This month, the UK’s largest community foundation (Tyne & Wear and Northumberland’s) released the latest report in the 10-year Third Sector Trends research programme.

The report, ‘Strength of Weak Ties’, led by Professor Chapman (Durham University), looks at the work of 25 national and regional charitable trusts and foundations giving £50 million per year in North East England. The main objective of the report is to assess whether foundations should work together more closely to maximise benefit.

This report is particularly interesting in the way it is structured around a critical appraisal of four ‘popular narratives’ about what is happening in the funding environment:

1. ‘The demand for grants is insatiable.’

2. ‘We can’t get core funding.’

3. ‘It’s all about impact assessment.’

4. ‘They don’t give many grants around here.’

1. ‘The demand for grants is insatiable.’

It certainly resonates with our experience that there is huge demand and competition for grant funding and this will come as no surprise to any fundraiser or charity leader. The report found that most foundations attempt to manage demand by focussing on specific areas of benefit and stipulating what kinds of grants are available.

Our experience at KEDA is that while this is true for the largest 1% of foundations in the UK, it is rarely true of the majority of foundations who offer little to no guidance on the detail of their focus or decision-making process. It is still common for a foundation granting millions annually to describe their focus in broad terms such as ‘health, education and social welfare’ (the vaguest of all categories) and their process as ‘apply in writing’.

One foundation talked about being more ‘needs-led’ and ‘not doing the “icing on the cake” these days’, suggesting that part of the criteria applied is a subjective view of what charity services are more needed or have more urgency.

2. ‘We can’t get core funding’

Grants for core funding (unrestricted) have been debated for as long as I can remember. While there have been positive developments on this topic from funders including Lloyds Bank Foundation (probably the most vocal supporter of core funding), Tudor Trust, Garfield Weston Foundation and Esmée Fairbairn Foundation, securing core funding is still a challenge for charities. Despite the positive actions of a small number of large funders and numerous reports on the topic from the likes of the Institute for Voluntary Action Research, the pace of change has been slow and for many foundations non-existent. Many funders don’t offer core funding grants and unfortunately many are still refusing to even cover ‘indirect’ costs such as management time and overheads, without which vital projects could not run.

In the Strength of Weak Ties, the view of foundations on this topic once again comes down to trust. While a very small number of funders have fully embraced an approach of trust based philanthropy, many who do offer core funding still have concerns about whether this is the right decision, voicing concerns that their long-term commitment of unrestricted funds could lead a charity to become ‘too comfortable’ with the arrangement and that this may result in ‘complacence’.

3. ‘It’s all about impact assessment’

As with core funding, the debate around how charities demonstrate the difference they make and the pros and cons of various impact measurement models has been kicked around for years. It is interesting that this research finds that most foundations involved in the study made little use of formal approaches to impact assessment. They tended to argue that the work they funded was so complicated that detailed scrutiny would be unlikely to yield convincing evidence, which concurs with my previous article on the complexity of impact.

Many foundations argued that it was more important to focus attention on the quality of relationship they had developed with their grantees. As one participant argued:

‘Actually, I’ve got no interest in measuring our impact. What I’m interested in is what relationship do we have with those charities, and what relationships they have with communities, other charities and the public sector. Then we can ask ourselves what we are sustaining. And expecting that sometimes it will fail, and not beating ourselves up about that. I don’t think it protects you from failure by having really strict criteria on impact and I think that a lot of the stuff that is generated is just put in a drawer and never read.’

The research found that one foundation, which had been heavily involved in promoting the use of complex approaches to impact assessment, was seriously rethinking its strategy. This shift in policy was led by an acceptance that the attribution of impact was much harder to do than expected.

‘Because they’re working in a very fluid environment where people have complex and changing needs, you just have to let the organisation get on with doing the best it can for those individuals.’

4. ‘They don’t give many grants around here.’

All foundations involved in the study felt that they should try to distribute grants as fairly as they could geographically. The statistics show that some areas receive significantly more grants, with a significant variation between Newcastle upon Tyne and Northumberland both with over 11 grants per 1,000 population and the Tees Valley areas all with under six. However, the data also shows that there are more large grants in Tees Valley so the picture is less clear.

The reality, for most foundations, was that while they were not engaged in place-based funding, they were investing in areas where there were higher levels of acute need in the community. For some, they had changed their position, taken in the early days of government austerity, where it was stated that foundations should not ‘step in where government has stepped out’ to the current situation where many felt that they no longer have a choice.

What does all this mean for you?

In conclusion, competition for grants is high, core funding is given by some funders but not others, impact is considered in different ways but rigid assessment frameworks may be less popular with funders than you think and most funders do want to get grants to areas that receive less funding than others.

If more competition inevitably means lower success rates, there are three actions you can take to counter this:

1. Ensure your case for support is as strong as possible, which means ensuring that you clearly articulate the need you are addressing, why your approach and organisation is the best way to meet the need and the difference you make, which can be demonstrated in a range of ways and should be proportionate to your project/service. See our building blocks guide for some more guidance on the case for support.

2. Do your research to identify the most suitable funders, discuss your proposal with them if they are willing, then tailor your application to meet their criteria and process where these are clearly stated.

3. Submit applications to more funders – if success rates are lower, you need to submit more applications to secure the same number of grants. It’s simple maths.

If you are thinking about how best to position your organisation to potential funders, check out our upcoming training and events, book one of our free advice sessions or drop me a line on alex.blake@kedaconsulting.co.uk.