Financial Incentives

Incentive Option 1: Priority Funding For Collaborations

"Money talks" – Gaming Trust

 Although Priority Funding for collaborations was seen as one of the most obvious incentives available, there was a wide range of views about its effects and its effectiveness. Foundations ranked it 3^rd in terms of potential whilst charities rated it lower at 8^th. On the positive side, it was seen as sending very clear messages about the requirement for collaboration, but there was a fear that it created “collaborations of convenience” (National Health Charity). It was the highest ranked financial incentive overall (although the foundations rated Joint Funding higher).

Foundation Perspective:

Although most foundations rated Priority Funding highly, they still recognised its shortcomings. They acknowledged the pragmatism of its highly tangible nature but were concerned about the way it might change charity behaviour (“we need to watch out for funding hijack and mission drift - there is a real danger of organisations blindly following the funding” – Private Foundation). There was a concern that it implied a slight arrogance on the part of the funder (“It is as if we are saying "Philanthropy knows best"” – Private Foundation). In general, it was agreed that it was a useful tool but not one to be used in isolation (“Priority funding could really tackle duplication if it was done in a holistic way backed up with research, engagement and honest intent and followed through in the long term, but it has to be what the community wants to do” – Statutory Trust). It was also felt that there needed to be serious money on the table with funders committing significant resources over the long term.

Charity Perspective:

Whilst a number of the charities interviewed recognised that Priority Funding was very powerful ("the ultimate incentive” – National Youth Charity, Regional Health Charity) and that it could lead to high impact there was significant concern on three key reasons. First, as with the Foundations, charities felt that it could lead to the wrong behaviours with collaborations forming simply to take the money (“fraught with danger - - is it a rort or a real collaboration?" – National Health Charity. “You need to ask yourself - why have two organisations who have never worked together suddenly turned up on a funder’s doorstep - just how sincere is that?” – Regional Social Services Charity). Second, there was a concern that funders could actually do harm by encouraging collaboration holus bolus without a clear understanding of the strategic challenges and specific needs of sectors ("do trusts and foundations really understand the need?" – National Youth Charity). Third, it was felt that it paid too little attention to the requirement to build collaborations upon trusted relationships ("It is a blunt instrument. If the relationship is all about money it is unlikely to be successful at achieving a greater purpose and there is more potential for conflict” – Regional Social Services Charity).

Incentive Option 2: Joint Funding  

“If we want collaboration to work, we also need to practice it ourselves” – Private Foundation. 

Joint Funding was seen by foundations as the incentive with the highest potential to encourage collaborations but it was only ranked 10^th by charities leading to an overall ranking of 6^th of 19. Whilst foundations felt that it set a good collaborative example that charities would be keen to follow, charities did not see this manner of standard setting as particularly influential on their own behaviours.

Foundation Perspective:

Foundations were unanimous in asserting the importance of the Joint Funding approach (as reflected in the 1/19 standard deviation ranking illustrating a high consistency of scoring) “It is important that we truly welcome collaborations rather than just pay lip service. Make it clear in our communications and in our actions which is what we have done in the Working Together More Fund. We need to make reward true partnerships not transactional opportunists” – Private Foundation. “I have a personal preference for a carrot rather than a stick" – Private Foundation. "Funder collaboration is important” – Statutory Trust.)

Charity Perspective:

Whilst the majority of charities were ambivalent about Joint Funding (as reflected in its relatively low score), there was diversity of opinion (as shown by the high standard deviation figure) and it did have its supporters ("It sets a good example. Good approach but who the funders are and the relationship between them and with the charities is critical. It seems to be an attempt by funders to sincerely walk the talk" – Local Community Charity. "If three funders approached us and said we'd identified the need and are prepared to resource it would be a huge incentive to us working together” – National Youth Charity).

Incentive Option 3: Block Funding  

“High potential but high risk as well – it might succeed or fail badly. You definitely need to provide major support infrastructure behind it.” – Gaming Trust                           

Foundations ranked Block Funding highly and also higher than charities did (5=/19 vs 12^/19) which was slightly unexpected considering the core concept of opening up the funding to charities to self-organise around the solution to a key problem.  

Foundation Perspective:

Foundations saw high potential in the idea of Block Funding, but felt that a great deal of work would need to go into providing a strong supporting process and infrastructure to ensure that collaborations stayed on track and delivered strong outcomes (“we would need a little more maturity from funders and recipients  and put effort into mechanisms and infrastructure to make it work” – Statutory Trust. “This is similar to some work we did where organisations with a shared vision have come together supported by 5 year funding” – Private Foundation. “It needs to be supported by a strong process that facilitates conversations and addresses any capacity issues” – Private Foundation.  

Charity Perspective:

As indicated in the standard deviation figures there was a considerable difference of opinion from charities. Reservations were mainly around systems and effectiveness (“It might be a little loose” – Local Community Charity. "It might be difficult to monitor and decide if there were thousands of deliverers wanting to get involved” – National Youth Charity). One respondent was concerned about the effectiveness of the allocation model (“I don’t like this idea – I think it is dangerous – squeaky wheels get the oil” – National Heath Charity). Supporters liked the open challenge to create new ideas, approaches, structures and partnerships.      

Incentive Option 4: Milestone Funding   

"Using milestone funding as an incentive could be seen as characteristic of a low trust relationship" – Peak Body

Milestone Funding was the lowest ranking financial incentive with foundations and charities ranking it 9^th leading to an overall ranking of 12^th. The standard deviation ranking of 18/19 reflects that for charities at least there was a large difference of opinion on the potential of this incentive.  

Foundation Perspective:

Whilst many foundations used milestones for funding, the majority lacked confidence that they could be used to incentivise collaboration (“It encourages people to work the system. I am sceptical about how it adds to trusting relationships between robust organisations” – Private Foundation. “It can lead to distraction from the main effort if it is excessive red tape” – Gaming Trust).

Charity Perspective:

Many charities shared similar views to the ones expressed above by foundations. However, there was a small group of supporters for the milestones strategy although they emphasised the importance of the milestones approach being heavily publicised upfront so charities applying for funding as collaborations knew about it rather than having it forced on them as a control mechanism.

Non-Financial Incentives

Convening 

Incentive Option 5: Identification of Public Value Failure

"This should be driving the collaboration discussion" – Statutory Trust

Whilst this incentive scored poorly with most charities and some foundations, it also had strong proponents from the philanthropic sector.

Foundation Perspective:

A majority of foundations saw the benefit in convening conversations around tough questions and felt that informed facilitation in this issue arena was an important opportunity for charities to show sector leadership. The amalgamation of Auckland into the single city was cited as a non-charity sector example of where this approach had led to a single more unified administration. The opinion research reports from ASB Community Trust and the Salvation Army were also felt to be good examples of this identification of non-collaborative effort shortfall. The approach was described as “good in the long term” and one respondent commented that “we are on the cusp of this becoming much more central” (Statutory Trust).

Some foundations felt that charities might be less enthusiastic about this approach due to the negative public embarrassment of identifying public value failure and the knock-on effects this might have in public confidence and charity fundraising. Although others saw this ability to “go to the heart of what they thought they were doing” (Private Foundation) as relevant and important. One Gaming Trust queried whether this type of incentive was more likely to galvanise funders rather than charities.                           

Charity Perspective:

As reflected in the ranking, charities were less enthusiastic about the use of this incentive mainly on the basis that it might generate conversation but little action (“I could spend my life going to meetings” – National Health Charity). There were charities that did support it despite the inherent challenge in the approach “This is a nervous conversation for any provider although many recognise the need to position more positively around the benefits of collective effort” – Regional Social Services Charity. Others felt it needed informed support (“this is a high priority for me but needs very good facilitator and the end in mind”).

Incentive Option 6 - Convening Dialogue

"Dialogue prepares the ground for collaboration” – Private Foundation.

Convening Dialogue was the highest ranked incentive overall (1^st for charities, 2^nd for foundations). As well as scoring highly there was a high level of consistency in the high scoring.

Foundation Perspective:

Foundations felt that they had a key role in advancing discussions between charities and being "intentional around appetite for collaboration” (Private Foundation). They saw these informal dialogue sessions as a good way to build trust between partners that formed the basis for strong relationships and more progressive thinking. They felt that the format enabled the examination of cross organisational issues and was particularly useful at the “commencement of early discussions where the way forward was unclear" (Private Foundation). There was recognition that success would be heavily influenced by having the right people in the room. The only concern was that it “might end up as just a talking shop” (Gaming Trust). 

Charity Perspective:

Charities were similarly enthusiastic about these relatively open discussions between organisations with different perspectives on issues. ("I like this approach as it brings a mixture of wisdom, skills and experience into the room and promotes a deeper understanding of the issues” – Local Community Charity). It was felt that foundations needed to be good at process and ‘present’ in the conversations and to do that it was important them to do the background work to truly understand the issues.

Incentive Option 7: Focus on Charitable Purpose

"Common purpose is essential for collective endeavour" – Private Foundation.

Considering the very high rating for Convening Dialogue it was perhaps surprising that convening with a Focus on Charitable Purpose ranked at only 10^th overall. Foundations rated it at only 13/19 although the standard deviation score of 18/19 shows that there was a wide range of views within that ranking.

Foundation Perspective:

Whilst many foundations saw the potential of using a focus on shared charitable purpose as a method to encourage charities to seek collaborative solutions (“If there is shared belief and passion it leads to authentic collaboration” – Private Foundation), there was a great deal of scepticism about whether these conversations would be able to transform operating preferences (“It is actually a lot harder to do well than you might imagine” – Statutory Trust. “People often have different ideas of how to achieve the purpose" – Private Foundation. “Could stay at an esoteric level. I prefer a value sharing approach” – Private Foundation. “Quite easy to say we share a vision of how the world will be but still try to do our own thing” – Private Foundation. “Egos can get in the way” – Gaming Trust.

Charity Perspective:

Charities rated this incentive far higher at 7^th and commented positively about its potential to enable charities to transcend self interest (“No down sides” - National Youth Charity. “Definitely need to look at core reasons for existence to encourage a change in thinking”. “Directly enhances mission” – Regional Health Charity. “This is my preferred incentive by a large margin” – Regional Health Charity.)

Analytical Review

Incentive Option 8: Diagnosis and Remodelling of Previous Success

“This is a proactive approach could be very helpful” – Local Community Charity       

Diagnosis and Remodelling of Previous Success was ranked 4^th overall and 2^nd= by charities. The low standard  deviation figures show the relative unanimity of support for this incentive (particularly by charities).

Foundation Perspective:

In general, foundations thought that this approach was a “nice Idea” (Statutory Trust) that built on best practice and strong relationships. They felt it was highly achievable (“it is probably not going to be rocket science working out what the key success factors were” – Private Foundation) and were aware of circumstances where it had been used in New Zealand to good effect.  Whilst they recognised that it might mean funding less new things this was not seen as a bad thing as the proliferation of small new grants was seen as one factor that perpetuated the survival of small duplicating organisations and “that might be outweighed by the opportunity to build on success” (Private Foundation). A number of foundations queried the assumption that the characteristics of the collaboration partners would stay the same and they noted that when key people move the whole nature of an organisation and its capacity to collaborate may change too. This incentive also required proactive funders and one respondent stated that there were only a few of these (“most of us are driven by the morning's mailbag" - Statutory Trust).

Charity Perspective:

Charities were very supportive of this incentive (“all upside - no weaknesses” – National Youth Charity. “Would build on good practice” – Local Community Charity. “Very effectively links organisational learning and development. Comes from a funder having 'appreciative enquiry'” – Regional Health Charity. “Would be good to copy other excellent ideas” – Local Health Charity. It was felt that the diagnosis learnings would have to be widely shared to be effective and that it was also worth examining things that didn’t go so well so we could also learn from mistakes. It was felt that a high level of sector specific expertise would be required to do this well (“Some social issues require a level of expertise and so I suspect this model is not totally transportable” – Regional Social Services Charity.             

Incentive Option 9: Asset Allocation Mapping

“Good because it goes directly to what we do best” – Private Foundation.

Asset Allocation Mapping was ranked 7^th overall with charities ranking it higher than foundations (5= versus 9=). Charities were relatively united in their support whilst foundations had a wider range of responses.

Foundation Perspective:

Views were split on this incentive. Its supporters claimed it had the potential helped to make complex charitable sector activity more transparent and meet “a main challenge or opportunity of making charities aware of similar organisations" (Private Foundation). Some felt it would be most effective if it was used after a convening approach had highlighted a major audacious challenge for a particular sector. At the other end of the spectrum, there was concern about whether it could be done well and how much it might cost (“can be an expensive waste of time. I might be a little jaundiced on this but I have yet to see successful mapping of anything in the social sector – everything is moving far too quickly” – Private Foundation. “You have to be careful with these elaborate ideas that the cost of doing them does not cost more than tackling the actual need!” – Statutory Trust.

Charity Perspective:

Charity support for this incentive was very strong “we need to go this way”, "this could be a major driver because people don't know what they don't know” – National Health Charity. “This is very tangible and could accrue significant benefit” – Local Health Charity).   Charities commented that it needed to tie in with tight evaluation.      

Education

Incentive Option 10: Leadership Development

 “I see a real need here. It would incentivise me no end.” – Local Community Charity.

 Funding Leadership Development to better enable senior and second tier executives in the charitable sector to lead in collaborative situations was highly ranked at 2= overall (charities 2= and foundations 5=) but whilst charities were consistently supportive of this incentive, foundations were more varied (standard deviation ranking 17/19).

Foundation Perspective:

Only one foundation felt that leadership development had no potential to incentives collaboration and this led to the lower figure for foundations overall and the high standard deviation. The large majority of foundations were very positive rating it high or very high. The importance of leadership development was noted (“in every endeavour leadership is the starter" – Private Foundation. "This is absolutely critical” – Statutory Trust. “Really important as it is critical who is leading, and how they are doing it, in a collaborative arrangement” – Private Foundation). The programme run by Leadership New Zealand and the Kaipara Community Programme run by the New Zealand Leadership Institute at the University of Auckland Business School were identified as good models that could be further developed particularly as they brought together people from multiple sectors and perspectives and used sustained development practices and workshops over an extended period. Foundations felt that we needed to develop strong collaborative leaders and were critical of heroic and charismatic leadership types "we are not looking for the heroic leader we need people who can develop excellent shared leadership” – Private Foundation. One respondent suggested that leadership development was required at the board level in charities too.

Charity Perspective:

Most charities felt that foundation support for leadership development would make a major impact on collaborative leadership (“we definitely need strong investment in leadership” – Regional Migrant Charity. "We need to create a culture where we are developing leadership” – Regional Social Services Charity.) Many felt that traditional leadership development was too individually focussed and that for this incentive to work collaborative leadership models should have precedence. An 'appreciative enquiry approach’ was recommended.

Incentive Option 11: Collaboration Promotion Organisation/Network

“We definitely need to understand and recognise collaboration more than we currently do" – Local Community Charity.

While charities ranked this incentive highly (5=/19), foundations were more sceptical about its potential ranking it 14/19 and contributing to an overall ranking of 8/19. Foundations, in particular, were divided about its potential, 

Foundation Perspective:

Whilst foundations recognised that there was gap in terms of dissemination of good practice on collaboration in New Zealand, they were divided on whether this incentive would add significant benefit. Some felt it important ("It is the missing part of the puzzle" – Gaming Trust. “Would be good if it brought in best practice from overseas and debated public policy” – Private Foundation), but others worried that it might be too esoteric (“danger that can be seen as an academic pursuit and in essence self-fulfilling" – Private Foundation. “I have a problem with academic centres interpreting information in a very rarefied atmosphere.  This needs to be more community-based.” – Private Foundation). One respondent commented that there was little academic study to support such a centre or network. Another respondent suggested that it be linked with a major leadership development and training programme to make it relevant.

Charity Perspective:

Charities in general felt that the development of such an organisation or network was a good idea (“we have experts in so many other areas - why not this?” – Regional Health Charity. “Would be a welcome addition” – Local Community Charity) although they worried about how it would be funded (“this can be expensive. It needs to be quite well resourced if it is to become a 'centre of gravity' and be successful." – Regional Health Charity. “The Charities Commission could fund it” – National Youth Charity) and that it might not be practical enough (“there is a danger of a talk fest - too academic, too disengaged” – Regional Migrant Charity. “Snappy case studies might work best” – National Health Charity.

Intermediaries

Incentive Option 12: Collaboration Brokerage

“I am instinctively suspicious of middlemen” – Regional Social Services Charity.

Although Collaboration Brokerage was the highest ranking incentive involving intermediaries it ranked lowly at 13/19 with charities particularly negative (14/19). This was the incentive where foundations were most divided. 

Foundation Perspective:

A small number of private foundations felt that Collaboration Brokerage could work well (“This shows great promise – we have already been successful when we have tried it. It is about much more than money and that is its strength” – Private Foundation. “It fosters interest in ideas and options without the risk of one organisation calling the shots” – Private Foundation. However, others were concerned that bringing another layer of administration between funders and the funded would not add to efficiency or effectiveness.

Charity Perspective:

Whilst a small number of charities felt this might be of medium potential to encourage collaboration (“Helps overcome the elements of collaborations that are scary” – National Health Charity), in general charities were sceptical about its likelihood of success ("too disconnected” – Local Community Charity. “I don't think the sector is mature or developed enough yet” – Regional Social Services Charity. “Too many middlemen might well suck money away from the cause” – National Health Charity. If it was to succeed it was agreed that it would be dependent on the calibre of the person who provide the brokerage “they need exceptional competence - clout and trust” – National Health Charity.

Incentive Option 13: Alliance Marketplace

“Blind dating won’t add much” – Private Foundation                   

The concept of using an online Alliance Marketplace to encourage collaboration was the lowest ranked incentive overall with foundations particularly negative (and consistently so).

Foundation Perspective:

Foundations felt that New Zealand was too small for this to work and charities would already know each other. They also felt such a system was too mechanical and simplistic for genuine and complex collaborative intent.

Charity Perspective:

Whilst a couple of charities thought it might be useful to find out who was doing what, most were dismissive of what they saw as mechanical and impersonal (“collaboration is about heart and it takes place face to face - it is not shopping!" - Local Community Charity).

Incentive Option 14: Network Administration Organisation (NAO)

“Anyway we can motivate the development of these central hubs the better as they do enable collaborations to work better” – Private Foundation.           

The potential of incentivising collaboration by foundations encouraging the development of NAOs was ranked very low overall (16/19) and by both foundations and charities (17/19).

Foundation Perspective:

 Whilst many foundations saw the value of the establishment of NAOs as features of good operation they did not see them as incentives and consequently ranked this option low. They felt that once a collaboration had been established they could help the partners with the establishment of an NAO and that would strengthen the partnership and its performance, although one respondent felt these structures were best when they happened organically.

Charity Perspective:

As with all intermediary incentive options most charities ranked this low although some pointed stated that they had used such arrangements themselves in their more successful collaborative engagements.

Incentive Option 15: Prequalification Procedures

“Funders hate giving away any decision-making responsibility” – Private Foundation.

As with all intermediary options, Prequalification Procedures was ranked low (17/19) with foundations particularly critical.

Foundation Perspective:

Most foundations saw this option as inappropriate for a small country and it was seen as “too elaborate for the spirit of New Zealand and the charitable sector” – Private Foundation (“this is just a gatekeeper” – Private Foundation. “These are very complex issues and it is hard to do well” – Private Foundation).

Charity Perspective:

Some charities felt that funders would like this (although our sample clearly didn’t) and they felt that it was “obvious as a 'hard' incentive” (National Health Charity). However, they felt it was “forcing collaboration for collaboration’s sake” (National Youth Charity).           

Administration and Process

Incentive Option 16: Collaborative Administration Infrastructure

“Very hard to do in reality - we are all very keen on our own stuff” – Private Foundation.

Whilst overall Collaborative Administration Infrastructure ranked poorly (15/19) it did have some strong proponents from the foundation sector although foundations overall only ranked it 9=/19. Charities ranked it 18/19 but the high variation shows one or two did feel it had some merit.

Foundation Perspective:

The foundations were on the whole consistent in their belief that building a more collaboration-friendly administration system would be a positive move. Where they disagreed was in their assessment of how difficult it would be to do (“Administratively it would be easy to change” – Gaming Trust. “Very hard to do in reality” – Statutory Trust).

Charity Perspective:

Charities on the other hand were less convinced that this had the potential to incentivise collaboration (“this might not encourage collaboration but it would certainly be very helpful” – Local Health Charity).                              

Incentive Option 17: Supporting Shared Services

 “Quite easy to do – should be a bit of a no-brainer.” – Peak Body

 Supporting Shared Services was one of the highest ranking incentives (3/19) with both foundations and charities consistently rating it positively.

Foundation Perspective:

Foundations were very positive about the concept of using shared services to encourage collaboration and the practicalities of making it happen (“there are huge cost savings, it is very effective” – Private Foundation. "Whilst it is perhaps more of a tool that an incentive, it can make a real difference” – Statutory Trust. “This approach naturally fosters collaboration” – Private Foundation). Sports House in Whangerei was cited as a good example where a large group of sports organisations had found increasing number so f ways to collaborate after being collocated in a well designed space. It was felt that it was important to develop not just the hub but also “the tangible incentives to join it” (Private Foundation).

Charity Perspective:

Charities were also enthusiastic about the benefits from the support of shared services and the way it led to collaboration leadership between likeminded non-profits (“really simple and a good driver for other areas - a quick win” – Regional Health Charity. “It can only be efficient - good idea" – Local Community Charity. “That sort of support is actually very difficult to find and important to get” – Local Community Charity. Commenting on the challenges, respondents emphasised the importance of bringing “people along with you – you can’t dictate” (National Youth Charity) and “recognising their independence and the integrity of each organisation to respond to its specific community of interest” – Local Health Charity.

Contracts and Accountability

Incentive Option 18:  Proforma Contracts

“This is an enabler rather than a driver” – Private Foundation.

The accountability incentive Proforma Contracts was the next to bottom ranked incentive overall and 19/19 for charities.

Foundation Perspective:

Like a number of the other options in the administration and accountability areas, Proforma Contracts ranked poorly with foundations as an incentive whilst being broadly appreciated as a positive feature of good collaborations.          The process of creation was seen as just as important as the contract itself but neither was seen as an instigator of collaboration in isolation.                      

Charity Perspective:

Charities ranked Proforma Contracts very lowly despite some commenting that they could provide “essential support” (Regional Social Services Charity) and prevented the “danger of reinventing the wheel” (National Health Charity).                      

Incentive Option 19: Common Reporting and Evaluation Framework

“Great idea that is unlikely to work” – Statutory Trust.

The option of developing a Common Reporting and Evaluation Framework was seen as a low ranking incentive overall (14/19) although there was a wide deviation in views (particularly within charities). 

Foundation Perspective:

As with Proforma Contracts, foundations saw the value developing a consistent reporting and evaluation framework, but thought it would be hard to action in reality (“funders are unwilling to accept reports to others outcomes” – Private Foundation). They also doubted it would qualify as an incentive to collaborate.

Charity Perspective:

Similarly, charities felt that standardisation in this area would be useful and “save a huge amount of time” (National Youth Charity) and “if realistic could be very valuable” (National Health Charity). However, they felt it did not incentivise collaboration but had “high potential to help us maintain it” (Regional Social Services Charity).                                         

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