Research and Analytics

general

CIPFA External Funding Statistics


June 2005
Introduction

Non-mainstream funding, external funding, grant funding - whatever you call it - are all valuable sources of income that can be used to help ease the pressure on valuable local authority resources. For the purposes of this survey, external funding is defined as discretionary money not accounted for within the local government finance settlement. External funding is distributed by various UK and EU agencies on a business case or competitive basis requiring an application.
  • Is your authority optimising successful applications to sources of external funding?
  • Is your authority optimising the successful delivery of grant received?

These are the two key questions that every authority should be able to answer and prove. Whilst there are groupings of local authorities meeting regularly to share and compare practice and experience, there are by no means comprehensive national or regional networks in place.

As a result, there is currently no national information available for local authorities in relation to external funding.

This new survey was developed in partnership with a number of local authorities in order to help fill the gap and provide the evidence. It is hoped that authorities can start to compare their external funding operations with others who may be more successful in the bidding process and be better informed on how to optimise their external funding.

In addition to those who took part in this survey, comments were received from several local authorities who were unable to respond or only partially respond stating that the survey has generated significant interest. This could provide a much needed impetus to encourage local authorities to develop effective external funding performance management frameworks to ensure that this data is recorded in future years.

This publication provides background information on local authority external funding operations, how many bids they have submitted, whether the bids were successful and the service areas in which they were applicable. It also includes details on bids operated in partnership.

Please note that the totals shown throughout the publication are for responding authorities only and have not been 'grossed' to account for non-responding or incomplete data returns. Readers should therefore be careful if attempting to use the results to draw conclusions about class of authority, regions or national pictures.

The Definition

External funding is defined as discretionary money not accounted for within the Formula Spending Share (FSS), or equivalent, distributed by various UK and EU agencies on a business case and/or competitive basis requiring an application.

Background Information

The number of officers with responsibility for external funding in local authorities ranges from a high of 37.7 in Manchester down to 6 authorities who have no officers with responsibility for external funding. The average number of officers is 6.0.

9 authorities were successful with all their bids, whilst only one was unsuccessful on all occasions. The average rate for successful bids was 89%.

Figure 1 represents success rate against the number of local authority officers (FTE) with responsibility for external funding. Success rate is defined as the percentage of successful grant bids from total grant bids submitted. Overall, the chart shows no strong relationship between the two variables. However, those few authorities with a large number of officers tend to experience a high success rate. Where there is a low success rate (below 10%), authorities usually have a low number of officers. The majority of the data is clustered in the top left hand area of the chart illustrating a high success rate despite authorities having a lower number of officers. This indicates that increasing the number of officers will not necessarily improve the likelihood of success in the bidding process.

91% of responding authorities have officers with responsibility for external funding whilst 9% do not. Those authorities who were able to respond are more likely to have external funding officers and to take a co-ordinated approach to the management of external funding therefore this statistic may inflate the true position. Of those 91% of authorities, approximately 61% received above the median value of external funding awarded in 2003/04. Of the 9% of responding authorities who do not have any officers with responsibility for external funding, only one authority received above the median value of external funding awarded in 2003/04.

Bid success rate and number of officers with responsibility for external funding
The number of external funding applications co-ordinated centrally on average is 29. Figure 2 shows success rate against the number of external funding applications co-ordinated centrally. The data in the chart shows little relationship between the two variables. There are two authorities with a large number of external funding applications co-ordinated centrally (Birmingham - 125, Wigan - 120) which have been excluded from Figure 2. Authorities with a large number of external funding applications co-ordinated centrally do not necessarily experience a high success rate.The average cost to the authority of providing any external funding unit per full time officer is 31,193.

42% of responding authorities have an external funding co-ordination group and 58% do not have an external funding co-ordination group. Of those authorities that do have an external funding co-ordination group, the average success rate is 82%. Of those that do not have an external funding co-ordination group, the average success rate is 88%. The median value of external funding awarded for those that do not have an external funding co-ordination group is 1,488,000. For those that do have an external funding co-ordination group, the median value of external funding awarded is much higher at 7,415,000. Therefore, having an external funding co-ordination group will not necessarily increase the success rate but the responses suggest that it will increase the amount of external funding awarded to the authority.

Bid success rate and number of external funding applications co-ordinated centrally
Figures 3 to 7 show the percentage of respondents that answered yes or no to specific questions in the survey. Broadly speaking, just over 60% of respondents do not have an internal database of funding sources, a co-ordinated bid tracking mechanism or a corporate External Funding Strategy. 67% of responding Council's financial regulations do not include a clause to ensure that all bids must be approved by the Chief Financial Officer. 67% of responding authorities also stated that the cost of any external funding unit is not recharged to services.

Does your authority have an internal database of funding sources?
Does your authority have a co-ordinated bid tracking mechanism?
Does your authority have a corporate External Funding Strategy?
Do your Council's financial regulations include a clause to ensure that all bids must be approved by a Chief Financial Officer?
Are the costs of any external funding unit recharged to services?
Two out of the eighty responding authorities answered yes to all five of the questions indicating a high standard of external funding management. Although good management does not guarantee results as their average success rate was only 43%. Of the responding authorities that answered yes to four out of five of the questions shown above, they have an average success rate of 81%. Of the responding authorities that answered yes to three out of the five questions above, they have a median success rate of 82%. This shows that despite having fewer systems in place to improve knowledge of external funding, the success rate appears to be an independent factor.

This is further exemplified by those authorities that answered yes to two or fewer of the questions where the median success rate is 88%. This implies that having more systems in place to assist with external funding will not necessarily increase your success rate. However, please note that due to a low response rate, many of those without external funding units in place were under represented in the sample. Those who do not have external funding units found it difficult to collate all the information required for the return and therefore those with low success rates were not fully represented. It should also be noted that the external funding management systems are not only in place to optimise successful applications but also for checks and balances, such as ensuring bids are only submitted if they are aligned to corporate priorities.

Bidding Process 2003-04

Table 1 shows the decile breakdown for the number of bids submitted, the number of successful bids and the success rate. 10 % of responding authorities submitted 4 bids or less. Half of responding authorities submitted 24 bids or less. The average success rate (percentage of successful bids) is 89%. The average number of bids submitted is 36, the average number of successful bids is 30.

Of those authorities that submitted 24 bids or more, the median success rate is 84%. There was one authority that had a 0% success rate. Of those authorities who submitted 24 bids and less the median success rate is 86%. There were three authorities that had a 0% success rate. Of those authorities that submitted 24 bids or more, the median total value of external funding awarded to them is 14,323,500. Of those authorities that submitted less than 24 bids, they were awarded a median value of 1,097,000. This shows that the higher the number of bids you submit, the greater the amount of external funding you receive, although there does not appear to be any effect on the success rate. For all responding authorities the total estimated cost of the bidding process is 5,400,000. The average estimated total cost of the bidding process is 135,000 per authority.

Number of bids submitted and number of successful bids
Table 2 highlights some of the costs associated with the bidding process. The median estimated total cost of the bidding process is 75,000. 10% of respondents estimate their total cost of bidding at 5,000 or less. 50% of respondents estimated their total cost of bidding process at 75,000 or less. The median estimated cost per bid is 2,305. The median payment made to external consultants is 15,000.

The average payment made to consultants (where one was made) per bid is 22,542.* The survey shows that approximately 40% of respondents have used external consultants to assist with the bidding process. Of the 40% who used external consultants, the median success rate was 88%. Of those who did not use external consultants the average success rate was 79%. This would suggest that using external consultants increases the success rate for an authority.

Estimated costs of the bidding process and payments made to external consultants
In summary, has it been proven that authorities are optimising successful applications to sources of external funding? A large number of officers (FTE) with responsibility for external funding do not ensure that an authority will be rewarded with a high success rate when bidding. 91% of responding authorities have officers with responsibility for external funding which is an encouraging figure.

Despite many authorities having external funding management systems in place this alone does not ensure them high success rates in terms of grant bids won.

Partnerships

Figure 8 shows the percentage breakdown of bids that were operated in partnership with other sectors. The majority of bids (32%) were operated in partnership with the third sector. These are voluntary, not for profit and community organisations. Other local authorities represent 29% of partnership bids. 29% of bids were operated in partnership with other public bodies. 10% of bids were operated in partnership with private sector companies. An area of further interest may be to investigate the success of the bids within the different sectors.

Breakdown of partnership bids
Table 3 summarises total bids and partnership bids. It shows that during 2003/04 a total of 1,321 partnership bids were submitted. 978 of these bids were successful. Therefore approximately 74% of partnership bids submitted were successful. This is over 10% lower than the total figure for all bids submitted which has a success rate of approximately 89%. The difference between the average and median can be explained by the large range in the number of bids submitted which is increasing the value for the average. This can also be seen in the number of successful bids.

Total number of bids submitted, total number of successful bids and success rate
Table 4 shows the value of grant bids applied for and the value of grant bids actually won during 2003/04. The lower quartile for value of grant bids applied for is 993,000. The lower quartile for value of grant bids actually won is 559,000. The upper quartile for grant bids applied for is 237,454,000 and for grant bids actually won the value is 230,955,000.

Value of grant bids applied for and actually won during 2003/04
Delivery

Figure 9 shows the value of external funding awarded and the amount of money actually spent during 2003/04. Please note that Manchester and Tameside have been excluded as the total value of external funding awarded to them is much higher than the rest of the authorities, and would skew the results of the scatter plot. Broadly speaking, figure 9 shows that authorities are spending all of the external funding awarded to them, only a handful of authorities are saving some of the money awarded to them.

Those authorities spending 100% of the external funding awarded to them, had an average 78% success rate. Those authorities spending less than 50% of the external funding awarded to them had an average success rate of 77%. The average value of external funding per bid is 717,304. Those authorities that were awarded less than this had an average success rate of 83%. Those that received more than 717,304 per bid had an average success rate of 80%.

Total value of external funding awarded and amount of money actually spent
Service Areas

Table 4 shows the value of grant bids applied for and the value of grant bids actually won during 2003/04. The lower quartile for value of grant bids applied for is 993,000. The lower quartile for value of grant bids actually won is 559,000. The upper quartile for grant bids applied for is 237,454,000 and for grant bids actually won the value is 230,955,000.

Value of grant bids applied for and actually won during 2003/04
Compliance

Table 5 shows external audit costs in 2002/03 and 2003/04. It shows a 40.6% rise in external audit costs and a 4% rise in the average value of external audit costs.

External Audit Costs
Only 3 authorities had grants suspended, withheld or removed during 2003/04. For those authorities the total amount of grants suspended, withheld or removed was 323,000.


June 2005

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