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Wilkinson Coutts & Matthews Integrity Training

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WILKINSON COUTTS / MATTHEWS INTEGRITY HUB: an up-to-the-minute information mix designed to help you with your lifework and career development in the asset integrity, inspection and NDE industries.

Matthew Petroleum Notes


 The three principles of free money

We would all like access to a bit of FREE MONEY to help out with our careers. Here at Matthews Integrity Hub: HEAD OFFICE we’ve looked at this business of grants, funding, awards and whatnot in the integrity industry. After a bit of study and lot of internal discussion we think we’ve got it sorted and can pass on the advice to you to take advantage of as best you can. If you have other experiences or ideas about it, that’s fine; we’d be pleased to hear from you about them. Send them over and we’ll take a look.

We think it’s all governed by the three principles of free money. We’ll call them P1, P2 and P3. Like many sets of principles, these three are completely consistent and interlocked together. You couldn’t get a knife blade between them.

Principles of Free money

Principle P1: The Prime Stakeholder Principle

This says that the main beneficiary of any grant or issue of free money, the main beneficiary is always the donor, rather than the recipient. Both are stakeholders in the transaction, and the recipient receives the free money, but the glittering prize always goes to the donor. One reason for this is because of the existence of principle P2.

Principle P2: The Prestige Principle

Most organizations are scaredy-cat things; in permanent fear of the environment in which they live. Every time they look upwards and outwards they notice their environment has changed, which frightens them as they are not sure what to do. One easy way they can try to control their dependency upon the environment however is by acquiring prestige.

Prestige is a soft and easy purchase target. Because it is based upon extrinsic, non-essential characteristics of the organization, its pursuit doesn’t involve much awkward high-level discussion between all the competing factions of the company. It’s an easy path to consensus. People like those.

Giving grants, awards and suchlike is one of the cheapest ways of buying prestige. That’s why they do it.

Principle P3: The Warm Glow principle

You don’t have to meet many people involved in charitable aid to quickly conclude that the act of giving provides a warm glow to the giver. This is the opposite of the ‘perfect altruism’ principle which says that the objective of the giver is to provide the best warm glow to the receiver even if that is at a cost to themselves. Nevertheless, we think that is how it works and that P3 gives a rationale for the continuation of grant funding from organisations. It also helps encourage the people working for the donor organisation to carry out those activities rather than complaining about it, which keeps their employer happy.

Meet the obstacles: Additionality and Deadweight

Left unfettered, the three principles of free money would result in financial meltdown of any organisation that gave out free money to buy prestige. To stop this, the size of grants and awards have to be kept microscopically small compared to any donor’s financial base. This also makes economic sense because in the world of prestige-purchasing you can buy almost as much prestige for £5000 as you can for £500,000. Prestige is a soft asset remember, like respect or goodwill, so it doesn’t follow the normal rules of value.

The easiest obstacle to put in the way of rampant prestige-purchasing is the requirement for Additionality. This says that in order to get some free money for their pot, the recipient must put a lot of their own in the pot first. It helps keep out dreamers and chancers and works so well that most funding organisations use it (it is one of the main tenets of EU and UK industry funding). Without getting too complicated it is also there to restrict what, in funding circles, is referred to as deadweight; losses incurred because of the inefficient allocation of free money. For anyone involved in grant funding, the delicate balance between additionality and deadweight is an issue that is always on the daily agenda.

The three principles of free money form the rules that govern the business of grant and award funding in any industry, the integrity business being no exception. There’s nothing negative or conspiratorial about them, you just have to understand they are behind all funding schemes and the effect they have on how grant applications work.

If you are happy with these principles existing in background then please move on and read about our experiences in ; Our search for funding in the integrity industry. It cost us a lot of time and money to find out what we did.  

Alternatively, if you have had enough of our take on the economic and organisational workings of the industry then you may prefer the following links on the subject of free money.

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