Adventures in enterprise grant-making

How can grant funding be used to stimulate enterprise behaviour?  Here Steve Wyler from the Enterprise Grants Taskforce interviews Greg Woolley from the Association of Mental Health Providers, a partner in the Enterprise Development Programme, which helps smaller-scale frontline organisations improve their ability to generate income through trading.

Steve: Was there already a lot of social enterprise activity within the mental health sector?

Greg: Most organisations we work with are used to operating within a traditional charity mindset. But they also know they need to ‘future-proof’ themselves. And while only a few see themselves becoming fully-fledged social enterprises, many are open to the possibility that trading could become an important part of what they do.

Steve: What did the Enterprise Development Programme offer to your members?

Greg: We’ve worked with 55 organisations in four cohorts. Each organisation received a bespoke package of grant (up to £30K) and other forms of support. The programme, funded by Access – The Foundation for Social Investment and managed by the Social Investment Business, encouraged each sector partner to respond flexibly to their circumstances and needs.

Steve: Tell me about the support elements.

Greg: First, we ran peer network sessions, small groups of four or five organisations facilitated by an industry expert over a six-month period, with the option to continue longer. We also offered more intensive group learning for each cohort – for our early cohorts we commissioned the School for Social Entrepreneurs to run a nine-month programme. This was high-quality but quite demanding for some practitioners, and in later cohorts we pointed people to short courses offered by the School for Social Entrepreneurs and complemented that with other sessions commissioned from independent consultants on key topics (marketing, branding, etc).

Steve: Anything else?

Greg: Yes, Access set up a pool of financial experts who could work one-to-one with an organisation to help them address challenges related to operational finance processes and/or broader financial strategy. Almost half of the organisations we supported made use of this and their feedback was excellent.

Access has now funded an extra ‘alumni’ year, so that we can maintain contact with those who have been in the programme and offer further light-touch support, for example sessions to practice ‘pitching’ a new trading activity. And this extra year is helping us generate a lot of learning and insights which we can share more widely with others in our sector.  

Outside the formal support offers, I often put people in the programme in touch with each other. This is simple and low-cost but the advice and encouragement which happens as a result is worth its weight in gold.

Steve: That all sounds great. Now tell me about the grants themselves, how did you use the grants to stimulate enterprise behaviours?

Greg: Firstly, I would start with a diagnostic exercise, going beyond the information provided in an organisation’s application to join the programme, recognising that sometimes people ‘don’t know what they don’t know’.  Then together, the organisation and I would draw up a list of all the things that could be done with the grant, and I would encourage them to prioritise those which could make the most difference.  

Steve: Did the grant have to be used for certain things?

Greg: No, it depended on what was most useful for the particular organisation. Often part of the grant would be used for backfilling for the CEO or another manager, so they could spend more time on the enterprise activity. And in many cases, they also used grant funding to buy in expertise, for example to design a pricing strategy, or to improve a digital platform.

Steve: Was the grant released all in one go?

Greg:  No, and this was a key element of our ‘enterprise grant-making’ approach.  The grant was released in instalments, and only paid out if certain grant conditions were met.

There were normally one or two conditions for each grant instalment. These conditions were always proposed by the organisation, and we were careful to ensure that they were always within their sphere of control.  So, for example, completion of a marketing strategy. Or preparation of an improved set of management accounts.

Steve: Yes, I can see how this would encourage the organisation to build up a set of good business practices, step by step. But what about trading success, was a trading uplift also required in order to release the next grant instalment?

Greg: Well, in some cases we did provide a portion of the grant allocation on an incentivised basis, and that worked especially well where the organisation was selling goods or services on a high volume and low price basis. But, for much of the programme, we were in the middle of the Covid pandemic, which caused very considerable difficulties and uncertainties for many types of trading. So, in many cases we introduced target milestones instead.

These were again proposed by the organisation and were intended to advance the organisation’s opportunity or ability to generate trading income. But we recognised that some of the milestones (eg achieving trading forecasts, building relationships with local authority commissioners, securing the opportunity to give a presentation at a conference) were not fully in the organisation’s control, and so these were not treated as a formal condition for release of a grant instalment. Even so, we found that the organisations were very committed to achieving the milestones.

Steve: That’s very telling. I imagine that agreeing the milestones and working towards them could go a long way towards embedding an enterprise mindset. But apart from the times when you used incentivised trading, you weren’t able to use the grant funding to directly reward commercial success?

Greg: That’s not quite the whole story, because in some instances, where some of the grant remained unallocated, it would be released as a ‘lump sum bonus’ if the organisation achieved an agreed stretch target. So, for example, an organisation would be rewarded with a £2.5K grant if they achieved 150 subscriptions, and £7.5K if they achieved 200 subscriptions.

Such targets and bonuses were always designed collaboratively with the organisation, taking account of internal forecasts where they were available.