This article has been published by Alliance Magazine as part of the Propel Philanthropy Collaborative's approach to increase awareness about the need for social impact infrastructure building.
Funding third sector digital infrastructure projects is not only necessary, it is incredibly urgent, as it can enable massive efficiencies in traditional processes. For example, by using and sharing data to streamline grant-making administrative processes, we can release hundreds of millions of pounds that could be so much better spent on beneficiaries.
Advances in technology have made it possible for grant-makers to use and share data through the entire grant-making process from grant strategy development, through application processes and due diligence, to monitoring and evaluation.
Masses of granular data on social needs are published by governments and other bodies. This allows for more informed grant strategy development, based on real data and needs, avoiding wasteful mistakes. For example, a major UK grant-maker decided to allocate 25% of their grants to charities serving black and minority ethnic (BAME) communities. But the percentage of BAME populations in communities across the UK varies from 40% to 2%. So rather than blanket allocation across the UK, by using published data, this grant-maker could have allocated resources more effectively, focussing on areas with a high proportion of BAME residents.
The traditional grant application process imposes significant administrative burdens on charities. Research from the University of Bath, UK (Source: Brevio and University of Bath Research Study 2019) found that £1.1bn is spent annually just on the staff costs of UK registered charities searching for eligible grants, and filling in different application forms for each possible grant. 66% of these applications fail. By sharing grant application data, conforming to agreed data standards, both this spend and the high failure rate could be significantly reduced. Online matching platforms which provide the solution to this problem already exist in the UK, such as Brevio. Similar platforms could be created elsewhere, bringing about massive savings worldwide.
Grant makers capture large amounts of data from charities, both to check for eligibility and for compliance with charity accounting practices. As well as the funding proposal, this data can include standard, publicly available information such as IP address, biometric markers, stated reserves and income on application (compared with information on annual accounts) bank details, online presence, adverse media checks on trustees, etc.
If grant-makers shared this data, they could save themselves, and applicants, both time and money. In addition, grant-makers could share incidences of fraudulent applicants and promote best due diligence practices in the sector. The funds saved through these practices could be directed to beneficiaries.
Nearly all charities receive project funding from multiple grant-makers, often five or more. All these grant-makers require separate monitoring and evaluation data. The costs to non-profits of providing multiple monitoring and evaluation reports, with basically the same information, is probably similar to the cost of researching and applying for grants in the first place. Sharing these reports could similarly reduce waste and provide significant benefits to non-profits and their beneficiaries.
It is crucial that we continue to invest in developing digital infrastructure that enables the sharing of data. This will enable us to embrace positive changes to existing processes and significantly reduce the enormously wasteful administrative burdens faced by grant-makers as well as non-profits. This massive waste of resources could and should be redirected to the beneficiaries that we are committed to serve. Failure to adopt these changes means grant-makers and non-profits will continue to waste hundreds of millions every year, in the UK alone. Globally the figure will be much higher. Therefore, we need to prioritise funding for infrastructure – the benefits far outweigh the costs.
You can find the original published version here