The idea was to bring together in a Sydney ballroom a diverse group of 10 organisations, ranging from large Not-for-profits to small social enterprises, and give them the opportunity to decide who among them should share in almost $1 million from the Paul Ramsay Foundation (PRF) to help develop solutions to address disadvantage.
The approach was predicated on an acknowledgement that many organisations were confronting complex social problems and struggling with the capacity, capability and resources to make the kind of contribution they wanted.
Innovation and agile thinking have become watchwords in addressing such challenges. The pioneering peer-to-peer review program was one response.
Various phrases can be used to describe the process – democratizing philanthropy; devolved decision-making; peer-to-peer assessment. All of them are appropriate, but the process, more fundamentally, also delivered some important insights into how this form of participatory grantmaking can shift the conventional dynamics of funding.
The 2019 pilot program was built on Charles Corn and former McKinsey Managing Partner for Australia and New Zealand and current PRF board member, Rob McLean’s, problem-solving framework contained in their book, Bulletproof Problem Solving: the One Skill that Changes Everything. The Social Impact Hub then hosted two Solve It masterclasses that featured Rob discussing the framework. PRF in partnership with Philanthropy Australia then invited organisations working to resolve complex social problems to engage with the peer review program. Those who were interested went through an application process that utilized the framework’s first three steps presented in the masterclasses and in the book. There were 113 expressions of interest, and the Social Impact Hub reviewed 32 completed applications before shortlisting 14 for the Foundation’s consideration. 10 organisations were finally chosen. The focus then shifted to a two-day workshop that brought the organisations together in the Grand Ballroom at the Double Bay Intercontinental Hotel in Sydney in October, 2019.
The goal was that five organisations would each receive $150,000 for their nominated project or initiative. Each project would be assessed by the other nine organisations before they decided which projects were worthy of support. The rule was that an organization couldn’t vote for itself.
The concept was borrowed in part from a US model developed by Village Capital, which pioneered a peer assessment approach for entrepreneurs more than a decade ago to help transform vision into scale. Co-founder of Village Capital Ross Baird described the approach: "Ultimately, our peer-selection model changes the power dynamic between entrepreneurs and capital providers in a way that leverages the comparative advantage of each actor and enables them to create more value together".
So, how would this Australian version work in a philanthropic setting?
According to Dr Renee Lim, one of the program facilitators and consultant to PRF, the design of the Australian peer-to-peer program created a combination of outcomes. “It was obviously about devolving the grant allocation to peers but there was also a part about creating collaboration between sector organisations and also increasing capability and capacity with sector organisations; and also changing the relationship between PRF and these organisations as a result of devolving that funding allocation,’’ she explained.
Central to this process was what Jessica Roth, Founder and Director of The Social Impact Hub, described as “…a learning and capacity-building lens.’’ And because that lens was integral to the program structure, it went beyond the grant allocation and yielded a much richer result.
"Because everyone who was taking part in the program had to go through the Solve It Australia educational program that was based on Rob McLean’s Bulletproof Solving methodology, they had a learning mindset coming into the workshop," Jess said.
“So, they were all in the mindset of helping each other better define the problem…the capacity-building training had illustrated the power of new perspectives and having diverse voices in the room. All 10 organisations were keen to learn and willing to contribute.’’
The organisations ranged in size, location and sectors: the Fitzroy Legal Service, Asthma Australia, The Smith Family, Campbell Page Limited, Star Health and the Burnet Institute, among them – on the face of it, none of them had much in common. Yet Renee and Jess saw how quickly a rapport developed between what on the face of it, might have seemed unlikely associates. And it was that rapport that helped drive the spirit of collaboration.
“A well-designed participatory grantmaking program like this one can contribute to better outcomes,’’ Jess said. “With the benefit of hindsight, we made some very good decisions in the design of the workshop and the parameters of the whole funding program that facilitated collaboration rather than competition.’’
A conventional grant application process is built around competition for funds. The shift away from that convention was integral to this pilot. “Normally, the Foundation would decide how to allocate grants in a competitive grant round,’’ Jess explained. “Here, decision-making was delegated to the participating organisations – they decided which five organisations would receive $150,000 each, so in that way, from that moment, their relationship with the Foundation became less significant. The Foundation didn’t hold the decision-making power anymore about who got the money and who didn’t…’’
The motivation behind such a move is not just about the amount of funding at the end of the process. “The reason why you devolve funding is so that funding has a better impact and for it to have a better impact, it requires more than just the use of money,’’ Renee said.
The shift in fund allocations away from the grant maker to the grant seekers meant that the decision-making process also looked different. Renee explained: “For me, the core outcome of the workshops themselves was to ensure maximum collaboration and capability building and to take away maybe some of that sense of competitiveness to therefore achieve what we wanted – which was that peers would decide what were the best projects, according to their insight, rather than have peers working out which projects they should fund based on who deserves or doesn’t deserve the money, maybe based on…previous assumptions or perhaps that competitive emotive component of decision making.’’
Each of the organisations were asked to buy into each other’s project, and to support it, break it down and challenge it.
Only at the end of the workshop did they choose who got the funding, knowing that although there would be five organisations who each received $150,000, no one left empty-handed because there was also an additional $150,000 that was used for the co-design training and evaluation support for all 10 organisations. Everyone felt like a “winner’’. There were no “losers’’.
The five organisations chosen were: Hands Up Mallee, the Burnet Institute, GoodCycles, the Benevolent Society and the Fitzroy Legal Service with the University of Melbourne. The COVID pandemic has compromised some of the projects’ progress and it is perhaps premature to arrive at a rounded picture of the program’s effectiveness in delivering the projects’ outcomes. But all 10 organisations took part in last year’s co-design and evaluation training, which would have been unlikely in a traditional funding program.
It’s clear that there were some significant and enduring outcomes from the engagement between the organisations. Renee said there were three pairings within the group of ten that had continued to collaborate, either on the specific project or in other ways. “And if that’s an outcome of the peer-funding process that you would not get in a traditional funding model, then I would say that would be 100 percent true,’’ she said. “The collaboration is a really lovely outcome.’’
The program has also meant that the organisations have continued their relationship with PRF. “These organisations feel they are much more connected to the PRF dynamic, whether it be with me, or through the evaluation process, or being able hear from some quite senior members of PRF...that has made a very big difference to their relationship with the funder, and I think that’s a significant outcome,’’ Renee said.
Jess offered some further thoughts about the broader lessons from the program. “This program was excellent, and I hope it inspires other funders to be bold and innovative, and trial participatory grantmaking,’’ she said.
But she tempered her enthusiasm with some words of caution: “I would urge funders to be a little cautious in taking a participatory grantmaking approach if there is no direct benefit to all participating organisations as there could be a perception that it is just outsourcing due diligence: especially where it becomes very time-consuming and a burden on the participating organisations. In this case, most organisations were grateful for the opportunity because they learned so much through the process, but if participatory grantmaking is only shifting the burden of due diligence to the organisations and they’re not renumerated for it, that could give rise to some challenges,’’ she observed.
Philanthropy Australia’s Thought Leadership series on Participatory Grantmaking features Lani Evans, from the Vodafone New Zealand Foundation and Michael Jarvis, from the Transparency and Accountability Initiative in Washington, and will be held on Tuesday-Thursday, August 24-26.