Why it’s high time we had a new solution to help charities innovate

Dan Corry
WHEN Britons dig deep into their pockets to help good causes, it’s an impressive sight. Last year, private individuals gave away the best part of £10.5bn. That’s terrific news for UK charities, but it also sets them a challenge. Once entrusted with this cash, how should the voluntary sector make best use of it?

Take a brilliant small charity as an example – say, a literacy programme for kids in Tower Hamlets, right on the doorstep of the City of London. This imaginary charity is achieving extraordinary results, turning around young lives in one of the most deprived boroughs in the country. So why limit it to a small pocket of east London? With a few tweaks, couldn’t the same methods also be applied to benefit children in Wembley or Rotherham or Aberdeen? Maybe the charity could send staff out to deliver these programmes; perhaps they could adopt new technologies and get their services to more people that way.

Such questions are easy to posit, but in reality, exploring them is a seldom occurrence. Charities, short on capital and nervous about justifying their use of donors’ money, simply aren’t in a position to make risky expansion plans.

And caution is understandable. If a charity hits on a project which really works, no matter how small the scale, there is little incentive to divert limited resources towards experimentation. While it might be second nature for businesses to push successful products into new markets, it’s almost unheard of when those products are about social good. In the end, it is potential beneficiaries who suffer from dampened risk.

This is why New Philanthropy Capital is proposing, as part of our manifesto published yesterday, a way to help charities get a bit braver. As budgets tighten across local authorities and other funders, we are calling for one of the UK’s best-known funding bodies to re-jig its priorities.

The Big Lottery Fund (BIG) has distributed billions to charities in the last decade, and now is the time for BIG to set aside cash for charities who want to expand their reach. A new dedicated Innovation Fund would start with 1 per cent of the BIG budget and grow to 5 per cent over the course of the next Parliament, eventually creating a pot of about £30m. This is a small sum for a body like BIG, but it would give charities room to innovate, as they search for the most effective ways to tackle complex social problems. The risk of failure, which has, for so long, stifled charities and funders alike, would be an acknowledged by-product of rolling out new ideas.

Existing schemes could be trialled across different areas, while the next generation of charity pointy-heads could be given time to pilot new technology, exploring what works and what does not. Social and impact investors from the City could well be attracted.

Many charities will stay small and local, and will carry on doing great work. But that shouldn’t be the default setting across the whole sector. With the right support, a bit of creative thinking could go a very long way indeed.

Dan Corry is chief executive of New Philanthropy Capital and a former Downing Street adviser.

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