The terms blending and braiding are used frequently, often together, and generally with little definition. However, they refer to two very different approaches to fiscal coordination. Rather than lump them together, let’s pull them apart and identify the settings where each is most useful. Next week, we’ll explore some tips on how to develop your blending and braiding models.
Blending funding involves co-mingling the funds into one “pot” where case managers can draw down service dollars, personnel expenses can be paid, or other program needs can be met.
In order words, blending is a lot like a family’s bank account. Each month, my husband and I deposit our paychecks into one bank account. When we go to write a check for the mortgage, we can’t tell whether his paycheck or my paycheck paid for the mortgage.
So, if you can’t tell which funding stream’s dollars paid for a given expense, when can you do this type of funding?
- When all of the services/expenses that are part of your program are allowable under all of your funding streams.
- When you are able to track the eligibility of all of your clients, to make sure each funding stream has a sufficient number of eligible clients being served.
Braided funding involves multiple funding streams utilized to pay for all of the services needed by a given population, with careful accounting of how every dollar from each funding stream is spent.
To simplify this concept, let’s use the visual of a braid. If each funding stream is one rope in your braid, you initially have separate ropes. In order to meet the needs of your client and pay for a variety of services, you bring those ropes of funding together. However, your funders aren’t interested in paying for all of the services your client needs, so when you are done providing services, you pull those funding ropes apart and report back to your clients in the services each funding stream independently paid for.
Complicated, isn’t it? Unfortunately, this is the approach we usually have to use. Many of our funding streams are only permitted to cover specific services or may have time limits on the length of services. By bringing multiple funding streams together, we can be more comprehensive in the services we provide, but we also need to be careful in how we track those services, so we can report back to our funders.
Which One Should You Use
A few signs that you need to use a braided funding model include:
- One or more of your funding streams cannot pay for one or more of the services you provide. For example, if your services include screening for health issues and one of your funding streams does not allow anything related to primary healthcare, you may need to braid. Or, if your services include stipends for participation and one of your funding streams disallows any direct financial payment to client, you may need to use a braided model.
- Tip 2: Using contracted federal funds that did NOT go through a grant process? Make sure you are designated a “vendor” – this decreases the complexity of the auditing requirements for some of the more complicated funding streams.
One or more of your funding streams requires detailed accounting of the number of clients who received services paid for by that funding stream AND the services they received. This has to be directly tied to the reimbursement request. For example, you have to enter the client and their services into a database developed by the funder, which generates the payment amount.
- One or more of your funding streams has frequent and in-depth audits, where auditors want to see how each dollar was spent, separate from all other programs and funding streams.
A few signs that you can use a blended funding model (less paperwork!):
- You are largely using funding streams that come as lump sums, such as foundation grants, and have discussed your plan to blend funding with your funders (or included it in your grant proposal).
- Tip 3: Using foundation funding? Most foundations allow their funds to be blended, but don’t forget to share your model with them and make sure it meets their needs!
All of your funding streams are appropriate for all of your expenses. For example, any funding stream you are using could pay for your curriculum expenses, stipends, and food for a youth leadership training seminar.
- Your funders are interested in seeing the number of clients eligible for their funding who were served, the outcomes of those clients, and your overall program budget. They are less interested in seeing exactly how many services their funding paid for, separate from all other funding.
- You have open and frequent communication with your funder and can share your plan for how you will blend, get feedback, and move forward as partners.
Regardless of which model you use, talk to your funders and make sure they are comfortable with your choices, make sure you understand their contracting and auditing requirements, and be ready to solve problems together!
Reminder: Blending and Braiding are Just a Means to an End
One of the big downsides to the complexity of public/private funding models is how easily the funding can take over your mission. The last thing we want to do as we work on blending and braiding funding is make decisions about programs, services, and clients based on the funding alone. Funding is just a means to an end! Ultimately, we want to make a difference with the funding, not just spend it. Open communication with your funder is important because at the end of the day, even if they want to see the evidence that the money was spent appropriately, they chiefly want to know it made a difference.
For more information, visit Spark Policy Institute’s Blending & Braiding resources at: http://sparkpolicy.com/fiscalsolutions.htm.