BD Giving Notes #29 – ‘The trouble with funding (Part 2)’

In the education system, students are able to apply to dozens of colleges and universities using one application form. Could a similar system help small UK charities unlock multiple funding opportunities?

This is the second of a three-part series about the impact of the cost of living crisis on the voluntary and community sector in more deprived areas of England. It focuses on the role funding agencies can play to protect small charities and the vital services they provide to local communities from disappearing. 

As a funder and a small charity that relies on fundraising, BD Giving is well-placed to feel the resource intensity of grant applications.

In part one of this blog series, we highlighted the Giving Evidence report published over the summer. In this report, the authors found that the cost of applying for grants is high for charities, especially small ones. Overall, the UK charitable sector is estimated to spend at least £900m every year applying to foundations. They estimate that applying for grants costs the sector at least 5.6% of the amount raised and at least 17.5% for small charities. 

This is serious for the sector because 80% of UK charities are considered small. 

In Barking and Dagenham, London’s most deprived borough according to the Index for Multiple Deprivation, there are comparatively more small charities than in other boroughs. And despite facing higher needs, our experience tells us that these charities receive much less money than other areas, even those with comparative levels of deprivation. 

In short, instead of being progressive, with most money going where the bigger needs are, the UK funding landscape is at risk of being regressive. This is a recurring theme we noticed as seen recently in the London Community Response Fund data. For example, it shows that despite the fact that Barking and Dagenham has the youngest population of any London borough and the highest incidents of domestic violence, it received far less in funding than this need will indicate.

The price of fundraising

The reality is that small charities have to decide whether they put their resources towards applying for funding or supporting the community. When it’s one or the other, where do you think resources most often end up?

In the education system, students are able to apply to dozens of colleges and universities using one application form. Could a similar system help small UK charities unlock multiple funding opportunities? All of the basic details for a charity are available on the likes of Charities Commission and Companies House websites. So, why do we spend hours inputting the same data into applications?

How could we make funding fairer?

How can we make this a fairer system; one where deprived areas are systematically prioritised? One where the needs of the groups and organisations providing support in these deprived areas are placed above their ability to write a clever application?

First, every funder should be aware that co-designing grants with beneficiaries can be hugely beneficial to small and ethnically diverse-led charities, and really increases their ability to attract the funding they need to support their work. It moves the power to shape communities away from funders, and into the hands of the people who know it more closely. When funders say “jump”, it can’t be the case that they only fund those who already know how to write everything about jumping. Instead, they need to use existing data to find out where jumping isn’t happening and, with deep pockets and a willingness to understand, approach organisations in those areas. And when that happens, they need to be prepared to fund something that might not be anything like jumping at all! Maybe there’s already a ton of jumping going on, it just wasn’t the right type of jumping or none of the jumpers knew how to tell their story in a way that would be heard.

We also support the Giving Evidence report’s suggestion that funders could “adopt a service mindset” meaning regular collaboration with charities to ensure a mutually beneficial funding process. This is a proactive approach that will help instil the values funders say they want to see across civil society, which must include having their own values questioned as well. As our good friend Joe Doran at Lankelly Chase Foundation said recently, funders need “to stop seeing the little pot of gold they are sitting on as their money and start thinking about it as the system’s money in the wrong place”.

Finally, perhaps we should all be asking funders about their evaluation process in the same way charities are asked in applications for funding. We can’t help but wonder what would happen if charities took to writing Google Reviews on their experience with funders.

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