LSF EVALUATION REPORT

NEEDS ANALYSIS AND THEMATIC MAPPING

20th November 2016
1. Introduction and aims
This report offers detailed analysis of the Online Diagnostic Tool (ODT) and LSF grant holder
application forms for the 266 successful grant holders (see appendix A-C for more detail on
the analytical approach taken). The analysis explores what types of organisations have
received LSF grants and what exactly they have been funded to undertake as well as
offering a number of broader insights which will be explored in much more detail
throughout the rest of the evaluation. As will be seen, analysis shows that a wide variety of
organisations have been funded in terms of region, sector, size, staff and volunteers.
Moreover, organisations have crucial differences in terms of their trajectory with some
facing severe declines in income and some experiencing growing pains through increasing
income. Analysis also revealed a wide range of LSF projects (including developing specific
systems, user involvement and impact assessment) although a majority aim to increase
income in some way. For some organisations, LSF is the first stage of an organisational
change process and their project involves primarily strategic thinking whereas others have
already undertaken much of this work and their LSF project involves putting their plans into
practice.

Section 2 examines who the grant holders are; section 3 looks at the average ODT scores;
section 4 explores what they have been funded to undertake; section 5 looks more broadly
at how grant holders have framed LSF within their applications; and section 6 attempts to
draw out some broader strands of analysis, which will be examined further throughout the
evaluation. Section 7 ends with a brief summary and conclusion.

2. The LSF grant holders

The following analysis gives a clear picture
of the types of organisations that have
successfully gained funding from LSF
around a series of different characteristics.

2.1 Region
Organisations in all English regions have
been funded although there are important
variations. Twenty-one percent are based
in London and 17% in the North West
compared to 7% in the East Midlands and
6% in the North East and East of England.
Figure 1 opposite gives the actual number
of organisations funded in each region.
These regional patterns of funding reflect
the general distribution of voluntary
organisations reported in NCVOs civil society almanac: but there are also important
differences. A greater than proportionate number of grant holders are in the North West
and a comparatively smaller number of organisations have been funded in the South East
compared to the general regional distribution. Other regions that show a disparity are the
East of England (which has the lowest number of grant holders but a higher than average
number of organisations generally) and Yorkshire and the Humber (where the opposite
pattern is observed: this region has a lower than average number of organisations generally
but accounts for 12% of the grant holders).

2.2 Sector served

Grant holders operate in a wide range of sectors although, as was stipulated by LSF, they all
work with some vulnerable or disadvantaged group. Organisations in the community (18%),
disability (14%), family (11%) and youth (11%) sectors are the most common accounting for
over half of all LSF grants. Figure 2 gives the full breakdown of the actual number of grant
holders in each sector.

Number of grant holders by sector served

48

36
30 29

19 17 16 14
11 10 9
6 4 4 4 3 3

Figure 2: Number of grant holders by sector served

2.3 Income
The ODT provides four pieces of income data on each grant holder - confirmed
organisational turnover in 2013 and 2014, estimated turnover in 2015, and estimated
income in 2015 (see figure 3 for details). Taking estimated income for 2015, the average
figure was 530,588 (ranging from 0 to 9,400,000) representing a small overall increase
on 2014. For further analysis, these income figures were separated into income
bands/brackets.
 180
160
140
120
100 2013 Turnover
2014 Turnover
80
2015 income
60
Estimated 2015 turnover
40
20
0
0 to 25k to 100k to 500k to 1m to
10k 100k 500k 1m 10m

Figure 3: Turnover and 2015 income levels: bracketed frequencies

From 2015 income data by far the most populous group of grant holders is those with an
income between 100k to 500k(59%) with just under a third (30%) between 500k to
1m. A much smaller number (9%) of organisations have an estimated 2015 income of over
1m.

Income band / frequencies 2015 income 2015 income (%)

0 to 10k 3 1
25k to 100k 2 1
100k to 500k 157 59
500k to 1m 79 30
Over 1m 25 9
Total 266 100
2.4 Changes in income
Organisations were split into three groups based on whether their income had experienced
a decrease of more than 15% between 2013-15, no/ small change or a more than 15%
increase in income(see figure 5).

Financial change 2013-15 (Number of grant holders)

140

120 115
107
100

80

60
44
40

20

0
Decrease No/small change Increase

Figure 4: Financial change 2013-15

Income growth can also be split up in different ways. Analysis of the 2013 and 2014
incomes revealed the following distribution (see figure 5). The following growth bands were
used: no growth (less than 1% increase), small growth (1%-10% increase), large growth
(10%-50% increase) and very large growth (more than 50%). Evidence from recent NCVO
research1 suggests that LSF grant holders may be generally more financially successful than
small and medium-sized charities overall because in NCVOs analysis there was a fairly even
distribution between organisations that had seen a fall, a rise or stayed the same between
2008/09 and 2012/13 (please note the different time period).

Significantly for a programme like LSF the NCVO research showed that the income of small
and medium sized charities is more volatile than larger charities. For example, the research
found that of all charities with an income between 100k-500k in 2008/09 - 23% had
moved into a lower income band and 8% in to a higher income band by 2012/13. Looking
by sector - health, social services, law and advocacy lost the highest proportion of overall
income. This volatility extended to the very survival of organisations with 23,000 small and
medium charities disappearing in the same period. Over the same period 18,000
organisations were created.

Crees, J., Davies, N., Jochum, V. & Kane, D. (2016) Navigating Change: An analysis of financial trends for
small and medium-sized charities, NCVO
 140.0
116
120.0

100.0 90 93.9

80.0

60.0
38
40.0
23.2 22
20.0 5.4
0.0
no growth small growth large growth very large growth
-20.0
-14.8
-40.0

average_percentage_growth (%) count_of_orgs

Figure 5: Growth bands by average % increase/decrease 2013-14 and number of organisations

Using the growth bands defined above (figure 5), there is a noticeable amount of
organisations that have had no growth and large growth. Probably more telling is that there
are 22 organisations that have grown by more than 50% in one year, with an average
increase of 94%. It seems that this average is large because of the maximum values in
terms of real growth (as opposed to percentage increase).

2.5 Assets and reserves

Another way of exploring financial health is the assets and reserves of grant holders. Table
2 shows the wide variety in terms of unrestricted funds and different types of assets. Some
grant holders have millions of pounds of unrestricted funds on their balance sheet and hold
large amounts of assets and reserves whereas some organisations have substantial deficits
in terms of unrestricted funds and no assets or reserves.
 Measure of asset or reserves Mean Minimum Maximum
Unrestricted funds 7,704 -571,915 308,449
Restricted funds 12,428 -203,530 359,418
Total unrestricted funds at the balance 180,941 -106,934 2,593,020
sheet date

Total restricted funds at the balance sheet 118,179 -93,172 2,764,240

date
Current assets 234,390 -13,192 1,650,000

Fixed assets 234,069 0 6,712,480

Accumulated reserves 10,603 0 816,098

In particular, thirty-three (12%) grant holders reported no fixed assets and 90% reported no
accumulated reserves. Although this figure is likely to be a significant under reporting2 it is
in sharp contrast to NCVOs almanac data which reports that 81% of medium-sized charities
(100k-1m) have some reserves.

Using current asset data, table 3 shows the breakdown of grant holders in to different
groups with around three fifths of organisations (62%) having current assets of less than
half their income and around two fifths (38%) having current assets of more than 50% of
their income.
Table 3: Current assets as a percentage of income

Current assets as a percentage of Frequencies Percentages (%)

income
Less than 25% 73 28
25% or more but less than 50% 89 34
50% or more but less than 100% 75 28
100% or more 27 10

This disparity could be due to a lack of understanding among grant holders (as the definition of what
constitutes reserves is quite technical) or it could be gaming by applicants who felt that if they detailed their
reserves they would be less likely to receive funding. Either way, the data on accumulated reserves should be
treated very cautiously.
The average figure given for the organisations proportion of income that was secured was
70% (minimum 5%, maximum 100%). The average figure given for the organisations
proportion of income that was highly likely was 26% (minimum 1%, maximum 90%).

2.6 Income sources

The average reported income from capital grants in 2014 was 18,175 (ranging from 0 to
72,011). The average figure given for the organisations proportion of income that came
from the public sector was 51.4% (ranging from 1% to 100%). The average figure given for
the organisations proportion of income that came from its two biggest streams was 51.3%
(ranging from 2% to 100%). The reliance on certain sources of income (especially statutory)
was described as a key challenge in a number of applications. This supports findings from
the sector more generally as a recent report by IPPR North found a long-term reduction in
grants in favour of contracts, that the income that the voluntary sector as a whole receives
from government has fallen, and that smaller organisations have been hit particularly
hard3.

2.7 Size of LSF grant

The average amount of funding applied for was 62,627 (see breakdown in figure 6). Most
organisations applied for funding between 61 to 80k (81 organisations (representing 31%
of the total)) or 41 to 60k (76 organisations, 29% of total). Smaller numbers applied for
amounts approaching the maximum (81 to 100k: 46 organisations, 17% of total).

35%
31%
30% 29%

25% 24%

20% 17%

15%

10%

5%

0%
20k to 40k 41k to 60k 61k to 80k 81k to 100k

Figure 6: Funding amounts applied for (%).

3
Hunter, J., Cox, E. & Round, A. (2016) Too small to fail: How small and medium-sized charities are adapting
to change and challenges IPPR North
2.8 Changes in income by amount applied for
Those organisations who experienced a decrease in funding were not more likely to apply
for one level of funding than any other. In contrast, more of those who experienced no
change in funding applied for funding in the 41k to 60k and 61k to 80k ranges. There
were fewer organisations who had experienced increases in funding that applied for the
maximum funding amount.

45

40

35

30
20k to 40k
25
41k to 60k
20
61k to 80k
15 81k to 100k
10

0
Decrease No/small change Increase

Figure 7: Changes in turnover between 2013-15 by amount applied for

2.9 Staff and volunteers

The average number of full time staff members for grant holders was 7.5 (ranging from 0 to
36), and the average number of part time staff members was 7.2 (ranging from 0 to 36).
The average spending total on staff costs was 304,361 (ranging from 0 to 1,270,689).
This represents approximately three-fifths of total expenditure. The average number of
volunteers involved by grant holders was 60 (ranging from 0 to 1,089). Only 6 (2%) grant
holders do not involve any volunteers with 86 (32%) involving 50 or more in their work.

2.9 Organisational reach

Grant holders largely though not exclusively described their organisational reach as
Local. Sixty-one percent of the organisations gave this description, comprising 161
responses. A further 22% (58) described their reach as Regional, but beyond this, other
descriptions were less common: 6% (15) described their reach as National, 3% (8) as
Neighbourhood-level focus, and 3% (7) as Multi-regional. Only 1% (2) organisations
described their reach as International (see figure 8).
70%
61%
60%

50%

40%

30%
22%
20%

10% 6% 6%
3% 3% 1%
0%

Figure 8: Organisational reach (%)

2.10 Reach by region

Breaking down reach by region reveals a number of patterns. The number of grant holders
overall was highest in London, but there they represented a mixture of local, national and
regional organisations (as well as smaller numbers of multi-regional, neighbourhood and
international organisations). The overall number of organisations in the North West was
second only to London, but a much larger proportion of these were organisations with a
local focus. While the overall number of organisations with a neighbourhood focus was low,
the majority of these were in Yorkshire and the Humber.

2.11 Clusters around organisational trajectory

The above sections offer useful analysis of specific demographic characteristics. This sub-
section looks across the different characteristics to generate some broader clusters of
organisations based on their organisational trajectory.

A key assumption of LSF is that different organisations are pursuing their own journey (see
the theory of change), however, some useful dimensions about organisational trajectory
and exactly where the LSF project fits into this emerged from both the quantitative and
qualitative coding.

Dimension Cluster
Financial health The financial data presented above brings into focus the
very different financial trajectories of different grant holders
trajectories which have shaped their LSF application and
 will likely drive many different aspects of their LSF projects.
Broadly three groups emerged:

Growers those organisations who have seen consistent

growth in income and maintain substantial reserves and
assets. Their applications often referenced the success of
the organisation and their LSF project was largely seen as a
way of adapting to growing pains;

Squeezed middle those organisations who have seen little

growth (if any) in income over recent years although they
may still have substantial unrestricted funds, assets and
reserves. Their LSF project often recognises the need for
change but they have some time to introduce them.
Moreover these organisations have often already made
significant changes which have helped them adapt to some
extent;

Fighting for survival those organisations who have seen

sharp declines in income and have few reserves - often
leading to reduced staffing levels over recent years. Their
LSF application therefore presented a story of failure and
inability to adapt to a changing environment often
reduced funding from statutory sources. Their LSF projects
are often aiming to enact radical and fundamental change to
the organisation that is framed as necessary for survival.
Stage of sustainability For some organisations LSF has provided an opportunity to
process step back and undertake an organisational review / planning
process. Their LSF project, therefore, represents the first
stage of organisational change beyond a generalised
sustainability the activities and outcomes of this process of
change are not yet clear. In contrast there are some
organisations who are at a different stage and have
completed their organisational review/ planning already.
Their LSF project is putting some elements of this plan into
practice. Other organisations have been undertaking a
process of organisational change for a number of years and
may already have received grant funding to enact certain
processes. LSF is therefore the latest element of this long
term process.
Organisational history The age of the organisation is a factor with 30% established
since 2000, 34% in the 1990s, 23% in the 1980s, 11%
 between 1945-79 and 4% before 1945. These different ages
can result in different strengths and challenges for grant
holders. Many organisations are first generation with
founders still in place amongst the staff or trustees. Some
organisations are long-established household names and are
deeply embedded in their community. Both of these make
the change process different and raises distinct challenges.

3.1 Overall ODT breakdown

The ODT contains a number of diagnostic scoring measures of the grant holders. Table 4
below summarises these for the 266 organisations, showing mean results along with
minimum and maximum values along with standard deviation in the responses. The Quality
and impact item shows the greatest overall amount of dispersion and variance: this may be
due to its having a markedly lower minimum than the other items.

Table 4: ODT breakdown

Mean N Minimum Maximum Std. Deviation

68% 266 50% 88% 6.9%

Sustainability

Market & 60% 266 47% 76% 5.9%

opportunities

65% 266 47% 88% 6.2%

Strategy & planning

68% 266 48% 91% 7.2%

Record & capability

59% 266 33% 89% 9.1%

Quality & impact

66% 266 50% 85% 5.7%

Overall scoring

The relatively narrow scoring range of the grant holders (low standard deviation) is perhaps
the key finding from this analysis. It is not clear what underpins this low variance. It could
be:

1. The ODT (or at least its scoring system) does not discriminate clearly between
different organisations. This does not mean the scoring system isnt valid (i.e. if 65%
 is better than 64%, which is better than 63%, then the measure is valid) but rather
that it does not offer clear variance between organisations that are better than
others on these dimensions;
2. It could be that there is relatively little variance between grant holders on these
dimensions either because:
a. There is little variance amongst the population of medium-sized VCSE
organisations generally;
b. The LSF programme has targeted funding towards organisations within a
certain range (i.e. not those that score very highly or very lowly)

Explanation 2b is likely to have played a role, however, the analysis of the applications
suggests that there is considerable variance across the grant holders. As such, if explanation
1 is correct then this also means that the ODT is not especially discriminating in terms of
change over time for the same organisation. This will present some challenges when
comparing pre and post LSF ODT scores at the end of the evaluation, however, as long as
the measure is valid the low variance can be calibrated into analysis.

3.2 Income and ODT scores

Two main findings emerge when splitting ODT scoring measures by estimated 2015
turnover: the most notable is that all scores are lower in those organisations in the 0 to
10k bracket (although this group represents only 2 organisations). A more robust finding is
that the 1m plus group shows the highest scores on all measures, including the overall
score. While this is only a small difference in all cases usually only 3-4% percentage points
it is consistent throughout this group of 27 organisations.

Table 5: Compound scores split by estimated 2015 turnover

Market & Strategy & Record & Quality & Overall

Sustainability opportunities planning capability impact scoring

0 to 10k 62% 55% 61% 57% 47% 59%

(n=2)

25k to 68% 61% 63% 69% 61% 66%

100k (n=8)

100k to 67% 60% 65% 68% 59% 65%

500k (n=158)

500k to 1m 68% 59% 65% 68% 58% 65%

(n=78)

1m plus 70% 64% 68% 71% 62% 69%

(n=27)

68% 60% 65% 68% 59% 66%

Total (n=266)
3.3 Income change and ODT scores
Splitting ODT scores by income change groups, some questions show only minor
differences. However, there appear to be differences on some items. Scores on the Market
and opportunities question were higher with positive financial change and vice versa.
Scores on most questions were slightly lower throughout for the decreased income group,
though the reverse was true for the Quality and impact group, for whom the increased
income group was slightly lower.

Table 6: Compound scores split by 2013-15 income change

Strategy Quality
Market & & Record & & Overall
Sustainability opportunities planning capability impact scoring
Decrease 67% 58% 63% 67% 60% 64%
(n=44)
No/small 68% 59% 66% 69% 60% 66%
change
(n=107)
Increase 68% 61% 66% 68% 58% 66%
(n=115)
Total 68% 60% 65% 68% 59% 66%
(n=266)

4. Understanding the LSF projects

A wide range of activities have been funded as part of the LSF programme4. The below
offers a breakdown of the different type of activities funded as well as some deeper
analysis to try to understand how different grant holders have framed their LSF projects
(section 5).

4.1 Increased funding

The majority of LSF projects are aiming to increase funding for the organisation. This is not
surprising given that income diversification has been an important trend amongst small and
medium-sized charities in recent years. Earlier NCVO research showed that between
2008/09 and 2012/13 small and medium-sized organisations increased their earned income

These findings are primarily based on the new codes that have been generated by the evaluation team
through coding funded applications (NB: in some cases the sub-codes do not total the overall code because
not all applications contained enough detail to sub-code accurately).
through fundraising and charitable trading by up to 60%5. Within the LSF applications fifty-
seven percent of projects are focused on developing new funding streams and/or
diversifying income whereas 20% of successful applications target increasing funding from
existing streams. Thirty-six percent of grant holders intended to develop new products or
services whereas only a small amount (6%) outlined developing more income from their
assets. Twenty-seven percent of applicants intended to develop new funding streams by
targeting new funders. Twenty percent were intending to target institutional funders but
only a small number (8% overall) intended to target individuals (whether the aim was to
charge for fees and services or to raise donations was not coded). Most of those applicants
intending to target institutional funders were looking at private sector (12%) or statutory
sector (13%) funders. A smaller number of applications were looking at VCSE funders (4%).
These statistics are represented on the flow chart in figure 9.

4.2 Reduced costs and pricing

Increasing efficiency was mentioned as a generalised aim in most applications, yet only 12%
outlined substantial activities in reducing costs or developing greater efficiency. This was
perhaps surprising given the high proportion who felt the hostile funding environment was
their biggest challenge. Sixteen percent made mention of restructuring their organisation.
Only two organisations talked about their intentions to carry out a merger (although some
were using LSF to resolve some of the challenges of previous merger). This is perhaps also
surprising as earlier NCVO research shows that small and medium-sized organisations had

Crees, J., Davies, N., Jochum, V. & Kane, D. (2016) Navigating Change: An analysis of financial trends for
small and medium-sized charities, NCVO
decreased their overall spending between 2008/09 and 2012/13 and, in general, increased
the amount that they spent on generating funds. Charities in the income band 100k
500k also nearly halved the proportion of their spending that went towards staff costs6.

One additional element mentioned in some applications was effective pricing which had a
number of different aims: full cost recovery; price discrimination (i.e. charging higher rates
to those able to pay more); or cross-subsidy charging more to some to subside provision
to core groups (these were not coded).

4.3 Strategic thinking

All LSF projects involve some strategic thinking but this code relates to projects that aim to
develop strategic thinking on a substantial and/ or ongoing basis. Apart from diversifying
income streams, the most commonly-outlined aspect of capacity building in the
applications was strategic thinking, as outlined in 51% of applications. Details of strategic
thinking included having better information available to managers and trustees in order to
make better decisions. In many cases this was paired with mentions of financial planning,
as outlined in 29% of applications as well as user involvement (17%).

Improvements in strategic thinking were primarily seen to be taking on business planning

processes including gathering market intelligence on demand and funding opportunities.
Improvements in the business planning cycle were also highlighted in many applications.
Fewer detailed and substantial competitor and/ or market analysis.

4.4 Volunteer involvement

This code excludes the involvement with the business partner as part of the project.
Around one in four (26%) applicants outlined activities around volunteers and volunteering
support in their application. In most cases, the focus of volunteering capacity building was
building on the capability of existing volunteers: 17% of all applicants outlined this, while
12% outlined increasing the scope and extent of volunteer roles. Only 12% outlined
increasing numbers of volunteers engaged by their organisation.

4.5 Staff involvement

Forty-four percent of projects planned to develop the organisations staff team. Thirty-
seven percent of these planned to focus on increasing staff capability and 22% were
employing new dedicated staff members as part of their LSF project.
4.6 Impact assessment
Impact assessment was outlined in 47% of applications. For most, the purpose of impact
assessment was for future funding purposes (27% of all respondents outlined it in this
context) as opposed to service development (16%).

4.7 User involvement

User involvement (separate from volunteering) was not outlined in the majority of
applications: only 17% of all applications outlined user involvement in some form. Most of
these involved consulting users (outlined in 10% of applications), and around equal
numbers intended to conduct evidence gathering with users (7%) or to involve users in
decision-making (6%). No applications outlined what we described as user-controlled
projects.

4.8 Improving specific systems

Improving systems and infrastructure were
common themes (Figure 11). The most
common system improvement was in
marketing, as outlined in 41% of applications.
This was followed by IT (24%) and finance
(25%), and systems for attracting new
business (22%). Less common systems were
general policies and procedures (10%) and HR
(also 10%). Administrative systems were
outlined in only 3% of all applications.

4.9 Changing or improving services

Explicit or implicit in almost all funded applications was the importance of ensuring
continued delivery of high quality services to beneficiaries, however, smaller numbers built
increasing service quality directly into their LSF project. Around one in five applications
outlined intentions to develop new services (21%) for service users (not for the purposes of
increased funding). Twenty-four percent of applicants specified working towards marks of
quality assurance or accreditation.

4.10 Partnerships or relationships

Developing relationships with other organisations (other than advisors and business
partners) was outlined in around one in four applications (26%), and these were split
between intentions to form partnerships in the private (9% of all applications), statutory
(11%) and/or non-profit (11%) sectors.
4.11 Advisor role
The advisor element of the application (q25b in the application) has not been quantitatively
coded, however, through qualitative analysis key dimensions of the relationship emerged.
These different aspects can be used later to form dimensions of a typology of the advisor
role. These analytic strands will also form an important part of the rest of the evaluation
including being explored in the December 2016 grant holder snapshot survey and the
journeying case studies. The advisor role and relationship is a fundamental aspect of the
LSF model and the programme theory of change contains the assumption that this role is
crucial to support organisations to achieve sustainability. However, the theory of change
contains little detail about exactly what it is that underpins the success of this role. Table 7
below offers some of the key dimensions that may or may not underpin success that
emerged from this initial analysis.

Table 7: The advisor role

Aspects of the different dimensions of the advisor role and relationship

In some applications the advisor is offering specific support in discrete projects (e.g.
financial systems review, developing a website) whereas in others the advisor(s) is
taking a much more general role across different elements of the LSF project acting as
a critical friend or sounding board)

Different applications emphasised different skills, knowledge and experience that

were seen to underpin the future success of the advisor role:
o Service skills, knowledge and experience (e.g. disability, arts);
o Topical skills, knowledge and experience (e.g. finance, HR, IT);
o Sectoral skills, knowledge and experience (e.g. VCSE);
o Practical skills, knowledge and experience (e.g. employed as a Finance
Director/ HR Manager);

Some applications stressed the importance of an existing relationship with the advisor
(sometimes long lasting and multi-faceted) whereas others were unknown to the
organisation
In some applications the advisor had been involved in the initial ODT and application
stage
Some advisors are part of a consultancy firm whereas others are individual actors
Some applications discussed how the advisor had been recruited whether it was
informally or through a formal, selective recruitment process
4.12 Business partner
The business partner element of the application (q25c) has not been quantitatively coded,
however, some insights emerged from qualitative analysis. As in section 4.11 these insights
can inform future typologies, will be explored in more detail throughout the evaluation and
help to give detail to assumptions within the programme theory of change. Table 8 details
these insights.

Table 8: Business partner

Aspects of the different dimensions of the business partner role and relationship
Some organisations gave substantial detail to the business partner role and had a
clear plan to how it fitted in to LSF. For some of these organisations some of the
success of their LSF project will clearly depend on the success of the business partner
role. However, for others little detail was given, the business partner didnt have a
substantial role and they were peripheral to the success of their LSF project.

Similar to the advisor role, some of the business partner roles are around discrete
projects whereas some have a much more general advisory role.

The nature of the relationship differed with some of the grant holders having a
multifaceted pre-existing relationship that reached beyond employer supported
volunteering. The relationship also differed between organisational and individual
links.

Not all business partners were private enterprises with some from the public and
VCSE sector
It was not clear from the applications what the motivation of the business partner
was although it will be important to explore whether it falls into CSR, HR, PR or
something else.

4.13 Project scope

Table 9 below offers some clustering around different aspects of the scope of LSF projects
which goes beyond specific activities.
Table 9: Organisational clusters around project scope

Dimension Clusters
Scope General projects have a wide scope across the whole
organisation and often involve a root and branch review
including governance, structure, management systems and
services. Discrete projects are more associated with
organisations that are putting plans into practice and are
often focused on developing specific systems e.g. HR,
finance and IT or developing a new product or service.

Another element of project scope is whether it is aiming to

bring about a change (e.g. new product or service) or those
which are aiming to shift to continuous change (e.g.
embedding ongoing impact assessment systems).

There is also a notable distinction between infrastructure-

focused and change-focused applications. Many applications
propose a change-based project with some associated
infrastructure developments, but some focus entirely on
infrastructure. A much smaller number propose a new
project or change without any infrastructure development.

5. Understanding how grant holders have framed their

LSF projects
This section moves beyond specific project activities to explore how the different elements
of LSF have been framed and understood by grant holders.

5.1 What are the problems that grant holders are facing that LSF is responding to?
Some applications gave considerable detail as to the rationale for the LSF project. Most
grant holders detailed external changes which their organisation needed to respond to
including:

Funding - many saw the funding environment as increasingly tough and competitive
and the most oft-cited external change was around funding both in terms of
o the perceived reduction in funding (especially in reduced funding from
statutory sources due to austerity measures);
o the nature of funding with the medium term shift from grant funding to
contracts that is well documented in the NCVO almanac
 Specific policy or legal changes that the organisation had to respond to;
Increased demand for services due to austerity measures especially perceived
increased poverty of certain beneficiary groups (this perception is supported by the
other research referenced in this report);
Broader changes amongst beneficiaries including changing demographics and new
technologies (e.g. web support).

Far fewer organisations detailed specific internal changes that were driving the need to
change. These included growing pains of the organisation where the need for change was
seen as a symptom of success (i.e. growth) rather than a response to failure. Another
internal change identified by a small number of organisations was the loss of founders and/
or new leadership.

Although the majority identified external changes as the overarching driver of change, the
remedy (by virtue of the LSF model) was to bring about internal changes. Therefore, a
number of internal changes were seen as necessary (i.e. the wide range of elements that
were outlined in section 4).

5.2 How have different elements of the LSF projects been understood and operationalised?
Space within the applications was restricted and often contested concepts were used with
little explanation, for example, an application may mention improving monitoring and
evaluation processes without going into detail on what this may entail (is this box-ticking
or simply due to a lack of space?). This made analysis of key conceptualisations challenging
and it will require considerably more detailed analysis throughout the rest of the
evaluation. Many applications used a lot of technical terms that are not so commonly used
in the VCSE sector e.g. market intelligence, harvesting data, leveraging. In isolation
there use is normal but some applications were extremely dense with this type of language.
It was not always clear what accounted for the high use of this type of language but it could
be the following:

Have certain types of organisations applied / been successful in LSF? (i.e. those
more fluent in this type of language)
How much is the language a reflection back of the language used in the tender
documents? (i.e. how much gaming has there been/ framing the project to fit the
fund?)
Is it due to the input of business/ private sector consultants? (i.e. we know from the
journey case studies that some advisors were extremely active in bid writing)
Or is this language quite normal in how VCSE organisations frame these processes
and behaviours?
Despite the challenges outlined above, analysis did provide some findings around
conceptualisations / deeper understandings. Including:
 Most grant holders (even those who see themselves as successful) clearly outline
the need to make significant changes in order to adapt to their environment. In
some cases the scope of these changes is fundamental and across the whole
organisation;
Most grant holders clearly articulated the LSF advisor model by clearly identifying
areas where there was an internal lack of skills, knowledge and experience.
Crucially, a clear procedure to rectify this was given by such activities as advisor
support, training and capacity building or changing personnel;
Sustainability was primarily understood as long term financial sustainability. This
was conceived of as a good thing because it would allow the organisation to
continue to deliver its services. The key characteristic that was seen to underpin
sustainability was fitness within the new and changing environment (primarily
economic but also political and social). In some cases this conception was taken to
the next level with fitness being conceived as the ability to continuously adapt to
the environment;
There was a distinction between organisations who conceived of risk as primarily a
project management issue (e.g. staff leaving or an advisor not delivering) and those
organisations who had calibrated risk into their project i.e. because the activities
represented substantial change (e.g. a restructure or a new product) the project was
conceived as inherently risky in terms of success;
Conceptions of staff training also differed. In the most straightforward of cases, staff
training is specified on specific and limited expertise that the funding is dedicated to
developing. In other cases, however, staff training is limited to staff workshops,
often with the purpose of ensuring buy-in to the project.

Organisations gave much greater detail and clearer conceptualisations of some processes
than others:
Changes in specific systems were often given succinct rationales, remedies and hoped
for outcomes. For example, a number of projects detailed the need for improved
financial systems and the specific benefits that would be gained, they then detailed the
precise role of the advisor and key staff within these processes and how it would be
achieved (including listing the software packages that would be used). In contrast, the
two areas that had the least clear conceptualisation were around:
o Impact assessment there were excellent examples of organisations who
already had impact assessment processes in place and wanted to improve them
both for service development/ strategic planning purposes and for attracting
funding. These included developing frameworks (such as theory of change),
developing systems and engaging external support. However, in other cases
impact assessment was little developed and was pre-supposed to be a means of
proving effectiveness to funders. In other cases, quite basic monitoring
systems were conceived as impact assessment;
o User involvement the quantitative coding showed that there were substantial
differences in the level of engagement that was perceived. In some cases there
was a fundamental commitment to increase user power in service design and
organisational decisions. In others user involvement was conceived as
 structured consultation which would feed into organisational decisions. In a
minority of cases, user involvement was conceived as little more than market
research;

6. Additional insights from the needs analysis and

thematic mapping
This section offers additional insights from the needs analysis and thematic mapping that
both form the broader landscape within which LSF and the evaluation are taking place but
also represent threads which will be explored throughout the different elements of the
evaluation.

Read as a health-check of small and medium-sized voluntary organisations the

applications detail a challenging external environment with many organisations
feeling they need to change radically in order to successfully respond. Many
organisations also outlined their lack of the skills, knowledge and experience in
order to do this. Through LSF, grant holders are able to access this skill, knowledge
and experience, however, LSF grant holders represent a small fraction of VCSE
organisations overall (NB: there are 18,542 general charities with an income
between 100k and 1m in the UK (NCVO almanac)) suggesting many small and
medium-sized VCSE organisations will not be able to access the support that they
need;
For most, the identified problem was external (most often reduced statutory
funding but also increased local/community need for services or changes to relevant
policy) yet the solutions were internal - raising the possibility of a mismatch
between challenge and solution (although this could still represent the necessary
process of successful adaptation). This corresponds to some concerns that have
been raised in the journeying case studies that a programme like LSF cannot alter
the fundamental operating environment. For example, taken together the LSF will
lead to a large increase in the supply of certain products within the VCSE sector
especially training - but it is not clear that there is a market on the demand side for
such products;
Related to the above, many of the proposals seem quite risky (i.e. relatively low
chances of success as most new product launches are not profitable across the
private and VCSE sector);
There is very little focus on increasing donation revenue, whether from public
campaigns or philanthropic sources/large donations. This is especially interesting in
light of the hostile public and media responses to fundraising from individuals in the
last year. Neither is there any mention of investigation into crowdfunding sources;
 There was little emphasis on partnerships / building relationships, and virtually no
mention of setting up formal networks to collaborate with other VCSE organisations
(this may be because the market is seen as an increasingly competitive one);
Although learning from the external advisors and business partners is central to the
LSF programme there was little emphasis on learning from other successful VCSE
organisations (this was only outlined in a handful of applications). Drawing out and
sharing this learning is a crucial aspect of the evaluation.

7. Summary and conclusions

The above has provided much rich analysis of the ODT and application data of LSF grant
holders. It is clear that they are a diverse group of organisations around a range of
characteristics including sector served, region, income and financial health. Perhaps more
interestingly they are at different stages of an organisational trajectory, which will shape
their LSF project. Some are growers (income up, financially healthy), some in the squeezed
middle (income flat, with reserves or assets) and some are fighting for survival (falling
income, low or no assets or reserves). Organisational age (especially whether the founders
still control the organisation) and the stage of their organisational change process that LSF
fits into is also important. For some, LSF is the first stage of a review of their operations and
model whereas others have already undertaken considerable work and change in the name
of sustainability for them LSF is an opportunity to deliver some of their planned activity.
Grant holders are undertaking a range of different activities within their LSF project with
many focusing on increasing income (not surprising given the current environment) and/ or
specific systems (e.g. marketing or IT). Other projects focus on broader elements of
sustainability such as the involvement of volunteers, user involvement and impact
assessment. Surprisingly few projects focus substantially on building partnerships with
other VCSE organisations or on reducing operating costs. The scope of LSF projects also
differs between discrete and general projects and the sheer scale of the transformation
that is being attempted. At such an early stage in LSF it is difficult to draw firm conclusions
regarding the advisor or the business partner, however, analysis has pointed to a number
of key dimensions of these roles and relationships that will be explored throughout the
evaluation including exactly what skills and experience the advisor requires and whether
they are offering targeted support or whether they are acting as a critical friend across a
range of areas.
Finally, the analysis also generated insights around the broader landscape within which LSF
is taking place especially the increasingly hostile funding environment and the increased
competition that has resulted amongst VCSE organisations. This has potentially mitigated
against a greater focus on collaboration and learning with other VCSE organisations and has
meant most projects focus on financial sustainability rather than broader conceptions of
user involvement or genuine impact assessment.

7. Appendices

The needs analysis and thematic mapping element of the evaluation has provided an
excellent opportunity to analyse existing LSF data most notably the application forms of
funded organisations and their initial Online Diagnostic Tool (ODT) responses. The aims
were:

1. To understand LSF grant holders including:

a. Who are LSF grant holders (e.g. size, age, sector, region)?
b. How did organisations rate on the ODT?
c. What have they been funded to do?
2. To understand the relationship between different characteristics and look for useful
patterns in the data (e.g. have organisations with growing income proposed different
projects?)
3. To understand how grant holders have framed their LSF projects including:
a. What are the problems that grant holders are facing that LSF is responding to?
b. How are key concepts understood? (e.g. sustainability, staff training)
c. Explore more deeply how different elements of the LSF projects have been
understood and operationalised (e.g. user involvement, impact assessment);
4. To cluster organisations based on a range of different variables (e.g. activity/ outcome
clusters).

To meet these aims a five stage process has been pursued:

1. Develop an LSF database. The database is a MySQL relational database, containing

2.7mb of data in ten tables. All text responses from the ODT have been inputted;
2. Initial scoping exercise where three researchers explored the data including each
analysing 5 applications. The best approach given time constraints was then agreed;
3. Coding of all 253 applications to generate new variables focusing on the grant holder
change plan (see the coding frame in appendix B). Quality assured through comparing
coding within evaluation team;
4. Quantitative analysis of all data including the newly generated variables;
5. Qualitative analysis of 15 diverse applications drawing out emergent themes and
analytical strands. Written up into short (1-2 page) summaries.

This work has been most useful in order to generate additional variables that will be used in
quantitative analysis at the end of the evaluation (in summer 2017) and in order to draw
out emergent themes that will be explored throughout the rest of the evaluation.
In order to be attributed to a code applications had to outline some detail around the
specific element if the item appears in a long list without any substance they were not
coded. The following coding frame was used:

Generating greater income

o Developing new funding streams/ diversifying income
New products or services
From assets
New funders
Institutional
o Private
o Statutory
o VCSE / Non-profit
Individual
o Developing existing funding streams
Quality assurance / quality standards (formal accreditation)
Volunteers (excluding local business partner)
o Numbers
o Capability
o Scope (extent of roles filled by volunteers)
Staff
o Numbers (not by directly employing as part of LSF)
o Numbers (by employing staff with LSF funds)
o Capability
Impact assessment
o For funding
o For service development
User involvement
o Intelligence gathering
o Consultation
o Involving users in decisions
o User control
Improve systems
o IT
o Finance
o Administration
o Policies and procedures (general)
o Marketing and communication
o HR
 o New business development
Governance
o Upskill existing board
o Replace / recruit new members to the board
Strategic planning / thinking
Financial planning / forecasting
Reduce cost/ efficiency
Develop services (not just for funding)
Partnerships / Relationships
o Private
o Statutory
o Non-profit/ VCSE
Restructure
Merger

A notes column was also provided.

An open thematic analysis was applied to 15 organisations. These were purposively

sampled based on diversity selection criteria around:

Income;
Grant size;
Income to grant size ratio;
Service area;
Region;
Age