8 Programme funding models (Q12, Q13, Q14, Q15, Q20)
8.1 Section 4 of the consultation paper sought views on the best funding models to achieve the programme's strategic priorities and to effectively deliver the outcomes which had been identified. It described the current funding arrangements, identified some of the challenges, and set out a range of possible changes to current approaches. The possibilities highlighted in the consultation paper were: the introduction of concept notes; a mechanism to leverage additional funding; the creation of separate funding streams for (a) institutional exchanges and (b) trade and investment, in addition to the traditional aid project funding; and the continuation of scholarships.
8.2 The questions related to programme funding models were wide ranging, and covered both high level, strategic issues related to the design of the overall programme as well as more operational issues relating to the application process, the length of funding cycles, the capacity for responding flexibly in between funding rounds to fund innovative and creative initiatives and other specific demands, and the requirements for monitoring and evaluation. The questions are discussed in turn below.
8.3 Across all questions, respondents made a wide range of comments and suggestions relating to more specific or operational aspects of the running of the International Development Fund. These types of comments have been gathered together, and are briefly discussed and summarised in a final section of this chapter.
Best funding models (Q12)
8.4 The first question in this section (Q12) invited comments about the best funding models for the main country programmes.
Question 12: Scottish Government is keen to deploy the best funding models for its main country programmes, to suit our strategic priorities, and effectively deliver outcomes. Please share any views you have on the best models to achieve this ambition.
8.5 The consultation document highlighted a range of challenges with the current funding approach including: maintaining the strategic direction of the programme, building longer term partnerships, retaining the distinctiveness of the block grant funding model, the lack of incentives for partner organisations within consortia, the limited flexibility to respond to innovative initiatives, and how best to enable support for institutional technical assistance and skills sharing. The document suggested that the Scottish Government was exploring an approach for the future which relied less on challenge funding and more on block grants for strategic programmes, combined with targeted competitive tendering.
8.6 In their comments, respondents offered a general endorsement of the Scottish Government's current approach to funding, together with a range of suggestions for improvement. Views on alternative funding models / systems were also offered by some respondents. Each of these aspects is discussed in turn below.
Endorsement of the current approach to funding
8.7 On the whole, respondents expressed support for the Scottish Government's current approach to funding. They thought the current approach provides an appropriate mix of funding models and mechanisms. In particular, respondents thought the current approach strikes a reasonable balance between (i) funding established partners while also allowing new partners to emerge, and (ii) challenge fund model and block grant funding approaches.
8.8 The challenge fund model, in particular, was affirmed by many. Respondents therefore on the whole tended to make suggestions about improving and enhancing current approaches rather than calling for more radical change.
Suggestions for improving the current approach to funding
8.9 The main suggestions for improving the current approach are set out below. Many of these points are discussed in more detail later in this chapter.
- Adopt a more flexible approach to the terms and conditions for funding. Respondents raised some very specific issues in relation to this point. Additional flexibility was requested in relation to a wide range of the current terms and conditions for funding including: exchange rate fluctuations and inflation adjustments, moving funds between different budget lines, increasing the range of allowable costs, adapting projects in response to emerging circumstances, the definition of eligible partners, and using money for capital costs. Respondents often made the point that this kind of flexibility was offered by other funders.
- Allow for longer term projects and programmes. There was a strong shared view that the kinds of changes being looked for could not be achieved in a short timeframe, and that, in order to properly embed change and reap the benefits of projects, a longer funding period was required.
- Introduce concept notes in relation to challenge funding. There was widespread support for the suggestion in the consultation paper of introducing concept notes. This was thought to be an appropriate way to ensure that organisations did not spend undue resources on developing projects and programmes which did not align with Scottish Government interests.
- Continue the Small Grants Programme (on an annual round basis). The Small Grants Programme was seen to have many strengths and to deliver value for money. It was particularly good for enabling smaller organisations to develop the organisational capacity and capability they required to make successful applications for larger grants.
- Develop ways of mobilising additional funds. Respondents thought it should be possible to improve the leverage of current programmes by encouraging collaborative bids or increasing the range of options for partnership funding.
- Provide additional support to small NGOs and charities. There was support - especially from small NGOs and charities - for additional help for these organisations in accessing funds. It was suggested that more flexibility in accessing funds by / for these organisations would be appropriate.
8.10 Other suggestions for improvement included: incorporating capacity building / training into all proposals; introducing an innovation fund; getting applications assessed by an expert panel (rather than by an agency); increasing the amount of face-to-face contact between civil servants and project applicants; introducing cash vouchers and / or transfers; having annual funding rounds; giving (more) advance notice of funding rounds; providing grants for evaluation; providing support to link with other organisations; and responding more quickly to requests for changes to projects.
8.11 Other organisations' approaches to funding were highlighted as offering good models. In particular, respondents noted: Tropical Health and Education Trust ( THET), Department for International Development Programme Partnership Arrangements ( DfID ( PPA)), European Union, Educational Concerns for Haiti Organisation ( ECHO), National Police Aid Convoys ( NPAC), and United States Agency for International Development ( USAid) (particularly the Global Development Alliance model).
Alternative funding models / systems
8.12 Respondents discussed a number of alternative funding models as follows:
- Matched funding: The consultation document explained that a matched funding model was currently only considered in relation to the Malawi Development Programme. Respondents had divergent views about the desirability of extending matched funding more widely. While some respondents highlighted the strengths of this model, others highlighted weaknesses. Matched funding could, it was argued, help with a sense of shared ownership and could be used to 'weed out rogue projects' which did not have local support; however it was also thought that this model risked excluding countries where the need was acute but matched funding was not available.
- Payment by results ( PBR): Respondents were aware that some funding organisations were moving to - or had moved to - a 'payment by results' ( PBR) system. This was not thought to be appropriate within the Scottish Government context: PBR systems were seen as more relevant for larger programmes and were not seen as appropriate where culture change was the aim.
- Dual model system: Respondents suggested that a 'dual model system' which would involve one funding system for government level projects and one funding system for civil society organisations would be appropriate in recognition of the fact that 'some development projects are better done by governments'.
- A 'single fund' model: It was suggested that a single fund (as opposed to separate funds for different programme strands) would be appropriate. This would be a single, integrated, annual call using a (two-stage) concept note.
8.13 A few respondents expressed a view that the (perceived) trend towards ever larger grants was not desirable. These respondents thought the diversity of stakeholders was a major strength of the current funding approach, and they were concerned that reducing the numbers of smaller grants would risk curtailing this diversity.
Planned vs flexible funding (Qs 13, 14)
8.14 Two questions in this consultation invited comments about how best to support both planned and flexible funding and what the balance between the two types of funding should be.
Question 13: Scottish Government recognises that flexible funding between funding rounds is often required to meet specific demands. Please share any views you have on how Scottish Government could best support both planned and flexible spending.
Question 14: In order to focus its funding efforts better, Scottish Government is inclined to adjust the proportions of funding that are allocated to its (long term) IDF programme and to its flexible funded elements. Please share any views you have on this.
8.15 The responses to these questions overlapped and so they have been analysed together. There were two distinct aspects to the responses as follows:
- The importance of building flexible funding arrangements into all projects and programmes
- The possibilities for developing a funding mechanism (or funding mechanisms) for a separate stream of 'flexible funding'.
8.16 Some respondents - particularly those with more experience of large programme funding - commented on both these aspects. Smaller NGOs were more likely to focus on the first aspect only. Each of these aspects is discussed further below.
8.17 Note that whilst the Scottish Government intended Question 13 to generate views in relation to the flexibility to fund innovative and creative initiatives between formal funding rounds, respondents more often discussed ideas about introducing additional flexibility within already funded projects and programmes.
Flexible funding arrangements within funded projects and programmes
8.18 Respondents often focused on the importance of building funding flexibility in to all projects and programmes, however long term or short term they were. It was thought that flexibility within projects and programmes, and more flexible terms and conditions for funding, were required to help deal with a rapidly changing operating environment. Respondents wanted flexibility to:
- Respond to external circumstances including emergencies and disasters (this might involve redirecting existing funds and / or having a specific fund for emergencies)
- Allow funds to be used to develop collaborations and partnerships
- Move funds between budget headings (while still maintaining the overall objectives of the project or programme) and / or between years
- Enable funding of 'back room' activities, capital costs and core costs
- Allow organisations to more flexibly deploy underspends (accrued for example because of exchange rate fluctuations)
- Give every programme a 'contingency allocation'
- Allow for the extension of time to complete projects / programmes
- Ensure that momentum is not lost at the end of a project and to redirect any unspent funds to 'follow on' activities.
8.19 In general, respondents agreed that some flexible funding was required in order to be able to respond rapidly to natural disasters and humanitarian crises, and to provide immediate relief for unforeseen events and circumstances. Respondents emphasised that only 'tried and tested' partners should participate in the delivery of emergency aid. It was also suggested that an appropriate response to a humanitarian crisis or natural disaster might be to allocate additional - flexible - funding to existing projects or programmes working in relevant (geographic or thematic) areas.
8.20 A few respondents noted the Government's manifesto commitment to establishing a '£1m a year humanitarian emergencies fund' as a welcome development. It was thought that this would reduce the need for the Scottish Government to have significant unplanned IDF expenditure between funding rounds. However, it was also noted that flexible funding would still be required for non-humanitarian emergencies.
Models, mechanisms and underpinning principles for flexible funding
8.21 Respondents emphasised the need for transparency in relation to the allocation of flexible funding. It was assumed by some respondents that 'flexible' was synonymous with 'non-competitive' and they asked for scrutiny and rigour to be applied equally to flexible and to competitively awarded funding.
8.22 A range of possible models / mechanisms for flexible funding were suggested including:
- Retaining a (small) proportion of the budget for (as yet) unspecified demands which relate to shorter term initiatives or emergencies
- Combining different types of funding round, e.g. two-year 'innovation fund' with five-year 'step change fund'
- Creating a 'food security' budget, worth 10% of the overall IDF budget
- Learning from other approaches which combine a rapid response element with a more strategic programme ( e.g. the Scottish Government's Rural and Environment Science Programme, DfID's Rapid Response Facility, EU, Wellcome Trust, THET).
The balance between planned expenditure and flexible funding
8.23 It was common for respondents to emphasise the importance of focusing mainly on planned expenditure: respondents often elided the idea of 'planned expenditure' or a 'planned programme' with a 'long-term programme'. There was a strong view across all groups that spending on long-term programmes, typically perceived as more than three years of funding, should be prioritised; these were seen to be the programmes which were required to deliver long-term change.
8.24 Respondents argued that planned expenditure could be evaluated against intended objectives, and they thought that this kind of evaluation was crucial. Respondents therefore argued that any flexible funding stream would have to be situated within a strategy that focused mainly on the long term.
8.25 Respondents did, however, also affirm the importance of 'flexible funding', a concept that was often elided with 'shorter projects' or 'innovative projects' or 'pilot projects', as well as covering funding for disasters and emergencies. Smaller NGOs in particular argued in favour of smaller / shorter / more flexible funding to encourage a flow of new ideas and new players alongside more established partners.
8.26 It was thought that any flexible funding should be small-scale, relative to planned expenditure, and that setting the amount available for flexible funding at a reasonably low level would reduce the chance of strategic priorities being 'lost', help minimise the risks of an underspend, and prevent too much money being taken out of competitive funding.  Those who favoured this approach suggested a figure between 10% and 20% of the IDF.
Other points raised
8.27 One NGO with an Africa focus questioned whether the IDF should have any role at all in short-term disaster relief. This respondent suggested that this kind of work was better done by DfID, Oxfam, or one of the other larger funding agencies. Another organisation (classified as 'other') suggested that flexible funding would not be required within the IDF if the Scottish Government joined up with DfID in relation to emergency response work.
8.28 Several respondents favoured extending the Small Grants Programme beyond its initial phase, and it was suggested by some that the small grants funding stream could be used for innovation.
8.29 Other points made included that:
- Flexible funding changes the role of IDF staff
- Long-term project funding should include advocacy, education and communication
- Concentrating only on bigger projects risked losing the community focus of the programme.
Longer term funding programmes (Q15)
8.30 The consultation paper set out the Scottish Government's ambition to support longer term funded programmes across political and funding periods. Question 15 asked for respondents views on what would be required to support this ambition.
Question 15: Thinking further ahead, Scottish Government would like to support longer term funded programmes across political and funding periods. Please share any views and ideas, or examples of good practice on what conditions and arrangements would be required to support this ambition.
Support for longer term funding programmes
8.31 Respondents highlighted longer term funded projects and programmes as key to improving current funding arrangements (see paragraph 8.9 above). There was widespread - indeed almost unanimous - support for the proposal for longer term programmes. Individuals and organisations of all types thought that this would represent an important improvement to current arrangements.
8.32 The main reasons which respondents gave for supporting longer term programmes were that:
- Partnerships of all kinds are necessary for delivering the kind of change being sought. It takes time to establish these partnerships, and longer timeframes are therefore required to generate more productive working.
- Reaching sustainability is often not possible within a three-year timeframe. In particular, if institutional changes require to be embedded or if changes need to operate at a range of levels from governmental to grassroots, a longer timeframe to grow infrastructure and policy support is necessary.
- In a number of specific contexts (agriculture, the environment, and renewable energy were mentioned), a three-year funding cycle is unworkable.
8.33 Organisational respondents who had been involved in longer term funded programmes (funded either by the Scottish Government or some other funder) were very positive about the benefits that had accrued from this longer funding commitment. Institutional changes had become embedded, and change was therefore sustainable.
8.34 Respondents varied in their views on the most appropriate length of funding cycle. Some simply expressed a preference for a 'longer' timeframe. Others were more specific and mentioned periods including: 3 to 5 years; up to 5 years; a minimum of 5 years; 6 to 7 years; 10 years; 10 to 15 years. One respondent suggested that the funding period should match the time period identified for the Global Goals.
8.35 Respondents across all groups emphasised the importance of adapting and enhancing monitoring, evaluation, review and learning frameworks as well as extending the periods over which funding was available. This was vital to ensure that longer term projects remained appropriately aligned to the outcomes that had been identified. Linked to this was the suggestion that funding should be explicitly phased, staged or tapered, with a review at each stage determining whether or not the next tranche of funding should be released. (See also the discussion of monitoring and evaluation at paragraphs 8.41 to 8.51 below.)
Examples of good practice in longer term funded programmes
8.36 Respondents referred to a number of existing programmes with longer term funding cycles which were thought to offer positive examples to draw on. This included: DfID PPA; Inspiring Scotland (which has a 10 year programme with a three-yearly 'reset'); the EU model (in which work packages are designed by recipient countries); the Icelandic Development Support Agency support in Malawi; the Gates Foundation (for health programmes); the ECHO approach; USAid; EuropeAid. One iNGO referred to a number of models and to a report on this topic which had recently been completed. 
Conditions for success for longer term funded programmes
8.37 Respondents offered a range of suggestions in relation to conditions which would contribute to the success of longer term funded programmes including:
- Distributing the funding through reputable organisations (with strong governance) and undertaking due diligence of local partners
- Setting up learning and best practice events, facilitated by the Scottish Government or one of the network organisations
- Encouraging funded projects to work with relevant UK institutions
- Gaining commitment from all political parties for a longer term approach to ensure that programmes will not be derailed by political interests.
Caveats and disadvantages in relation to longer term funded programmes
8.38 Respondents affirmed the importance of funding projects of all types - including short-term projects, and projects requesting small amounts of funding. While this did not necessarily contradict any ambition to develop longer term funding programmes, respondents emphasised that not all IDF funds should be allocated to long-term programmes.
8.39 In addition, respondents identified a number of disadvantages of moving (wholly) to longer term programme funding. These included: a reduced pool of funded applicants; a risk of reducing the opportunity for new and innovative work; a risk that start dates might be delayed and / or any sense of urgency might be lost.
8.40 Finally, one respondent said that it is not the job of government to provide long-term funding for NGOs.
Improving monitoring and evaluation (Q20)
8.41 Question 20 asked respondents about their views on how monitoring and evaluation of programme investments and initiatives could be improved.
Question 20: Scottish Government recognises that evaluation of our investments and initiatives must inform better targeting of our efforts. Please share any views on how we might improve our monitoring and evaluation.
8.42 In their comments, respondents affirmed the importance of monitoring and evaluation, and provided examples of existing monitoring and evaluation frameworks which they thought were helpful in this context ( e.g. THET, DfID Girls Education Challenge ( GEC)).
8.43 Comments about improvements to current practice focused on the following, each of which are discussed further below:
- The importance of longer term, more holistic and wider evaluations in addition to individual project specific arrangements
- The development of more opportunities for learning and sharing successes and challenges in relation to project outcomes
- An increased focus on intended project / programme outcomes from the outset, together with an articulated theory of change to guide monitoring and evaluation frameworks and the use of templates across all projects
- The importance of building capacity for monitoring and evaluation within partner countries
- The importance of adequate funding for monitoring and evaluation.
Longer term evaluations
8.44 Respondents from all groups made the point that the impact of particular projects and / or programmes may not be fully realised until years after the project or programme had completed. In addition, there are wider questions ( e.g. What types of approach have been more and less successful? Has learning been taken up into practice?) that would require a more holistic approach, and would have to draw on evidence about both processes and outcomes generated across a range of projects and programmes over a longer period of time.
8.45 In general, respondents thought these longer term evaluations could be undertaken by academic organisations, either on their own or in partnership with those involved in project and programme delivery. Crucially, these longer term evaluations were required to be independent.
Opportunities for sharing the learning from monitoring and evaluation
8.46 Respondents wished to see more opportunities for sharing the learning from monitoring and evaluation. This could be done partly through better sharing of regular monitoring and evaluation reports, but was more often referred to in the context of meetings, workshops, webinars and other types of learning events. Respondents emphasised the importance of learning not just from projects which had worked well, but also from those which had encountered difficulties. The learning should be both about the approach to monitoring and evaluation as well as about the outcomes which had been achieved.
8.47 Respondents also suggested that there should be more face-to-face contact with civil servants, throughout the life cycle of projects. Respondents recognised that there was insufficient capacity at the Scottish Government at present to achieve this, but thought this would be helpful going forward.
Outcome-focused evaluations using a common approach
8.48 Respondents thought that monitoring and evaluation could be improved by adopting common approaches to (i) identifying outcomes; (ii) identifying a theory of change; (iii) developing logic models / driver diagrams; and (iv) identifying baseline positions and appropriate measures. In this context respondents emphasised the importance of using both qualitative and quantitative approaches.
8.49 This would help to focus more directly on defining the outcomes for projects and programmes. Respondents thought that organisations would benefit from having access to templates and supportive materials, as well as individualised support in developing the overall framework.
Building capacity for evaluation in partner countries
8.50 Respondents highlighted the importance of undertaking both the design and the implementation of monitoring and evaluation approaches within the host countries; they contrasted this with an approach where monitoring and evaluation was led solely from Scotland. This would help to build capacity for monitoring and evaluation in partner countries, which was thought to be an important consideration.
Funding for monitoring and evaluation
8.51 Respondents wished to see adequate resources allocated for monitoring and evaluation. One respondent suggested that the current allocation of 5% should be increased to a minimum of 7%.
8.52 Finally, it was suggested that the timeframe for the submission of end-of-grant reports should be extended. This was currently set for one month after project completion. An extension to three months was though to represent a more realistic timeframe for reports to be submitted.
Enhancing the operation of the international development programme
8.53 The consultation paper and accompanying questions mainly focused on strategic issues relating to the priorities, objectives and overall design of the international development programme and the funding models which might best support this work. Many respondents, however, used their response to questions throughout the consultation to comment on more operational aspects of programme management and delivery as summarised here.
Use of programme funds
8.54 There was a wide range of suggestions for specific activities that should be pursued and / or funded via the programme. These included:
- Initiatives and networking structures (including the development of online resources) in Scotland and in partner countries to support partnership working, capacity building, knowledge exchange, civic involvement and sustainability
- Twinning initiatives, exchanges and visits
- Student and academic placements and exchanges; academic partnerships addressing particular global issues; exploratory visits and meetings
- Training and support for Scottish NGOs and partner country organisations
- Volunteering programmes
- Encouragement of appropriate trade and business practices
- Projects to address specific research questions that are relevant in both Scotland and a particular partner country
- IT facilities to assist with partnership building.
8.55 Other suggestions mentioned (usually by just one or two respondents) were:
- Changing from a donor-recipient model to a co-partner model (where the funds are accessed mutually by all applicants)
- Committing a small sum (up to 15% of the IDF) to an 'institutional strengthening fund'
- Using small grants for capacity building - especially for smaller organisations.
8.56 In addition, there was a clear view that individual projects funded by the Scottish Government should be aligned with the principles underpinning the programme as a whole; i.e. they should support capacity building, sustainability, equality of partnership, community participation, etc.
8.57 There were, though, varying views on the number and scale of projects which should be funded. Some favoured focusing on a smaller number of projects, including large-scale high profile projects which might increase visibility; others favoured the diversity achieved through multiple small projects.
Applying for funding
8.58 In terms of eligibility, some respondents thought that it should be a requirement for lead applicants to be based in Scotland; while others were keen to see the direct funding of partner country NGOs.
8.59 In terms of the application process, respondents called for more scrutiny of applicants in terms of their financial standing, experience, personnel, and current links. There was also a suggestion that it should be easier for small community-based organisations to apply funding.
Programme and project management
8.60 There were calls for a coherent programme of interlinked projects that would maximise impact. Respondents emphasised the importance of following good project and programme management principles and of undertaking appropriate research, monitoring and evaluation (at both programme, sector and project level).
8.61 They also emphasised the importance of having appropriately knowledgeable and skilled Scottish Government staff involved in all aspects of the programme, complemented by input and participation from partner countries.