Funding in a cold climate

It’s not easy being a grant-making trust or foundation at the moment. I know because I’m a trustee of one, and regularly talk to others in the course of my work for NPC.  Many have less money to play with, at the same time as charities are in need of more. They are faced with grantees in serious financial difficulty, whilst public policy changes are leading to a rise in absolute poverty and disadvantage.

It’s tougher still being an operating charity in this environment, but there’s no doubt that funders are faced with some very real dilemmas; should they step in to meet urgent needs where the state has withdrawn, or should they stick strictly to the additionality principle? How interventionist should they be when grantees are struggling? And above all, how should they seek to achieve impact with fewer resources? These are tough questions that go to the very heart of a grant-makers identity and principles, and there are no easy answers.

NPC is planning a short research project to look at some of these issues. We want to provide some clarity on the range of strategies available to trusts and foundations to help grantees weather the storm, or even turn the situation to their advantage. In the meantime, however, there are a few things that I personally think are worth bearing in mind for successful funding in a cold climate:

• Seek ways to leverage your funding. Join up with other funders, pay for advocacy, look to scale up good work grantees are doing. These are all ways to leverage resources for greater impact. For example, in Islington local funders are thinking about how to co-ordinate their individual giving programmes with the council’s successor to the Social Fund, to try and preserve a decent safety net for residents. Not all funders will want to get that close to government, but if you’re pragmatic there are times where it can work.

• Use evidence.  Basing grant-making on the best available evidence increases the chances of success. For me that’s about equipping yourself with information on what the needs are, who is doing good work, who else is funding in the area. The Nationwide Foundation is a good example of a funder who undertakes research to establish these things before launching a new programme, so its grant-making is focused and effective.

• Help the sector to adapt. If the voluntary sector is going to do any more than cling on it needs to change, and independent funders can help it do that. That could mean encouraging collaboration (as, for example, The Baring Foundation have been doing in their work with Law Centres), paying for organisational development, or providing core funding for charities in difficulties to give some breathing space.

• Show some grit. At the same time we have to accept that not all organisations will make it. There will be many genuine losses, but also perhaps some which did not deserve to continue. Grant-makers have a role in making sure that the best charities survive, and that the resources available flow towards them. That may, at times, require a hint of ruthlessness.

If all this sounds like a description of the much discussed ‘funder plus’ model then that’s no coincidence, it’s never been more relevant. If funders react to hard times by withdrawing to a traditional model of reactive grant-making, I think they’d be missing a huge opportunity. Now, like never before, is the time for bold and brave funding.