaps that’s just classic damage limitation, but I would have liked – and even expected – a bit more contriteness in their response.

The Cabinet Office’s response is just as bullish. They said:

“Society Network Foundation won a grant to deliver such a programme, but despite their efforts and our support, it was unable to make it work… Trying new things and being innovative means taking sensible risks.”

Sensible risks? Perhaps. But I’m not seeing a great deal of ‘sensible’ on display here.

Is it too cynical to suggest that the Prime Minister’s support for Big Society had anything to do with any of this? I don’t know…but I have my suspicions.

Bear in mind that at the same time as this money was being doled out, a number of long-standing charities that reflected the interests of small community groups and marginalised communities – including Black Training and Enterprise Group, Community Matters, Women’s Resource Centre and Urban Forum (which I was CEO of at the time) all had their Cabinet Office funding cut.

Out with the old, in with the new.

Didn’t seem like a good strategy to me at the time. Now it looks even worse.

7 thoughts on “The mysterious case of the £2m grants and the missing 999,936 volunteers

  1. Someone should design a name generator for organisations designed to manage these kinds of projects – it would just need to randomise a combination of the words “Social” “Community” “Foundation” “Network” “Society” “Big” “Capital” “Action” etc. Put them on your letterhead and, hey presto! BIG offer you money.

  2. Thanks for posting this Toby, interesting analysis of something that we witnessed first hand at the time. Strange to see it all being picked over so publicly now, but mainly because so many things like this happen all the time and usually no-one bats an eyelid. The gap between 1 million volunteers and 64 is somewhat, erm, noticeable though… :-/
    Not quite sure if I agree that the governance is ‘murky’, it’s fairly standard practice for charities to own trading arms – it’s the flow of funding that’s the problem for me. There are so many small organisations who really deserve the chance to prove themselves at a higher level, yet funders and the government insist on starting new things with big grants and questionable theories rather than scaling up what works.
    One thing I always find peculiar about grant funders is that they so rarely include anything about track record in their funding guidelines. Do you know many that do? Simply adding a question to their forms like “What grants and investment have you received in the past and how did you spend them?” would increase accountability and might help organisations who have been responsible with smaller grants go on to access larger sums rather than hitting a glass ceiling.

    • hi Andy,
      i’ll tell you why i think the governane is murky. Setting up a trading subsidiary is one thing. Setting up a private company, then setting up another private company (and transferring public charitable money from one to the other), then some time later setting up a charity to be the parent company is something else. And….(what’s not covered in the NAO report) then moving on and setting up another company, or charity, or both, and another and another…without worrying about the carnage left behind. never staying still long enough for anyone to get a proper handle on what you’re up to…that’s something else again.
      It’s like someone setting up a company, declaring it bankrupt leaving debts all over the place and then popping up somewhere else with another company. that’s pretty murky in my book.

      most of the funders i know look at track record (and also financial record – through company accounts) to some extent. they obviously want to strike a balance between due diligence and burdening applicants, but questions like ‘tell us why you are the right people to deliver this work’ are pretty standard ways to get at that sort of information.

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