The distribution of grants is an effective instrument for improving and steering economic, social and health outcomes in the UK.
And with the economic challenges being posed by the Covid-19 pandemic, it’s critical that the billions of pounds made available as grants get to the right people and the right organisations, and are spent in the right way.
In this article, Markus J Becker, Digital Growth Director at Capita, examines some of the key challenges for distributing government grants and explores how digital transformation can improve schemes’ effectiveness to boost the economy and create better outcomes for government, businesses and citizens.
Grants are a critical weapon in the Government’s arsenal for doing good, particularly in periods of economic distress such as the Covid-19 pandemic. When they’re used correctly, they funnel money to distinct causes and people, stimulating organisations, creating better outcomes and making society healthier.
Citizens can apply for lots of different grants, from help with education or childcare to money to start a business or to get through a difficult time. And the Government has introduced even more targeted schemes to support people as they try to get through the economic recession caused by the pandemic. In fact, our own desk research has revealed that the UK Government disburses more than £100bn a year in subsidies, grants and grant-related funded schemes.
As the Government turns its focus to re-energising the economy, it’s crucial that citizens get the financial support they need as quickly as possible. For each grant disbursed, scheme managers need to ask: how do we get public funds into the right hands?
At Capita, we believe that it starts with making it as easy as possible for people in need to apply for funds. Grant application platforms should be user-friendly and mobile-first. Statista reports that 86% of the UK population has access to a mobile phone - a figure that’s set to increase to 89% in 2024.
To achieve this level of ease, there’s work to be done. While most grants can be awarded using repeatable, rules-based, transactional processes, government grants are mainly bespoke and their administration can often cost more than 10% of a fund’s value.
Grant makers are under pressure. They have to show that their funds have a positive impact and aren’t being misused. They have an ethical responsibility to remove barriers to accessing funding and to create application processes that prioritise vulnerable people’s needs.
Key challenges for government grant disbursements
While the vision and intention may be there, government schemes face several legacy challenges, including:
- Lack of transparency of scheme performance and errors. The TRL Insight report on Fragmented Funding says: “There is no strategic overview of council funding and little co-ordination between programmes, particularly where they span departments”
- Lack of accessibility due to obscure rules or lack of awareness of their existence
- Frustratingly poor user experience and accessibility for online applications. Applicants are used to digital experiences in retail, where the process is seamless and well communicated, so they often abandon their application when they come up against obstacles or barriers
- Inefficient processes, made worse by the bureaucracy of compliance and auditing
- Preventing fraud. The National Audit Office estimates that 5% to 10% of grants are fraudulently claimed, while HMRC says that up to £258m in grants for the self-employed could have been fraudulent or paid in error
- Lack of data insights. Scheme evaluations are conducted post-event and the insight gleaned can’t be used to influence the scheme anymore. Collecting data points during the scheme’s life allows for adjustments to optimise its impact in real time.
- Large administrative burden caused by manual processes and the time it takes to set up a scheme
- Prohibitive operating costs
- Building confidence that grants are fairly allocated and used for their intended purpose.
Challenges for applicants
At the heart of each grant scheme is the intention to create better outcomes for people who need extra financial support. Those people are the schemes’ customers, and deserve to have customer experiences that are intuitive, simple and transparent. But many schemes make it difficult for them to apply for funds or to even find them in the first place.
Consider an online retailer’s digital experience. The retailer communicates with its customers all along the purchasing journey, keeping them up to date on key milestones such as when their purchase has gone through, when their order has been received, when their item has been packed, and when it has been shipped. This gives them peace of mind and an ongoing view of the process.
Now consider the owner of a small business who applies for a grant. The application system can’t communicate with them, update them on their application’s progress or tell them when they’ll receive the funds that they’ve applied for. As a result, they abandon their application and their business suffers, at a time when help was actually on the way. The design of this service needs to change.
“Clarity and speed are of the essence. Many of the companies that have been unable to use existing government support schemes are already on borrowed time – and will need these grants paid out swiftly if they are to survive”. Dr Adam Marshall, Director General, British Chamber of Commerce (May 2020)
Government guidance and best-practice processes for managing grants
The UK Government has laid out a best-practice guidance, captured in 10 practices that support the grant lifecycle.
The intentions are good and the principles for good grant management are there, but many of these best practices could be improved through digital transformation creating real benefits for both applicants and grant makers.
Approvals and data capture can be streamlined through Artificial Intelligence (AI), as would risk controls and assurance and performance management and monitoring. In the socially distanced Covid-19 landscape, training could also be delivered and measured effectively online.
Aligned with the Governments Functional Standards, we have envisioned the seven crucial steps for delivering successful grant schemes. Taking them creates better compliance, better user / customer experience and better anti-fraud capabilities.
How grants can be disbursed more effectively
Every moment counts when you’re awarding a grant. With today’s unprecedented challenges, it’s crucial that schemes get financial support to the right people and organisations as quickly as possible. There are great opportunities to use digital and data technology to make schemes more efficient and effective (much like the fintech industry does).
Using digital technologies helps grant makers to:
- Set up new grants in a matter of hours with a reusable set of tools and standards
- Adjust live schemes while keeping the integrity of each scheme variation intact
- Track performance of the scheme or its administration in real time
- Integrate multiple data sources to minimise manual assessment of applications
- Save administrative time and cost when designing, activating and managing grants
- Reduce intensity and cost to maintain
- Reduce data entry errors with automation and validation
- Make scheme-design decisions based on data, understanding what has worked well or not and how to improve for the future
- Reduce security risks and use data analysis and AI to identify fraudulent activity.
Applicants also benefit significantly from digitally transformed grants:
- Vastly improved customer experience
- Early eligibility checker to rapidly advise on chances of qualifying for a grant to avoid wasted time and effort
- Auto-completion of data, where possible, to avoid errors
- Regular, automatic notifications about application status and estimated completion date
- Ability to improve an application by adding further documentation post-submission
- Ability to direct-scan and upload documents to prove expenses for fast payment
- Reassurance that funds are going to the right people and being used for their intended purpose.
By reimagining the customer experience, using a digital platform and services with optimised processes, funders can administer grants with confidence and gain new data-led insight into their schemes’ outcomes:
- Continuously evaluating the sources of and uses for data
- Allowing applicants to self-assess their eligibility, increasing schemes’ quality, performance and success
- Minimising costs and making grants go further
- Using intelligent automation to assure process quality and compliance, for example fraud prevention. Background checks can be put in place for each grant to ensure that applications are genuine
- Using machine learning and behavioural analytics to support grant scheme managers and strengthen their decision-making with grant-specific insights
- Giving grant scheme managers confidence that grants are being used for their intended purpose.
- Reporting on its performance and achievements through an easily-accessible dashboard
- Delivering data that enables grant scheme managers to create better schemes
- Creating smooth customer experiences, so that applying for a grant has the same level of communication and ease-of-use as online shopping.
Conclusion and recommendations for best-practice grants disbursing
For the next few months, or even years, the UK will be in a phase of economic recovery. The Spending Review 2020 predicted that the economy won't reach it's pre-Covid-19 level until the end of 2022. In times like these, the first priority is survival and avoiding further economic decline. It’s the Government’s ethical responsibility to help its citizens by providing education, security and a favourable business environment and to use the public purse to do so. When the Government disburses benefits, it is broadly spread and cannot reach specific causes. With grants, however, it is possible to be more targeted and make a significant impact on certain sectors or individuals.
Now, more than ever, it’s important that this process is further refined, using the latest technologies to help to select, roll out, optimise and measure grant schemes. If grants were transformed by technology, their impact would be enormous.