Charity effectiveness and efficiency — Lessons from Tomorrow’s People

This article shares lessons for charities on how to go about reviewing and reforming front-line delivery models in order to become more effective and achieve better outcomes. The lessons draw on the experience of the charity Tomorrow’s People which introduced a new model in 2017 after a review lasting eight months. This led to a sharp increase in the number of disadvantaged and unemployed young people the charity reached, a big reduction in the costs of doing so, as well as better outcomes. The design of the review process was central to these achievements.

The work of Tomorrow’s People

Tomorrow’s People had a long, 30-year track record of work helping some of the most disadvantaged unemployed people in society get on their feet and into the labour market. The charity began in the corporate sector when it was founded in 1984 by the drinks company Grand Met (which became, via a merger, Diageo). This parentage imbued the charity with a passionate belief in the value of work and self-worth, and also gave it a strong focus on performance and an interest in measuring and demonstrating impact. The charity stood out relative to its peers at a time when there was less focus on impact and measurement than now. It also developed a reputation for delivery and innovation alongside an understanding of unemployment and the problems faced by the people it helped.[1]

The front-line work of Tomorrow’s People consisted of two different strands. First, it delivered government contracts helping unemployed young people and adults into work. It did this successfully across a range of regimes and contracting structures for 30 years including, latterly, payment-by-results contracts. Work covered by these contracts is not the focus of this article.

Second, the charity designed its own programmes for young people based on its breadth of experience and knowledge. This is our focus. These programmes grew when the charity became independent of Diageo in the mid-2000s. They were paid for by raising private funding from corporates and grant-making trusts and foundations. Occasionally, public sector funding, such as from local authorities, also supported these programmes.

The key programme in this second approach was called Working it Out which the charity ran in locations across England and Scotland. Working it Out helped young people who were so-called “NEET” — not in employment, education or training — and could not get into work. Most of these young people had struggled in school and had come from workless and sometimes dysfunctional families. Research, as well as the charity’s own experiences, showed they would most likely stay unemployed without tailored, sustained and sympathetic help. Tackling their underlying lack of social skills and personal development through a range of individual and team-work was vital to fixing the problem.

The majority of these young people were not being helped by mainstream services and often were not even on their radar screen. They arrived at the charity’s door through a range of routes, but the majority came via word of mouth and recommendation from other people the charity had helped. The front-line staff of Tomorrow’s People were embedded in their local communities and built strong links with statutory agencies as well as with employers to find jobs. The quality of staff, their knowledge and experience including their ability to work with both young people and employers, were crucial to the approach.[2]

Performance on the front-line

Working it Out began in 2004 and established a strong track record during the next decade. It delivered good results and was independently evaluated on more than one occasion. At the time we began to contemplate reforming the model, the most recent assessment had just been completed by economists from the Bank of England under the auspices of the charity Pro Bono Economics. The Governor of the Bank of England, Mark Carney, wrote a foreword to the economists’ report in which he said “the work Tomorrow’s People does with young people adds real economic value, and has continued to do so over an extended period and against the backdrop of significant changes in government policy as well as the economic environment.”

In their detailed report, which updated a previous assessment by FTI Consulting, the Bank economists said that the period they studied covered “a significant expansion of the [Working it Out] programme — with no dilution in its effectiveness — while costs have been controlled. This is clearly an encouraging finding that suggests the WIO programme continues to develop and respond to changes in the economic environment.” According to these economists, for every £ spent on the programme, there was an average economic benefit of £3.80 in higher taxes, lower benefit payments, reductions in the costs of crime and less pressure on health services.

Underlying these figures were hard outcomes. Just over 40% of the young people going through Working it Out got a job, a further 20% got back into education with 30% more finding a place on a training programme. This was as good as any charity in the employment field. It was particularly impressive because Tomorrow’s People tended to help young people with more challenging problems, and in need of more intensive support, than those supported by many of its peers.

Pressure for change

With such results and endorsements, there was little internal desire among management for change. The overriding question was how the charity could pay for and expand the programme. However, there was a growing dissonance between this view that Working it Out was effective and a good model, and rumblings from grant-makers that it was expensive and no longer innovative.

The cost of the programme was £3–3.5k per young person depending on location and numbers. This was higher than many new funding programmes introduced in related areas or fields. Faced with such costs, it was easy to welcome independent assessments of effectiveness but hesitate to provide funding. Such hesitation was showing up in rejected applications.

Funders’ unease was mirrored on the front-line where staff felt anxious and frustrated. Although outcomes were strong, these staff knew their budgets and felt the model was expensive. Many knew organisations whose costs were lower. They also saw the difficulties in raising money to sustain their work.

The two of us approached this from different perspectives. One of us was close to the front-line; the other was part of the senior management team. The first was a regional operations manager looking after government contracts and a range of Working it Out projects across part of the country. This involved managing staff on the front-line, which gave direct access to their thoughts and concerns, as well as exposure to budgets and costs. This was backed up by considerable personal experience of delivering youth work. The other was new in post as chief executive and saw the lack of a feedback mechanism to share and act on lessons from the programme, as well as the fundraising challenges. A background and interest in the analysis of charities and impact reinforced the sense that things might be done differently.

From these different vantage points, we both felt there was a good case for review. Neither of us was swayed by the evidence that Working it Out was effective. That is necessary for any charity, but it was by no means sufficient.

The final prompt to change was an impending cliff edge in funding. The difficulty of funding Working it Out had been temporarily masked by a large (£2 million a year) grant from a major financial institution. This represented 40% of all private funding received by the charity. It was due to come to an end in 2016 after three years. This grant had prompted a scaling up of activities and replacing it was going to be tough. In short, the organisation needed something new.

Reviewing the model

In response, we initiated a programme of review in the middle of 2016. We both knew that it was possible for a model to be effective and deliver high social returns, yet still need reform. This might be because it did not reflect the best thinking inside or outside the organisation. It might also be because resources were not being used as efficiently as it might, resulting in costs being too high.

We set up a working group, held staff workshops and brought in outside consultants who contributed in the background.[3] Workshops were held with young people in locations in England and Scotland. A huge number of feedback forms from young people were digested to gather ideas and thoughts. Importantly, the charity’s senior management did not control the review. A front-line operations manager (one of the authors of this article) oversaw and led the process, with a license to do what was right without fear or favour.

Working it Out had not been reformed for many years and although there was a single programme, practice had evolved and developed in different locations. It was not the same in Plymouth as it was in Glasgow or Southwark, for example. This was a strength — staff were able to vary delivery according to local need, social as well as business, and culture. The lack of deliberate sharing of practices, and the absence of processes for learning and development, meant there was a wealth of insights and knowledge which could be used in the review.[4]

Perhaps the single most important idea, which unlocked a host of other changes, was to vary the model according to need. All young people went through the same multi-week programme in Working it Out irrespective of their problems and challenges.[5] This approach had served well during the first decade but it was no longer ideal. Experience and data suggested the charity could and should differentiate by need. This insight and the design of a new model came directly from the cumulated knowledge and experience of Working it Out, using hard and soft data, and from staff as well as young people. The new model which resulted was decided on and “owned” by front-line staff and their immediate management.

A new delivery model

The final model had three different pathways for young people according to their individual problems and needs. Crucially, this approach would allow the charity to target resources more effectively, which held the promise of better outcomes. That prospect was enhanced further by the parallel introduction of the charity’s first bespoke management information system for youth programmes; this MI system was also developed as part of the review.

Better targeting of resources would reduce the costs of delivery. Each young person could be helped at a much lower cost. Calculations suggested the unit cost would be as low as a third of the old model. Within an ambitious strategy for the charity, this would allow many more young people to be reached and helped. It is important to stress that lower costs were not given as a goal to the review teams. We felt confident that costs would be reduced, but this had to follow as a consequence of designing the right model to best help young people. Reducing costs should not dictate any element of the review.

The whole process lasted eight months in total and the new model was introduced in April 2017, with a staggered start in different locations in England and Scotland. This was a huge undertaking. The new model meant a more complex staff structure in each location, new staff roles, including job descriptions, greater management and requirements for training. There would be tighter and more constrained work timetables, as well as significant increases in the number of people helped.

The last of these required a step increase in the number of referral agencies and routes for young people to come to Tomorrow’s People. As noted, word of mouth had long been the most common way for unemployed young people to hear about the charity’s programmes, but we were targeting a large increase in numbers. This could only be done through active “marketing” and if the figures fell short of targets, results would be worse and costs higher.[6]

Thus, the new model created and placed expectations and extra pressures on staff. It helped that they had been closely involved in the design and felt ownership over the results; changes had not been imposed on them.

The chart below shows the number of young people helped by Working it Out through its history. In the year before the new model was introduced, the number of young people fell, reflecting the ending of the £2 million a year grant and unavoidable closure of some projects.

During the first 11 months of 2017, after the introduction of the new model, 1,553 young people were helped. The previous highest figure had been 965 in 2014. Such a dramatic change is a direct consequence of the new model. There was no increase in the number of locations where Tomorrow’s People worked. The number was, in fact, lower than had been the case for many previous years.

The costs of reaching these young people were much lower. The unit cost was £1,205 during 2017/18, down from a historic average of £3,326. (These figures include all allocated overheads.) Therefore, the total cost of helping 1,553 young people was considerably below the cost of helping 965.

As hoped, outcomes were also better. If one considers employment outcomes alone, 41% of young people helped in Working it Out got a job. The figure was 56% for the first period of the new model. Further improvements in outcomes would have been achieved over time.

The combination of more young people, lower costs and better outcomes is compelling. It followed directly from the new delivery model and the way it was designed and introduced. It is a tribute to the staff of Tomorrow’s People that they engaged with, embraced and achieved this.

Efficiency and effectiveness

Pressure on charities to demonstrate impact has increased in recent years, hence the growth in the use of measures such as social return on investment (SROI). A measure of impact is an indicator of effectiveness, but it can be a blunt instrument to understand an organisation. It gives little information about whether a charity uses its resources efficiently.

Effectiveness and efficiency are not the same. Effectiveness is not a guarantee of efficiency — an organisation can be effective defined in terms of achieving outcomes, but not as efficient as it could be. Being inefficient means more charitable impact can be produced with the same resources.

Discussions about efficiency in charities are often restricted to the question of overheads and whether these are too high or not. As well as a misleading measure in itself, this provides no information about the efficiency of front-line delivery.

Comparisons between charities based on outcomes are of some use for assessing how an organisation uses resources. But they are difficult to do accurately and can easily produce misleading conclusions. As well as benchmarking outcomes with others, charities need to regularly review their own ways of working.

Without the reforms to its core delivery model, the new strategy of Tomorrow’s People would not have made sense. This link between front-line and strategy is important. Front-line working practices and models should be part of a strategy review in any charity. It makes sense to consider them alongside fundamental questions about the organisation.

Recommendations

The process of review and reform followed by Tomorrow’s People carries lessons for others. Obviously, there is no guarantee that a charity reviewing its delivery models can achieve the same scale of change and improvement at Tomorrow’s People. The situation there was unique to that charity, reflecting a pent-up demand and potential for change. Nevertheless, it is often possible to make significant improvements, particularly to models which have remained unchanged for some time.

We offer the following advice to charity leaders thinking about front-line delivery in their organisations.

• Do not mistake effectiveness for efficiency. Good outcomes do not mean you are using resources as well as you might and should not be taken as a reason to reject change. Efficiency is not a dirty word — it is about maximising charitable impact and should be part of the lexicon of charities when discussing front-line services.

• Review of front-line delivery should be part of strategy development. A core part of a strategy process should be an assessment of both the effectiveness and efficiency of existing models. That should include providing the resources and time to review and change them.

• Listen to and empower front-line staff. If front-line staff express a desire and appetite for change as well as a willingness to learn, review and reform are probably overdue and can be done without undue disruption. Engaging and empowering front-line staff makes it more likely that changes will be accepted. Also, it gives an organisation a greater chance of radical and material change grounded in knowledge and practice on the ground.

• Listen to funders. There is understandable frustration among many charities that funders seek new and innovative ideas and approaches but are reluctant to support existing models that work well. Often though, funders’ instincts about a model provide valuable indications about the need for review and, possibly, reform.

• Appoint a management lead. A single person from within management should lead the process. Ideally, this person should have intimate knowledge of front-line delivery but, also, not be tied too closely to the existing models. They do not necessarily have to be from the senior management team and should report directly to the chief executive.

• Do not be afraid to disrupt management structures. Reviewing and reforming practices involves questioning and challenging existing ways of working. That can include a challenge to lines of authority and power. This can produce powerful results though and, in the process, highlight valuable and key staff for the future.

Martin Brookes & Robbie Smyth

Martin Brookes is Director of Brookes Impact Partnership and was Chief Executive of Tomorrow’s People from 2015–2018.
Robbie Smyth is an independent consultant and led the work reviewing Tomorrow’s People’s delivery model, becoming Director of Services at the charity in 2017. He is an associate of Brookes Impact Partnership.

If you want to discuss this article, including how we might help your organisation review its delivery models and strategy, get in touch via martin@brookesimpact.com.

[1] The charity went into administration in 2018 because of problems with short-term funding. This was unconnected with the work discussed here.

[2] A smaller version of Working it Out called Works! operated in rural communities.

[3] Aside from consultants to help with the review, we also were helped by the management consulting firm Oliver Wyman and its social impact programme to assess and try to influence the attitude of the management team to change.

[4] Comparisons across different locations were done as part of regular performance management, but they looked at outcomes only and not at practice.

[5] The programme was ten weeks in England but 16 in Scotland. This distinction itself was peculiar and could only be justified in part by the needs of young people in the two nations. It was introduced so as to satisfy the demands from the £2m a year grant to reach more young people. Before this grant, the programme was 16 weeks also in England.

[6] We will write further articles giving more details about the delivery model and the diagnostic tool.