There are a number of different ways in which funds can be made available. Consider whether an open grant application process, commissioning specific services or infrastructure projects, participatory budgeting, bursaries for individuals, or repayable grants are most appropriate. Some of these distribution methods are fairly new and practice in using them is evolving.
The choice of distribution method(s) will depend on the Fund purposes and any priorities within those, and whether these lend themselves to certain options. Are monies to be targeted to particular themes or projects from the outset? Beyond that, there are a range of other factors to consider, as follows.
Key factors to consider
Whether funds are to be made available on an open, competitive basis and how this will be done. Consider how many ‘eligible bodies’ there are in the Fund area of benefit that may be able to deliver on the Fund’s purposes or priorities. If there are a number, then this may lend itself to an open grant programme (see below) of some type.
Consider also whether the Fund disbursement arrangements allow for a timely response to new needs and opportunities as these arise. It may be that an emergency situation (such as the closure of a key local facility or natural event like a storm or flood) or a significant opportunity (such as for investment in a community renewables project) happens or emerges, requiring a response in a short timescale. Ideally, the Fund Strategy will allow for an appropriate response, including making awards or investments outside of any regular schedule of ‘rounds’.
The amount of time and effort associated with the distribution method; for those setting it up and providing the ongoing administration associated with it, and for those seeking funding. The level of resources (volunteer or paid) and amount of time available before the first investments are expected or required will have a significant bearing on how funds can be made available. Some methods involve more time and resources to set up and run effectively than others (for example participatory grant-making involves considerable promotion and the organisation of a voting event and its value needs to be weighed against this). In addition, it is unfair, unreasonable and indeed waste of people’s time to expect lots of applicants to put in the effort in applying for or requesting funding where they may not have any realistic chance of success.
Another issue to consider is how inclusive to make the funding distribution processes; methods like participatory budgeting (see below) can bring about a range of additional outcomes such as greater involvement in and support for the Fund, a sense of community empowerment, and further involvement in or resources for the groups that take part. However, remember that more inclusive approaches will often involve more work to set up and run. Moreover, it isn’t always the case that the most deserving causes will be prioritised through these. Popular causes aren’t necessarily those that address disadvantage or inequality, for example.
Weighing up the above factors will be an important exercise in choosing distribution methods for the Fund.
Some options for fund distribution methods
Many community benefit funds of any size will lend themselves to an open grant making programme in some form, and this is often a good place to start; it is a way of getting funding out relatively quickly, there is established practice to draw on, and many local groups will have experience of applying to an open grants programmes previously. It can also provide an opportunity for the decision making group to get a solid grounding in some key aspects of fund governance and administration – and which can then inform the use of other distribution methods at a later stage.
Under this method, those who are eligible to apply for funding must follow an application process and a decision on their proposal is then made by a local group or forum (see the module Getting the Governance Right for more information on setting up such a group). Grant awards may be single or multi-year in nature.
A grant making programme can be fairly targeted or open; seeking to address specific fund purposes (for example provision of community facilities or spaces only) or a wide range of these. Some funds may feature a number of fairly targeted funding strands, others just one open grant programme. More information on running an open grant programme is provided in the annex Guide to open grant making.
Where there is clear evidence that a specific project or service is required locally, for example, through the community action plan, this can be commissioned directly. For example, local broadband provision or community transport. This will involve putting together a specification for the service with clear outcomes and related targets to be met and then inviting proposals in response to this. A clear selection process and criteria will need to be agreed. There will need to be a body that commissions the service, in other words, a legal entity that enters into a binding agreement with the selected service provider.
Ongoing payments can be tied to the achievement of the outcomes and targets. Regular reporting and reviews are therefore key; there must be a way to check that the agreed activity is being delivered well, achieving impact, and that it is still a priority locally if the aim is for the commission to run over a number of years.
Again, used where a specific service or project is required by the community (and there is evidence of that), but where there is clearly just one local organisation well placed to deliver it. In this case, a bid for funding may be encouraged from that organisation directly. Identification of the bidding organisation may have come about in various ways, for example, the organisation may have made representations to the renewable energy business or those involved in making funding decisions, or local stakeholders may have approached the organisation to ask if they would be willing to provide the service or project in question. Whatever the case, there should ideally be some consensus, at least amongst key local stakeholders, that the service or project is required and that the organisation in question is best placed to provide it.
Similar in some ways to commissioning, the bidding organisation should be required to outline how they will deliver the service or project, at what cost, and over what timescale. This bid should be in response to a clear specification, which may be jointly developed by the decision making body and the bidding organisation and must have clear and realistic (but challenging enough) targets and outcomes. However, unlike commissioning, this kind of targeted (or direct) funding is not an openly tendered process – it is closed to just that organisation.
The award could be multi-year in nature, but funding should not be expected to continue automatically, year-on-year; it should be dependent on reviews of the extent to which the agreed targets and outcomes have been achieved, perhaps annually.
A targeted grant scheme aimed at addressing specific purposes by funding individuals who meet certain criteria. Some examples include funding for volunteer development, education or training opportunities. Bursaries are usually capped at a reasonable limit, and proof of need may be requested, such as evidence of receipt of welfare benefits, as well as of the opportunity, for example, acceptance on to a college course or apprenticeship.
This is a form of competitive grant-making that involves a larger number of local people having a direct say on which proposals receive funds through a voting process (either online or at a public event). Proposals must, however, still meet with the Fund’s purposes and with basic eligibility criteria, so will need to be screened beforehand.
For example the Cardenden Community Panel has run participatory grant-making processes to distribute community benefit funds from Ventient Energy’s Westfield Wind Farm, and Up North! (Melness and Tongue) have also used this method for distributing Scottish Government funding and are looking to use it to distribute community benefit funds coming into that area. Participatory grant-making has its roots in participatory budgeting (PB) which has gained increasing attention from central government and local authorities over the last few years. See Further Resources Section below for more guidance on PB.
This type of investment may be appropriate where the projects or enterprises being considered for funding support will generate income from trading (i.e. selling goods or services). If they will, at what point might they expect to break even and move into profit? Offering a repayable grant (essentially an interest-free loan) can be one way of getting more value from the Fund, recycling the grant monies for further onward distribution. This method may be most appropriate where funding a local business is being considered and may make such an investment more palatable to the wider community. Cash flow forecast information that supports this decision, and a clear agreement setting out re-payment terms and conditions, will be required. The investment must remain interest free; charging interest on it may not be allowed by the renewable energy business, and such lending is regulated by the Financial Conduct Authority.
