More grant funding is essential to help social organisations scale up or replicate a project because projects are “too risky” for social investors, according to a new report.
Research carried out by the International Centre for Social Franchising for the Big Lottery fund identified access to finance as a key reason for organisations not seeking to replicate their success elsewhere. According to The Potential for Social Franchising more than half of those it interviewed report lack of access to finance as a reason for not scaling up.
The report went on to identify grant funders as essential to the process, saying that replication projects are often “too high-risk for social investors”.
It calls for the creation of a Social Replication Grant Fund and recommends the creation of a social replication toolkit to support organisations going through the process.
It also calls on funders to familiarise themselves with the process of social replication and promote it those that they work with.
Grant income helps charities to grow
A separate report, which was released last week by the Centre for Market and Public Organisation, and looked at the grants made by the Community Fund (a predecessor to the Big Lotttery Fund) between 2002 and 2005, found that organisations which received a grant experienced a “multiplier effect”.
Looking at a sample of more 5,000 grant applications and comparing those that were awarded a grant with those that were not, it found that “being awarded a grant directly affects a charity's survival” with the impact being felt up to four years after the grant was received.
Researchers also concluded that lottery funding is not a replacement for other sources of income as those that received a grant recorded higher overall income growth, with medium-sized charities seeing their income go up by £1.60 for every £1 of grant income.
Professor Sarah Smith, who led the research, said: “Our research was designed to find out if grant funding meant a reduction in other sources of funding such as donations.
"The findings indicate that grant funding – in this case from the Community Fund – plays a vital role for many charities. It is clear that it doesn’t simply substitute for other sources of imome but in fact ‘crowds-in’ other incomes to thrive and grow.”
