Part 3: Supporting the selection of grant recipients

3.1
In this Part, we discuss what the Department has done well in supporting the decision-making committees. It has provided:

• sound training, guidance, and tools for staff;
• useful information to committee members about their roles and responsibilities; and
• useful information for staff about supporting committee decision-making.

3.2
We also discuss what the Department could do better in supporting the committees' work:

• Funding priorities could be more focused.
• Richer information could be available to support committee funding strategies.
• Decisions about selecting grants could be better recorded.
• Risk assessment of applications to the Lottery Grants scheme could be more consistent.

Summary of our findings

3.3
The Department's systems and processes for handling grant applications and supporting the selection decisions of the committees (through training, and providing information) are sound and relevant.

3.4
The Department's systems and processes generally help the Department and the committees to apply the principles we expect them to when selecting grant recipients. These include fairness, openness, and value for money.

3.5
The Department could improve the information and guidance provided to the committees to help them determine funding strategies and priorities. The Department could also improve the support that it provides to COGS committee members to help them better understand and comply with their obligations to complete a record of their assessment of grant applications.

Providing sound training, guidance, and tools for staff

3.6
In our view, the Business Process Manual provides clear guidance for the Department's staff, with clear steps to follow for processing applications and grants, and well-designed support tools. The staff we interviewed were familiar with the Business Process Manual, and some also reported the value of colleagues' experience and other training.

3.7
Staff handled the core business of funding administration reasonably well, as performance standards indicate (see Figure 3 in Part 4). Many of the regional staff were involved in community development work, such as community funding forums, which gave them the opportunity to share information about funding with the public, and to meet and gather information about potential applicants and about the community.

3.8
The Department's grant administration work is carried out mainly by funding advisors and support officers. The Department's advisor role (Community Development and Funding Advisor) is non-specific, so staff can perform a range of tasks. In practice, a staff member usually acts as funding advisor or committee co-ordinator for a particular sector or COGS or Lottery Grants scheme committee, or as a community development advisor. The Department is recruiting staff with more generic skills, to manage changing workloads and varying tasks as needs arise.

3.9
Staff receive general induction and training in using the Business Process Manual and Grants Online. They refer to desk files, experienced colleagues, and the Business Process Manual for further guidance as needed. We saw staff working with the Business Process Manual and Grants Online, accessing these with ease through the Department's intranet.

3.10
Most tools (such as checklists) and methods we saw were fit for purpose and appeared to work well for staff. Although Grants Online has limitations, it is adequate for supporting the committees' selection decisions. Other tools included a new template for reports from the advisors to several committees in the Lottery Grants scheme, which was produced as a result of a business improvement project in 2009. Staff and committee members told us that this template works well for them.

3.11
Staff also use checklists to ensure that all necessary information is gathered to support the reports from advisors (for the Lottery Grants scheme), and checklists for risk assessment.

Providing useful information to committees about their roles and responsibilities

3.12
The Department provides training materials and handbooks to members of the committees. The training materials and handbooks cover legislative and regulatory requirements, governance processes, roles, responsibilities, principles, and policies about decision-making and accountability.

3.13
The Department has told us that it provides induction to all committee members and further training if there is any change in process. Some members we contacted in a short survey told us that they found the materials and initial training useful but also noted aspects that could be improved, such as drawing on the experience of longer-serving members for guidance. Some members of a committee for the Lottery Grants scheme did not recall receiving any initial training.

3.14
The handbooks clearly set out the risks of, and requirements for managing conflicts of interests. Many committee members may be directly involved in the communities or organisations that they are making decisions about. The Department has sound and transparent systems and controls for identifying and managing such risks,⁵ and the Department's committee co-ordinators were consistent – with one exception – in ensuring that committee members followed due process as a part of their standard meeting practice.⁶

3.15
The Department's advisors keep committee members up to date, as necessary, with committee funding policies to ensure that decisions are consistent and appropriate, and also with changes to, for example, the outcomes framework for allocating Lottery Grants scheme funding.

3.16
In our view, it is important to continue to remind committees of the risks associated with possible conflicts of interest. We encourage the Department to review its training process for new and sitting committee members to make sure that they all receive consistent, ongoing, and relevant training when serving on a distribution committee.

Providing useful information to support committee decision-making

3.17
In our view, the guidance material for staff and the committees clearly lays out the Department's role as administrator and secretariat to the committees, exclusive of decision-making about grant recipients. Committee members and staff we spoke with understood their respective roles well.

3.18
The Department's staff provide the committees with synopses of applications (for COGS), and reports from advisors with a range of supporting material and recommendations (for the Lottery Grants scheme). For most Lottery Grants scheme committees, the reports from the advisors reflect clearly the investigation and analysis carried out to reach the recommendations made to the committees.

3.19
Most committee members we spoke with told us that they appreciated the support and preparation the Department's staff provide, including clear layout of process, timely receipt of papers, and useful information about applicants. Most members we spoke with also commented positively on the service and on the quality of the advice received from the Department's staff in general.

3.20
We expected that staff would share information about applicant community groups and sector knowledge, within and between regions, and between regional and national committees.

3.21
The Lottery Marae Heritage and Facilities Fund within the Lottery Grants scheme is set up to support and encourage national-regional collaboration, with specialist advisors in each region. We noted some good examples of information sharing, such as the work of the advisors to the Lottery Environment and Heritage Fund Committee, who send out information to regions and also seek information from the regions where applications originate. This kind of collaboration can enhance the quality of information provided in reports and synopses of applications for the committees.

3.22
In our view, there are more opportunities for closer collaboration between national and regional staff. We encourage the Department to explore the benefits from such collaboration, while acknowledging that such knowledge sharing requires time and resources. Options include:

• providing a repository of information on the Department's intranet that all staff could contribute to and draw on for information about grant recipients or experiences in the regions and the different grants schemes; and
• greater collaboration and sharing of information between regional staff (providing local knowledge) and staff working with national or specialist Funds for the Lottery Grants scheme (providing an overall viewpoint).

Funding priorities could be more focused

3.23
The Department has an important role in providing comprehensive, high-quality information about the community and context of grants for the committees, to support those committees in setting their priorities. The high-level priorities for targeting funding and to guide decision-making are clearly defined through the Lottery Grants Board's Statement of Intent and the committee members' handbooks for each of the schemes.

3.24
The priorities for each of the national and specialist committees in the Lottery Grants scheme are defined by Fund criteria. Lottery Regional Community committees and COGS Local Distribution Committees define their own priorities, the latter through public meetings. The priorities for both schemes, which are used to allocate grant funding, are then published.

3.25
Lottery Regional Community committees in the Lottery Grants scheme and COGS Local Distribution Committees articulate their funding priorities in a broad range of ways. For example, some committees name their priorities in specifically outcome-oriented terms⁷ such as "Applicants who can demonstrate that people are benefited by the service", or in terms of specific programmes or purposes such as "Cooking", "Education for men", and "Volunteer costs". Others name their priorities in global terms such as "Men", "Aged People", "Emergency", or "Community Resilience", which could encompass a very wide range of applications.

3.26
In our view, although these published priorities reflect the general focus for both schemes, they do not always provide a sound basis for the transparent and outcome-focused allocation of scarce funds.

3.27
We encourage the Department to provide:

• suitable information to the committees, including information gathered from community development work about particular needs, so committees can form appropriate judgements about where funding should be targeted; and
• guidance to the committees so they express priorities in terms that clarify proposed benefits to the community, and so help to identify target groups for funding.

3.28
Such information and guidance would better enable the open and fair assessment of need and the allocation of public money to where it would be most useful, based on robust information.

Richer information could be available to support committee funding strategies

3.29
Committees had different funding strategies and allocation approaches, such as full or part-funding, ceilings for salary funding, moderating grants at the end of the allocation process, or keeping tally along the way. In the Lottery Grants scheme, for example, the Lottery National Community committee and the Lottery Regional Community committees have to decide how to ration the year's funding allocation over three funding rounds, such as rationing by the pattern of application numbers in previous years.

3.30
Some committee members we spoke with would welcome regular reporting and more information about funding patterns to inform their committee's funding strategy. They would also like greater depth of information on demographics and communities of interest in regions, and guidance in matching priorities with community profiles.

3.31
The Department has a rich stock of information in Grants Online about community groups, which could provide in-depth information for the committees. Although the Department's staff and committee members carry out some useful analysis, the difficulty of extracting such information from Grants Online means that it is time-consuming and not cost-effective.

3.32
Enhanced reporting is a planned function of the Department's new grant administration and management system. If there is a delay in implementing the new system, it might be useful for the Department to consider, within the resources available:

• collating the work that has been done by staff already;
• conducting targeted analysis of existing data; and
• reporting regularly on this to distribution committees.

Decisions about grant selection could be recorded better

3.33
The Department's role includes ensuring that committee decision-making adheres to the principles of transparency and accountability. The decision-making needs to be fair and capable of withstanding external scrutiny (such as requests under the Official Information Act 1982 or judicial reviews). The importance of maintaining these principles is made clear in the committee members' handbooks and in the training that committee members should receive when they are appointed.

3.34
We noted instances where the Department's role in providing guidance to support good decision-making could be better explained, for the benefit of committee members and the Department. Committee members and staff we talked to varied in their understanding of how much authority Department staff had to insist that committee members carry out procedures properly or fully.

3.35
In particular, for COGS, the Department needs to clarify the purpose of the Local Distribution Committee Members' Assessment Tool, a form that committee members are required to fill out while assessing applications. Our analysis of a selection of instances where this tool should have been used showed that more than half of the forms were not completed.⁸ Reasons given to us by staff and committee members for non-completion included that some members:

• felt they were experienced in assessment and did not need to; and/or
• were reluctant to commit their comments to paper, especially as their assessment might not represent the final decision.

3.36
In our view, it is important that committee members fill out the form for the Assessment Tool. It is the only record showing that applications have been assessed appropriately. It is also the only record of contact with the grant recipient. Without this record, the committees risk questions about whether they have followed due process. Further guidance from the Department and streamlining the Assessment Tool form could alleviate any compliance burden on the members of the committees.

3.37
In our view, there should be better recording of assessments and selection decisions by the committees, to include the reasons why applications are approved, declined, or approved for lesser amounts than the applicants requested. At present, there is not enough detail provided to defend decisions if that were required. A range of generic reasons for decisions could be provided for use during the committee meetings where grants are allocated.

3.38
We have discussed our findings about the Local Distribution Committee Members' Assessment Tool with the Department. We note that the Department has brought this matter to the attention of the COGS evaluation team (see paragraphs 5.15-5.16).

Risk assessment of Lottery Grants applications could be more consistent

3.39
Advisors to the committees in the Lottery Grants scheme do not consistently take all relevant factors into account when assigning risk, and the necessary responses to the assessment of risk are not well defined. Although the advisors generally collect enough information about applicants and projects to evaluate risk for applications to the Lottery Grants scheme, they may assign risk on only one or two criteria, such as the applicant's history or the size of the grant. Advisors will often visit the recipients of grants in person to verify the project.

3.40
Determining that a grant recipient is high risk often happens too late, and often only when the grant recipient should be reporting on the use of the grant (during the accountability stage), or during a random audit of grant recipients.

3.41
The Department, through its Funding Issues Discussion Group, is creating a risk assessment tool to ensure that risks are identified and mitigated early. In our view, such a risk assessment tool is necessary to ensure that risky grant recipients or projects are identified before grants are made. Identifying an applicant's risk profile would enable committees to make better risk-based decisions. We encourage the Department to continue its work on a risk assessment tool.

3.42
All applications must have supporting financial information in more or less detail appropriate to the size of the grant or the project.⁹ Advisors often need to make informed judgements about the legal and financial viability of an applicant organisation, to estimate risk and also when requested by committee members during grant allocation meetings. We encourage the Department to focus more, when recruiting and training, on improving advisors' skills in judging financial viability. The Department has told us that it has scheduled training in financial analysis skills for its managers.

5: More general guidance is contained in our good practice guide, Managing conflicts of interest: Guidance for public entities, which we published in June 2007.

6: The exception is ensuring that COGS Local Distribution Committee members complete their Assessment Tool – see paragraph 3.35.

7: "Outcome" is defined by the Lottery Grants Board as the difference applicants intend to make or the change they aim to bring about, for those who will benefit from their project or service.

8: Our sample size was 127, drawn from 10 Local Distribution Committees in the regions that we visited.

9: This ranges from detailed audited financial accounts and project management plans (for major projects or large organisations) to bank statements (for smaller grants).