Part D: A convincing response from the Scottish Government and those responsible for disseminating funds would include:

There is no silver bullet to solving the funding challenges faced by voluntary organisations in Scotland, and particularly national voluntary sector intermediaries. However, the Scottish Government can change things for the better by nature of their funding. No less than 10 main themes were covered by senior leaders when exploring changes to funding that are needed to maintain and enhance intermediaries’ capabilities and preparedness in the months and years to come.

Adopting timely processes

Voluntary organisations need suitably communicated notice periods advising when the Scottish Government and those that disseminate funds will make annual funding decisions and when they can expect payments.

Some organisations felt that the past financial year (2021/2022) was far better than before. However, we are far from consistent, timely decisions and payments across the Scottish Government.

At the very least, a timely process for funding would mean that organisations have certainty before the beginning of the new financial year. Anything less than this is inadequate practice and must be addressed.

Some organisations are forced to cope with delayed funding decisions and payments by using their reserves. However, this is not appropriate and indeed most organisations are unable to rely on this.

If funding is not to be continued, organisations need several months’ notice to be able to fulfil legal responsibilities and handle redundancies appropriately by providing staff with three months’ notice.    

The transfer of risk to voluntary organisations through delayed decision-making and payments is unparalleled, with voluntary organisations left with no idea whether they'll receive funding.

In preparation for the new financial year the following April, the Scottish Government and those that disseminate funds on their behalf should make significant efforts to adopt timely processes by:

•  entering conversations with intermediaries on next year’s funding before and no later
   than August

•  providing confirmation of a funding decision before and no later than December

•  paying funds into an organisation’s account before and no later than the tax year   
   start date in April.      

Providing written documentation

Written documentation is essential for effective and consistent communication between the Scottish Government and intermediaries. It is also vital for good governance.

The Scottish Government and those managing government funds should develop and sign-off partnership agreements with intermediaries promptly. Partnership agreements should never be left unfinished without signing.

They should provide intermediaries with timely letters of comfort for in-principal funding for the new financial year adhering to the above timescales; this helps assure boards and auditors.

They should also provide written confirmation of timelines for discussing, approving, and paying intermediaries' funding; this offers welcome relief for leaders navigating the annual process.

Offering real multi-year funding

Intermediaries could make more of a positive change with greater impact if they had access to longer-term multi-year funding from the Scottish Government. Multi-year funding that is longer-term falls between three and five years and should not be confused with a multi-year commitment to rolling funding that is reviewed annually and that has no inflationary uplift across the years.

Generally, intermediaries need a minimum commitment to funding of at least three years ahead, and some public bodies and independent funders are already funding in this way. Intermediaries recognise that the Scottish Government will often need to enter into these multi-year agreements with some caveats and this understandable.

Providing an inflationary uplift

Intermediaries are being asked to deliver more for less, sometimes with the same funding as was provided more than six years ago.

The Scottish Government must acknowledge the many intermediaries take real terms cut year on year, as is the case for many other voluntary organisations.  

Intermediaries need the Scottish Government to build in in cost increases year on year, and annual and multi-year agreements should be uplifted in line with inflation at the very least.

Providing meaningful core costs

Intermediaries need a genuine contribution that covers most core costs. This will help to build services, support income generation, and adapt to changing circumstances.

The Scottish Government must work with intermediaries to recognise what is enough core for each intermediary to maintain a solid level of capacity to maintain delivery.

The Scottish Government should also work with intermediaries to give more thought to how funding is put in place to support intermediaries to innovate and diversify their income base.

Being transparent around funding

There should be transparency around which intermediaries are being funded, by which departments, non-departmental public bodies, and third-party organisations, and by how much.

All funders should publish their funding on a website as well as the outcomes that are agreed with funding recipients.

Though this might be uncomfortable for some, taking this approach will make it easier to identify and fill gaps, and learn from good practice in planning and reporting.

Offering flexible unrestricted funding

While multi-year funding necessitates more flexibility in how funds are used as the landscape changes, the same trusting approach is needed in single-year funding.

The Scottish Government should look at the work of a variety of independent funders to understand how they are able to provide more freedom in their funding.

Flexibility should not be by chance but rather be part of in-built, regular conversation about changing need, gaps in provision, and what more or different support is needed.

Modernising approaches to monitoring and reporting

There is also more to funding intermediaries and voluntary organisations than the money itself. Intermediaries welcome a package of support around the funding they receive that supports capacity building and recognises the support and ongoing dialogue that is needed.

Part of this should involve a two-way conversation and two-way decision making relating to how the success of intermediaries’ work is measured during and after the funding period. Intermediaries can better demonstrate their impact when they are not confined to traditional reporting mechanisms.

Building consistent and accessible applications and fund information

Intermediaries, as with other voluntary organisations, need information on funding opportunities as soon as is possible. They need to know what new funding streams there are, what they cover, and how to apply?

Intermediaries need ample time to consider and submit proposals to new and existing funds given the annual cycle many currently contend with. This information is needed for budget planning and forecasting.

Greater consistency with funding processes and applications would also help, as this can vary from submitting an application to sharing a business plan. Knowing what the process is in advance helps with planning.

We need to see Scottish Government departments, non-departmental public bodies, and the different organisations responsible for disseminating Scottish Government funding be more active in sharing insights, developments, processes and streamlined best practice to improve the experience for grantees.

Establishing visible relationships and partnership from senior civil servants

The quality of relationship between intermediaries and the Scottish Government has been identified as a crucial variable that can reduce or compound the impact of funding challenges experienced by intermediaries.

While intermediaries often have strong relationships with the civil servants they meet regularly, many felt that relationships at a much more senior level needed to be more understanding.

The Scottish Government needs to listen to intermediaries to understand what certainty and sustainability looks like for them, and there needs to be a common understanding of, and commitment to this across government.

The Scottish Government should also investigate why the funding experiences felt by voluntary organisations is far superior in some areas compared with others and take steps to remedy this.