Considering how risk applies to grant-making
Risks are inherent in grant-making. Being open to innovation and risk is a quality that many expect of a funder like us at the Big Lottery Fund.
We need to balance this risk with other important factors; we need to make sure we make good use of public money, distributing it fairly and equitably.
Two major challenges that funders like us face are:
- designing grant-making processes that minimise risks of failure and fraud. At the same time, funders want to be innovative and accessible to small groups
- increasing understanding of what grants can and cannot achieve.
In meeting these challenges, funders face risk such as:
- being unable to check the quality of the finished product before allocating funding
- grant applicants don't perfectly reflect the needs of end users
- grants are often given to groups with whom funders have little direct knowledge
- funders typically set out to fund new and untried services.
Checks and controls can be increased to reduce risk. However, this can also reduce the potential benefit of the funding.
More about the research
In 2005 we commissioned Diana Leat to explore some of the tensions facing grant-makers. The report includes comprehensive lists of risks for funders and advantages of grant-making.
Risk and good grant-making: A discussion paper