Foundations and Risk: Spirit of 2012

In this series, we are taking a closer look at foundations’ attitudes to risk. We will include perspectives from across the UK and from funders with a number of specialisms and approaches.

The fourth article in this series comes from Debbie Lye, Chief Executive of Spirit of 2012.

This series first appeared as feature in April 2017’s Trust & Foundation News. Read the magazine here. 

Our money is public money raised through the sale of Lottery tickets, so we need to ensure that people feel their 25% contribution to good causes is well spent. The headline figure of £47 million to spend within a 10-year timeframe created huge and maybe unrealistic expectations of what we can do. We have already committed some £25 million, and the board has more ambitious plans ahead, so we risk being unable to manage those huge expectations. It is also a challenge to meet our UK-wide remit – so far we have funded projects operating in over 100 locations across the UK.

Some of the ways to reduce risk include keeping a very tight cap on the percentage of our grants that can be used on capital spend – not more than 10% – and focusing on youth and community-led activity at the grassroots in the communities that lottery players live in, so lottery players might even benefit from the projects themselves.

Many good organisations are desperate for funds, and we have to say no a lot of the time. The first time we had an open challenge for a disability arts project, we had 226 applications and gave four grants. Over 220 disappointed organisations is clearly a reputational risk. We learned from that, and for the second round in 2016, we asked for brief expressions of interest and received 164 applications before taking eight through to the more detailed form and giving three grants.

Volunteering is central to the projects we fund, but it is crucial that new volunteers’ expectations are managed from the outset. There is a risk that high profile volunteer schemes, like the 2012 Olympic Gamesmakers, give people the idea that volunteering is always glamorous, and that volunteers are always thanked and appreciated. We have a set of volunteering principles that must be in place as a condition of our funding and that includes being upfront about the reality of volunteering – there is a lot of grind.

But some of the risks faced by delivery organisations do not directly apply to us, such as safeguarding and protection issues. We do due diligence to make sure the organisations we fund have appropriate policies and processes, and enact them. But in the end it is their liability. We do want to work a lot with disabled people and disadvantaged people – both are minorities and so there could be a perception that what we are doing is not mainstream enough, but I think we have a firm rootedness to rebut that argument.

Another risk we face is that some of our projects focus on developing and inspiring young artists. Inevitably some of those artists are left-field and create provocative work which can potentially lead to criticism of the artists but also of us as a funder. We negate that by taking the stance that art cannot be censored, and by having clear messages prepared.

Our risk management strategy is monitored through an interactive matrix, with traffic lights that change according to risk levels. The board is comfortable for Spirit to be a risk-taking organisation, as they understand that we are trying to be innovative – so long as we continue to monitor and manage risks rigorously.

We take an outcomes measurement approach to all that we do, including asking ONS wellbeing questions. There was a risk our grant managers and external partners wouldn’t evaluate in the way we expected, and would feel embarrassed asking about anxiety and more emotional issues, so we provided a suite of tools, and hold regular learning events. This impact methodology is not just for ourselves and our accountability, but to support the sectors we fund – arts, culture, sport and physical activity – they need to prove they can do hardcore serious work. For example, by measuring outcomes we support the argument that projects we fund can help reduce spending on public health.

We also have a specific incubation fund to test ideas that have the potential to scale up. An example of a partner we funded is the Sporting Memories Foundation, which works with people with dementia. We gave a grant of £50,000 to develop a set of resources, like memory cards, and a training module. The foundation also works with youth organisations to train 14 to 19 year-olds to talk to older people, help them compile memory scrapbooks and so on. From that it has developed a toolkit, and has now received a grant from the Big Lottery Fund for nearly £500,000.

Another example is an incubation grant of £50,000 to Uprising, a hugely ambitious project called One Million Mentors. It aims to be self-funding ultimately, with mentors paying £30 a year to belong to the network. It is innovative and so there is a risk as it may not achieve the scale of its ambition, but if it does, it could make a massive difference.

From a financial point of view, we also have to manage our glide path over the 10 years of our endowment. We mostly commit for three years, with the last round of commitments being in 2020. As time goes on, we will have to reduce the risk of our invested funds to make sure we don’t end up having made a commitment that we can’t meet. Nor do we want to be throwing money out the door at the last moment, and I know that has happened to some fixed-term trusts. It’s a really fine balance.

Debbie Lye
Chief Executive
Spirit of 2012


Other articles in this series:

Foundations and Risk: Lloyd’s Register Foundation 
Foundations and Risk: The RS Macdonald Charitable Trust 
Foundations and Risk: The Wolfson Foundation 
Foundations and Risk: The Sylvia Adams Charitable Trust 
Foundations and Risk: CriSeren Foundation 
Foundations and Risk: Webb Memorial Trust

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