Does your grantee have a unique selling point?

The UK charity sector is crowded and dominated by small organisations, many of which look similar on paper. But for lots of place-based charities, the real differentiator isn’t a distinctive service model or scalable ‘product’, it’s relational infrastructure: trust, legitimacy, local knowledge, and the ability to hold relationships in a place. If that’s true, funders need to stop funding as if ‘scale’ is the only signal of value and start investing in the connective tissue that makes communities work.

I was in Oxford last week for Skoll. The SideBar was the standout: a less polished conference, more honest working session, practical, curious, and (usefully) messy.

I co-facilitated a session on relational infrastructure. Along with my co-panellists, we explored what it is, and what helps relationships flourish (not just survive). It left me with a simple question: if trust and relationships are what make many local charities effective, are we funding for that?

The UK charity sector is huge, and most of it is small

In England and Wales alone, there are well over 170,000 registered charities. About three-quarters have an income of under £100k a year, and a big chunk are micro, in the £0–£5k band.

That matters because it forces an uncomfortable question: what actually differentiates most small and micro charities?

If you approach this like a business analyst (or a spreadsheet), the honest answer is: often, not much.

For the vast majority, the ‘hard infrastructure’ isn’t distinctive. Many are dealing with the same structural constraints: stretched capacity, fragile funding, volunteer dependency, and an operating model that doesn’t ‘scale’.

So where is the advantage?

The differentiator isn’t hard infrastructure, it’s relational infrastructure

My provocation is this: for many small and micro charities, the differentiator isn’t what they own or what they can systematise. It’s what they hold.

Their local trust. Their legitimacy. Their proximity to people. Their deep knowledge of a place. The relationships they’ve built, repaired, and kept going at the neighbourhood level, sometimes for years.

A lot of these organisations matter not because they look unique on paper, but because they occupy a unique relational space in the life of a place. They’re part of the civic fabric that makes things like belonging, resilience, trust, and social cohesion possible.

And that kind of ‘USP’ is hard to replicate. You can’t drop it into a new area like a franchise.

Most charities don’t operate in a hard-to-get-in sector, but many operate in a hard-to-get-out sector

Many charities don’t have a competitive advantage in the classic sense. They’re not necessarily delivering a specialist service that no one else can deliver. They’re not protected by barriers to entry.

But once they start showing up: delivering, listening, convening, mediating, building routines, holding a space, they become woven into the local ecosystem. They build connections that support the ‘local biome’: community development, mutual support, informal problem solving, and everyday trust.

And when you’ve built those relationships, you feel responsible. You keep going even when, in purely financial terms, it might not make much sense.

In our social cohesion work, the signal wasn’t ‘how much money’, it was ‘how much local civic life’

In our previous blog series, we shared findings from our work where mapped organisations contributing to social cohesion across England and Wales. It was obvious in the qualitative work that you can feel how men’s sheds, community pubs, local meeting spaces, cultural groups, co-ops, and youth organisations contribute.

But the quantitative work nudged us in the same direction: the density of local organisations seems to matter. For every charity per 10,000 people, the likelihood of a neighbourhood being categorised as mission-critical decreases. Not because ‘more charities automatically fix deprivation’, but because local civic infrastructure changes what’s possible in a place: the connections, the support systems, the ability to organise, the ability to respond.

There’s also a wider evidence base worth reading on public trust in charities.

So, what does this mean for funders and philanthropy advisors?

If we agree that the charity space is fragmented with hundreds of thousands of small and micro-organisations, and we agree that many of them contribute because their differentiator is relational infrastructure, then philanthropy has a responsibility to fund that reality.

That means ongoing support. Not just one-off ‘project grants’ that assume stability exists somewhere else. Not just funding the shiny new thing that can scale.

Some of these organisations will need a continuous lifeline, and if we value what they hold, that shouldn’t feel controversial.

They may never become the next silver bullet solution. They may never scale. But they can be part of what makes communities strong, the foundations that make better outcomes possible for everyone else.

And yes, this is where I lose some funder and philanthropy advisor readers who want to fund the next big scalable bet. We absolutely need you too. We need philanthropic funding that de-risks innovation and backs big ideas.

But alongside seeding and scaling solutions, we also need to sustain the connective tissue. The local, small organisations that quietly make trust, belonging, and cooperation possible.

Their USP isn’t a product. It’s every relationship they build and help flourish locally.

What does this mean for your funding decisions?

If a charity’s USP is trust, something you can’t fully qualify or quantify, how do you choose which ones to support? And how do you support them without accidentally breaking the thing you value?

At NPC, we spend a lot of time helping funders and sector leaders make sense of messy systems like this, where the ‘best’ organisations aren’t always the biggest, and where relationships matter as much as programmes. See our services for funders, philanthropists, purposeful businesses and investors.

Practically, that means combining good old-fashioned listening (to communities, practitioners, and funders) with sharper ways of seeing the wider ecosystem: mapping who is active locally, what kinds of work are happening under the surface, where funding flows go, and what gets missed when you only look for the ‘usual suspects’. AI provides these opportunities to analyse data at a large scale. The idea of using AI to map who is out there is not about replacing judgement; it’s about improving the picture you’re making judgements from. More on this to come in an upcoming blog – stay tuned!