Photos: Xander Wegscheider and (insert) Ray Reyes, on Unsplash
This webpage is for trust fundraisers with three or more years’ experience. Beginners should use this page instead.
Exit strategy – saving money??
Introduction – what’s this all about?
It’s not as common as it once was, but – people sometimes like to present saving money to other funders as an exit strategy. The theory is: our service users now won’t need service X, therefore Funder Y, who funds it, will fund our work at the end of the grant.
The following tells you how to make it work. However, be warned: it’s a great deal of work!
Pros
This is clearly better than no exit strategy.
When I was at one charity, I wrote a guide for Services on how to pitch their work to Commissioners on saving money. We get a lot more Local Authority funding afterwards. What it helped do at least was to get feet in the door with commissioners.
Although trusts will have heard this kind of thing before and then seen it not work, if you follow the advice below and get positive feedback from your commissioner for a pilot, you can put together a much more sophisticated argument to the trust, that differentiates itself from the vague claims they’ll have heard in the past.
The realities
It has to save money for the right funder
Firstly, the application needs to save the right person money. If it generates tax – so what? If it saves a hospital money, but you;re approaching a Local Authority, that won’t cut much ice – there have been massive, multi million pound disagreements over decades about “bed blocking”, which are basically about NHS Trusts accusing ash-strapped local authorities not caring about them. It’s a recurrent issue with prevention programmes, such as falls prevention programmes, too.
Even within the same funder, if it comes out of a different pot there can be issues. So, there have been problems over the years with schemes falling between housing and care, for example, even though they’re both Local Authority funding.
It has to be the kind of intervention the funder would fund
Take falls prevention. There are two ways you can go: you can give people training and exercises so that they fall less (a health intervention) or you can improve someone’s home so they’re less likely to fall in it. Health funders fund the one set, Local Authorities the other.
It needs to create cashable savings
If your scheme would result in less people needing home care under a spot spot purchase (per head purchase contract) then the local authority could take the money out. However, if it results in a few staff members in different fields of work being slightly less busy, they chances are they aren’t going to get their hours cut. So, the funder cannot turn the saving into cash. It’s not really a saving, then.
It’s also just possible that people will push back on the change, internally, at the funder.
It needs to target the right individuals with the problem, the ones that the funder would help
The fact is that a lot of care, to stick with the same example, is not funded by the state but delivered by family members. In many situations, a Social Worker will do what they can to avoid paying for care and it’s only in a more limited range of circumstances that the state will come in. So, the project saving money needs to target enough of the right segment of the affected group, or to have a very low cost per head (e.g., sometimes benefits take up work) – if, not then the cost of the intervention is higher than the savings you’re trying to make.
The funder may not believe you
Commissioners can be sceptical about whether cost savings approaches really work. It’s hardly surprising, given that VCSOs have a tendency to trot out the “It will save you money” line without having the first clue about the realities listed above! You’ll need to show you really know what you’re talking about.
It’s easier to get commissioners to listen / get money in some years than others
Most commissioners operate on a three year business cycle, so if you can fit into the consultations, or to time things when relevant contracts are up for retendering, then they are more likely to listen. However, they can also have a limited amount of discretionary funding at other times.
How to make the case, if you’re still going ahead with this!
1. Set things up so the right kind of evaluation will be available
It’s about numbers of people in the situation that they won’t need the alternative, funded support and who would otherwise be claiming that support. Sometimes the data in your scheme will provide that. Sometimes you can also find evaluations of schemes like yours and draw on their data.
2. Find relevant costs
If you’re looking to replace a standard cost, there are often figures online for costs per head (e.g., in Social Care Statistics in the above example). Using those in conjunction with the number of people you’re looking to free up from needing the service will give you a figure for the potential cost saving.
3. Get confirmation from the commissioner that they’re interested
You’ll need permission from the relevant staff, usually in Services, whose contact this would be. The chances are that, if it turns into a meeting, you’ll just be one of a number of items. However, sometimes you can get people on the phone and get a general assurance as to whether it’s something they’d be interested in – not great, but it’s something.