The changing landscape of grant making trusts?

At the Directory of Social Change we’ve been researching grant making trusts for over thirty years, examining their practices, scrutinising their reporting, and making what they do clear to those organisations that rely on their funding to achieve their objectives. With the latest edition of Directory of Grant making Trusts, we’ll be releasing a report containing some key information gathered as part of our ongoing research which we think will be of great interest to everyone looking at grant making – from either side of the fence.

In lieu of the final version of the report, here are some of the initial findings and discussion points that have been occupying our research team over the last month or two.

No replacement funding

Only 8% of trusts will consider replacing lost statutory funding. This may be unsurprising, given that historically trusts have been reluctant to fund work which is viewed as a state responsibility or to fill the gap when state funding ends.  However, this is notable in the current environment which is characterised by deep cuts to public expenditure.  It is likely that many trusts will receive more requests for support along these lines in the future, and may need to re-examine their policies and procedures as a result.

Do we know you?

For the majority of trusts (90%) the percentage of successful new applicants was less than 50%.

Many trusts appear to fund a high percentage of the same applicants year-on-year, with the most common response indicating that less than 10% of successful awards were made to new applicants.

However the way some trusts make grants over multi-year periods could affect this data.  For example if a trust makes three-year grant awards every year, and awards the same total amount of funding each year, then by definition only 33% of applications could be ‘new’ in any given year.  The rest of the funded organisations would be in years 2 and 3 of their grant agreement.

More competition?

Just over half (57%) of trusts reported no real change from last year, although around one third (34%) reported an increase in applications.

For a significant group of trusts applications are on the rise, but the level of stability for the majority of trusts is surprising, given the difficulties in the broader funding environment for charities.  

A number of those that responded said they were maintaining their overall levels of grantmaking but reducing the size of individual grants; a few stated that they were in a position to increase the amount of total grants given. Inevitably, a number of them stated that they have been unable to sustain previous levels of grant making.

A question of scale

As for replacing huge cuts in statutory funding, it’s interesting to see that 74% of grants made were for £5,000 or less. Only 14% topped £10,000.

All of these factors indicate that overall, grant making trusts are not stepping into the void created by the withdrawal of statutory funding in many areas over recent years, and are largely continuing to operate in the same way with the same objectives, as well as supporting largely the same beneficiaries.  Later this year we’ll be carrying out some more in depth research  analysing the DGMT data against a range of additional geographical and beneficiary data to try and identify any underlying patterns or shifts in behaviour, but at a macro level at least, it’s business as usual.

The “usual” challenges

You can’t always apply for the money

Grant making trusts are charities, and as such, their money is for the public benefit. You might assume that means anyone can apply for it so long as they meet the trust’s criteria, and to an extent that’s right, but around 32% of trusts stated that they do not accept unsolicited applications. Now what that means in reality for fundraisers can be difficult to ascertain. For some trusts it will indicate a specific approach that the trustees proactively seek out organisations to support, and will not support any applications from organisations they do not already know about. For some it may indicate a temporary state, where multi-year grants have been committed and they will not consider any new applications for a period of time. And for some it will be an attempted deterrent, a deliberate barrier intended to reduce the number of applications they have to deal with. Either way, they all have a legal obligation to at least consider any application that might help them further their charitable objectives.

Ineligible applications

Ineligible applications are still a significant issue, with many funders experiencing ineligible applications rates in excess of 90% of the total applications received. This is why DSC continues to campaign for an end to ineligible applications by providing detailed information on the policies and practices of trusts and foundations and making key recommendations to potential applicants, namely:

• Read the guidelines provided by the trust (not doing so being the most common reason for applications being ineligible given by the trusts who responded to our survey)

• Do your research – make sure you apply to the right funders

• Seek clarification if there is anything you are unsure of in the guidelines or application process

• Do not send blanket appeals – funders can tell if an application is a general mail-merged appeal sent to many organisations without due regard for their individual policies and funding priorities

• Make sure your application is clear, concise and jargon-free.

However, as is usually the case with grant making trusts, the overall picture masks a lot of interesting activities by individual and groups of trusts.

For example, looking at the top level data on eligible applications and numbers of awards made, if your application is eligible you stand a 45.9% chance of getting funding.

However, dip below the headline figure and you’ll find 43 trusts with a £16.8million receiving over 12,000 eligible applications, that didn’t make a single grant in the last financial year. At the opposite end of the scale, there are 61 trusts with £17.1million that received 6,797 eligible applications between them and funded every single one.

Overall, our research suggests that funding from grant making trusts and foundations remains stable despite the recent recession and the prevailing economic challenges. Funders are continuing their efforts to mitigate the worst effects of the financial crisis on the charities that rely on their funding to help to support some of the most disadvantaged members of society.

The austerity measures imposed by the current coalition government however make the likelihood of an increased demand on trusts and foundations’ finite resources in the future almost inevitable.

Figures in this article are taken from a forthcoming report DGMT Analysis 2012 which will be available at www.dsc.org.uk/dgm

Ben Wittenberg is Director of Policy, Publishing & Research at DSC. Follow me on Twitter @ben_wittenberg