The Pioneers Post interview: Mary Rose Gunn
The CEO of The Fore tells Pioneers Post’s Tim West that foundations and social investors must put judgement above process if they really want to help rather than hinder the development of our best social enterprise pioneers.
Mary Rose Gunn is frustrated. In fact, she’s quite upset.
The problem: good people running great organisations are being ignored, blocked and in some cases undermined by a broken funding system perpetuated by the outdated, paternalistic and inflexible approaches of UK foundations and social investors.
Instead of fixing it, we seem intent on propping up a system that encourages mission creep, a lack of innovation and a disastrous lack of mobility in the social sector.
A power thing
Gunn is CEO of an organisation called The Fore, a trust set up in 2017 to provide high potential charities and social enterprises with modest grants (up to £30k – based on research showing there was a gap in availability between £10k and £50k) and expert support to help them significantly increase their income, capacity and impact.
Its launch followed a pilot programme run by The Fore’s parent body, The Bulldog Trust, to test the belief that early-stage organisations doing brilliant work stand the greatest chance of reaching their potential if they can access ‘grantee-driven’ funding that trusts and supports them to steer their own course ahead. This contrasts with the majority of grant funding that tends to link money to particular activities, outcomes or themes that are defined by the funder rather than the organisation using the money.
In 2012 Gunn had been working for The Bulldog Trust for five years – spending most of her time setting up Two Temple Place, a magnificent, neo-gothic mansion on London’s Embankment, as a venue dedicated to culture and philanthropy. On the side she had been doing some grant making, and had noticed some significant issues:
“Firstly, there was no real opportunity out there for small charities to get hold of development funds because everybody wanted to fund specific projects and things that were easily quantifiable,” she recalls. “People running these charities were invariably pretty inspiring, and incredibly impressive in that they were dedicating their lives to what they were doing, often taking a small salary if any.
“I found it increasingly upsetting, frustrating and it made me quite angry in some cases that these people were experiencing a funding system that basically didn’t help them in any way – and not only did it not help them but sometimes it would actually be ruining their confidence in what they were doing and in themselves.
“When you were talking to them and hearing what they were doing – working with children with behavioural difficulties or trying to make the lives of people in their community who were elderly much better – the fact that they were being treated like that by the funding system was downright wrong.
The way the funding sector works has hampered how charities and social enterprises develop because you can’t stick to your core mission.
“It’s a power thing,” she says. “Rather than being respected for what they were doing they were being made to feel like they had to come in supplication and I just found the whole thing quite distasteful.”
The sector has made progress but funding is still “criteria laden”, she says – and the people who are best at filling in the forms are not necessarily running the best organisations.
Success story: Tutors United
Tutors United increased its students’ average scores in a maths assessment by 170% after just 15 hours of tutoring. Founded by social entrepreneur Joel Davies when he was just 18, it recruits university students to provide tutorials for disadvantaged primary school children – charging the housing associations where it works, so the children’s parents don’t have to pay. Since receiving its grant from The Fore, it has doubled turnover, taken on two new housing association contracts and increased the value of a further five. It now works across 13 London boroughs and has provided support to over 200 children. The Fore also introduced Tutors United to Pauline Roteta, Vice President at BlackRock, who rebuilt the financial model, and to Annie Maciver, Senior Policy Advisor at the Cabinet Office’s Race Disparity Unit, who joined the board.
Crying out for business expertise
Alongside the frustrating habits of the funding sector, Gunn noticed two other factors that needed attention: first, charities and social enterprises were crying out for business expertise but didn’t know where to find it; second, contrary to the messages from funders, it was “very easy to spot really good quality organisations that would benefit from the support on offer”.
So the Bulldog Trust launched its pilot and over four years supported 51 organisations and disbursed £1m of grant funding provided by Golden Bottle Trust, part of the private bank C Hoare and Co.
The Fore has forged strong relationships with corporate funders such as the investment management giant BlackRock, the global credit ratings company Moody’s and the advisory and merchant banking group Rothchild & Co.
True to Gunn’s word, the grants had no specific programme requirements. “We know the most important people are the end beneficiaries but you can’t deliver the greatest impact if your organisation doesn’t have the capacity to develop and grow. Our aim is for transformational funding – this might, for example, enable an organisation to hire somebody to increase capacity for programme delivery so the CEO is freed up to consider strategy and pursue growth opportunities.”
There was another essential aspect to the pilot, and this was the provision of highly experienced professionals both to assess the applicants and support the successful organisations in whatever way they required.
“It’s absolutely essential that the assessors are people who have got a huge amount of professional experience,” says Gunn. “When you have a meeting with a person with a distinction from Harvard Business School and 15 years’ management consulting and private equity experience, you are sitting down with somebody who is going to give you an interesting and valuable strategic overview of your organisation – so the whole process adds value.
“Sitting down with a 23-year-old who’s just left university is not going to be valuable. Sitting down with somebody who has run businesses, has spent time in the world doing things, is valuable. All those who get through to the due diligence phase of our programme benefit from this strategic input, whether or not they eventually receive funding.”
Since the pilot began the organisation has amassed a veritable army of professionals who want to give their time. “There’s nothing more rewarding than seeing your professional skills be useful in a social context,” believes Gunn. “Reducing knife crime because they can help write a strategic plan is phenomenal… People are absolutely bowled over by the feeling they get when they help someone who is driving social change.”
Professionals are selected for their attitude as well as their skills. “We find that the business people we work with are not arrogant. They are all so impressed by the organisations, the leaders running them and what they are achieving, instead they feel actually very humble,” she says.
“It’s also really important that we remind charity and social enterprise leaders that it is they who are doing the really difficult bit – if you are an arts charity running workshops with elderly people reducing social isolation, that is really, really difficult. There are loads of places where you can find an accountant or consultant to help you out so the charities should celebrate the value of the skilled volunteering opportunities they have to offer and not feel they have to work with someone that doesn’t make them feel great about themselves. The trouble is a lot of this kind of support is often very fragmented so we pull it all together under one roof to try to make our grantees' lives easier.”
Success story: Innovating Minds
Innovating Minds was set up in 2016 by Dr Asha Patel (pictured) to provide accessible psychological support for disadvantaged young people within the school environment. Its recent impact report showed that high risk behaviour (eg assault, use of a weapon) decreased by 90% in the schools it worked with. It used The Fore’s grant to hire a Business Development Manager so it could meet demand for its services from new schools. One year along, it has expanded from supporting four schools to 45, and grown turnover from £80k to more than £300k.
About two thirds of the way through the pilot, the Fore team realised it had struck gold. “The demand from the charities was off the scale, the funding rounds were completely oversubscribed, we had business people coming out of our ears who wanted to provide the expertise,” reports Gunn.
In 2017, the two founding trusts agreed a major expansion of the programme, creating a new entity – The Fore – to run it, with Golden Bottle covering the operational costs for the first three years.
In its first two years The Fore gave out 76 more grants and just over £2m. The average grant size was £28k.
Rather than being respected for what they were doing they were being made to feel like they had to come in supplication.
The Fore has also gathered compelling evidence to show that its ‘venture-capital style’ approach succeeds in unlocking scale, sustainability and impact. A recent benchmarking comparison revealed that the organisations in the pilot had significantly out-performed similar charities in the benchmark group ie those who had not been through The Fore’s programme.
Concerns that the bespoke design required for each grant could be really expensive have also been allayed. “You have so many skilled business people out there who love giving their time almost for free in order to help create these bespoke relationships, so it doesn’t need to be expensive.”
Gunn believes the model is potentially transformative not only for charities and social enterprises but also for foundations looking to make significantly greater impact with their funds, and for corporates who are seeking more innovative pathways for their philanthropy, social responsibility and employee engagement programmes.
The Fore has already forged some strong relationships with corporate funders such as the investment management giant BlackRock, the global credit ratings company Moody’s and the advisory and merchant banking group Rothchild & Co. It has also been working with The National Lottery and the Peoples Postcode Lottery, as well as with some private family trusts who like giving money that also buys professional support.
Conversations have opened up with other foundations such as Power to Change, which supports place-based community businesses, and there is hope that other foundations will want to come on board with funding or even take on the model themselves.
But there remain some big questions and challenges that arise from The Fore’s experiences, regarding how social enterprises and charities can access growth support, as well as the status quo in current philanthropy, foundation and social investment practice.
Success story: WasteAid
One in three people worldwide do not have the luxury of having waste taken away. WasteAid provides simple and cost-effective community waste management to combat this problem. It trains local people to manage waste in a safe and affordable way and supports people to become self-employed recycling entrepreneurs, generating economic value from waste materials. WasteAid used The Fore’s grant to develop capacity for rapid expansion. In the first year it doubled the number of countries it works in (12 in total), reached 16,000 new people, and more than tripled its unrestricted income.
Asking some big questions
Among foundations, Gunn says, the way that funding continues to be administered means “you end up completely distorting the business models of the organisations you are supporting because they are continuously having to contort themselves to meet what funders want to get the funding”.
Social entrepreneurs will jump through the hoops rather than having to shut down their organisation – for obvious reasons. “But the way the funding sector works has hampered how charities and social enterprises develop in this country because you can’t stick to your core mission,” says Gunn. “The funders are then continually critical that charities have mission drift. But if you are funding organisations on the strength of their core model as we do, you don’t end up with mission drift,” she argues.
There is also the question of how to encourage and fund innovation in the social sector. Gunn points out that innovative solutions tend to work across sectors rather than in specific boxes. “When you are solving complex problems the solutions need to be able cut across multiple sectors too.”
You have the same charities at the top that have always been there and we are then surprised that we don’t have new solutions to our 21st century problems.
Gunn also laments the “disastrous” lack of mobility in the charity sector. If the FTSE100 were the same now as it was 20 years ago our economy would arguably have nosedived but “that is what it is like in the charity sector”, says Gunn. “You have the same charities at the top that have always been there and we are then surprised that we don’t have new solutions to our 21st century problems.”
This doesn’t mean that the big charities are doing a bad job, or that they shouldn’t receive grants. But just as in any investment portfolio you have some blue chip stocks, some bonds, some gilts and a small percentage of alternative or riskier investments, so should the grant makers allow for diversity in their portfolios. “Make grants to the big organisations but everybody should be supporting small organisations so we make sure we’ve got really good innovation in the charity sector – because innovation is so much more difficult if you are a large company or a large charity.”
Why social investors should take notice
And how about the burgeoning social investment community, which has made repayable finance the solution for innovation in the social sector? Gunn says there’s “a massive place and potential for social investment” but she is nervous that the level of enthusiasm fails to match supply. “The social investment community is not acknowledging categorically enough the fact that it needs investment in the pipeline if social investment is going to start becoming a viable alternative for charities and social purpose organisations.”
“We think of ourselves as investors,” she says. “They are grants so we are not looking for the money back but we are making investments in the organisation – we are not buying outcomes for beneficiaries,” she explains. She believes there is enough repayable finance in the market – but smaller organisations need grants first before they can contemplate impact investment. “A funding continuum is how we talk about it. When you first take on social investment you also can’t suddenly jump to paying 6% or 10% return, and often debt is not the right model.”
The Fore has connections to several social investors and is working with venture philanthropy advisors Sumerian Partners on a potential fund that might support organisations on the journey towards social investment. Such partnerships would seem to make sense, not least because of the efficient use of resources in the due diligence process: “If organisations have been through our due diligence process and got funding from us, we’ve done all the ongoing monitoring and evaluation and they are continuing to perform well and they are great, you need very little in order to say, ok here’s the next stage of funding which will take you on to get you ready for social investment.”
Judgement versus process
So, where are things heading next?
Given The Fore’s success figures, one might have thought that potential funders would be bashing down the door of Two Temple Place to take part. It wouldn’t seem outrageous to suggest that, if The Fore were a private company with such a record, somebody might have bought it by now, or at least copied its ideas.
Yet the funding sector seems strangely unaware of the opportunity presented.
Gunn cites one of her colleagues who observed that we seem to have got quite confused as a sector – perhaps even as a country – by the difference between ‘judgement’ and ‘process’. “It’s crucial that funders check that they aren’t putting process over their own good judgement – because it certainly doesn’t make your grant funding any safer,” she claims.
And as far as safety is concerned, she would actually prefer to be taking a little more risk. “We would like to be able to fund 30 things and then have five at least which are considerably more risky. You don’t create change if you don’t take risk,” she says.
Gunn says her ultimate goal is to shift thinking in the funding system. “For me personally, I am in this to try and raise awareness of the need for systems change. I would love to scale what we are doing here and it would be so easy for us to give away another £5m, at very little cost – but it’s also about spreading the word about best practice, raising the bar in terms of how funders operate, and showing that we are so excited about our pilot benchmarking we’ve done and the fact that our sector-agnostic model is creating grants where the organisations are on average three times more successful than their benchmark after three years.
“It is just proving that your money is better spent if you offer more of it un-restricted and you open up your access. Hopefully this is something we can gain real profile on and then people will start questioning their own processes – and saying, maybe we should look at doing something a bit more like this ourselves?”
This article was produced in partnership with The Fore.