Are we over-reliant on trusts and foundations? Part 2.
Once you pop, you can't stop
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This week..
We’ve scheduled our next book club for Thursday 18 April at 1pm.
The book is Lisa Greer’s Philanthropy Revolution, all about what it’s like to be a Major Donor and how it feels to interact with fundraisers.
Caroline is also really enjoying being a paid subscriber to Lisa’s Substack, Philanthropy 451 and can’t wait to read her book (again).
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Today’s article
We’re sharing part 2 of Ali Lyon’s exploration into over over-reliance on trusts and foundations.
The comments, emails and messages on part 1 have been so interesting. Thanks to all of you all for taking the time to articulate your thoughts on what feels like a beast of a topic.
Thanks also for giving us space in your inbox for the important conversations - we love spending time with you in this way.
Have a great week,
Tony and Caroline
Are we over-reliant on trusts and foundations? Part 2
by Ali Lyons, edited by Caroline Danks
Firstly, thank you so much for your incredible feedback on part 1:
“It was excellent and very helpful in terms of communicating upwards why we need to diversify and why ‘the money's stopped coming in’”
Louise
“Trusts and Fundraising provide vital support to charities, so I’ll be interested to read part 2 to see what the author thinks might be a realistic alternative?”
Louise (a different Louise from the one above though)
Caroline and I appreciate that what we shared was a description of a problem.
Part 2 is a continuation of that.
If you’re looking for hints, tips and ideas for writing better funding applications, this week’s article is not for you.
We believe it’s really important to highlight injustices and inefficiencies when we see them. Both of us are in a privileged position to be able to interrogate these things and then to talk about them openly without anything terrible happening and we truly believe that by saying the thing, we can help you to understand (and explain it) too.
Ok, part 2, let’s go…
The small charity penalty
What results from current model of grant making is a wealth gap in our sector.
In charities under £500k, 38% of grant funding is used to raise more grant funding.
The figure is 35% for those under £1million (Directory of Social Change).
Small charities may be the least viable on paper but in reality, tend to be doing the work which is most needed in communities. This is because they’ve been founded by people who are living daily with the problem that the charity is set up to solve (and not Victorian philanthropists who believed that they knew best how to fix problems which they never had to personally endure).
As Derek Bardowell explains in his book ‘Giving Back, How to Do Good Better’,
“If you don’t live it, you can leave it.”
Community rooted charities founded through activism, lived experience, tenacity and sheer bloody-mindedness are unlikely to benefit as much, whereas medium sized / large organisations are well placed to navigate / resource complex application processes.
Yet so many small charities are reliant on grant fundraising. It is an unhealthy diet, but it is the most accessible to them.
It’s this or nothing
Trusts and grants are often viewed as the default.
Many people new to the sector simply assume that if they want to instigate a charitable activity, that there will be funders queuing around the block to give them money.
And whilst there’s an open, published process and funds available for (on paper), the level of competition is not immediately obvious to those who have never fundraised before.
Although income is rarely completely unrestricted, trust fundraising is quicker than going down the community fundraising / individual giving route (which can take more upfront investment and longer to establish).
The ROI is generally higher and success is certainly possible for anyone with sufficient time on their hands and enough research / writing / communication skills to figure it out.
For those who experience that success, once you pop - you can’t stop – and you end up on a hamster wheel of never-ending applications.
An unhealthy eco-system. A trap. And as a result, charities are putting themselves at risk:
Restrictions associated with most grants prevent charities (especially smaller charities) from building reserves and securing core, operating costs.
Vulnerable to a change in strategy from grant funders, even if they’ve supported you for a long time.
Lack of genuine understanding of finances and how to fund the organisation to build resilience.
Mission creep
For those who do experience a modicum of success, it’s easy to panic and to start shaping your activities according to funding opportunities.
You think:
‘A fund for young people? We could do that’, even when the majority of those you support are 40 plus.
It’s much healthier to start with the activities you want to do (and crucially, why) and then to look for funding which fits.
This involves being bold and turning away from opportunities which may be a partial fit. But you’re saving yourself time and effort in the long run (trust us on this one…).
It’s better to stay small and focused on your core mission, at least until you can be confident of your funding sources.
What should grant funding be doing for us?
Thus far, our exploration has been around what’s going wrong, what’s no longer serving us and the impact of the problems we experience on the daily, working in the charity sector.
To paint a more positive picture – what is it we would like?
Of course, more money over multiple years which is completely unrestricted is the dream. But is this realistic, given the high demand for resources?
Maybe we need to manage our own expectations?
Would the following expectations of grant funders be possible?
Provide transitional capacity to develop other fundraising streams including digital capability and marketing.
Allow us to prove the need for something to enable us to build a case for support – evidence is a powerful factor in being able to secure more funding.
Work with the sector to better define what we need, and then to provide these things in a transparent way (and in a way where expectations are managed).
Facilitate meaningful partnerships between charities with similar aims (which are not a total ball-ache to manage).
What can we do next?
Honestly, I’m not sure.
We’re working in a system which needs radical change, and yet radical change is unlikely.
Do we push harder trying to achieve this change, or work with what we’ve got?
Defining the problem has been tiring enough – almost as tiring as the work I and many others do each and every day to prevent incredibly hard working, effective charities from going to the wall.
I know that the power sits with those who have the money.
Funders could re-examine their practices and change things to ensure that the money goes to those doing the best work (and not to those who can afford to play the system?)
Super-large charities could examine really, really hard, whether or not they truly need to keep on with a ‘growth for growth’s sake mindset – recognising that, just because you can raise money, it doesn’t always mean you should (but then this will only work if every super-sized charity commits to doing this).
Charities of every size should consider their unique offerings and take the time to be honest about duplication (and how we can collaborate to best serve the needs of communities).
I confess, I don’t know the answer to the question of ‘what can I do to fix a very broken system’. For now, I’ll keep talking about it, writing about it and encouraging discussion from every corner.
Please keep talking about this too - our voices and our experiences deserve to be heard and shared. The problem is systemic, so the solution has to come from the system and we need to do that together.
Thank you for all your messages and connection requests on LinkedIn – do keep them coming.
It’s been amazing to chat to so many people who are feeling and thinking similar (and different) thoughts.
You can also leave a comment.
Agree with what’s been said before… short term if funders could take a hard look at the level of detail they demand vs need / level of grants on offer. and aim to dedupe asking us to supply the same information multiple times that would be an immense help as a starter for ten…