Trusts and foundations occupy a unique space in the voluntary sector, and an increasingly important one as a number of other sources of charity income come under pressure.
The most recent annual benchmark of sector sentiment by PwC, the Institute of Fundraising and the Charity Finance Group found 65 per cent of the more than 300 respondents reported an increase in demand for services last year.
The Managing in the New Normal report revealed a quarter of respondents reporting they did not have the resources to meet this increased demand.
But separate research published last year revealed promising news from the foundations space. The Association of Charitable Foundations’ annual Giving Trends study, conducted by Professor Cathy Pharoah of the Centre for Giving and Philanthropy at the Cass Business School, found grant spending among the 300 largest foundations reached its highest actual level in 2014/15. The total of £2.7 billion was the highest level since the £2.5 billion registered pre-credit crunch.
If, as it seems, income from trusts and foundations is set to become an even more important part of the voluntary sector funding mix then knowing how best to engage with these organisations will be a helpful skill for operational charities.
Know your funder
ACF chief executive Carol Mack says it is important to view foundations not as organisations distinct from the voluntary sector, but as integral parts of it with charitable objectives of their own.
The good news, Mack says, is that the foundation space is diverse. With at least 10,000 foundations in the UK there is likely to be one relevant to every organisation that requires funding.
“Like charities they’re part of the pluralism of civil society. They’re very varied. They’re varied in the way that they’re set up, and the way in which they operate,” Mack says. “It’s really important to remember that both foundations and the charities they fund have a common purpose in mind, and
that foundations need operating charities in order to deliver their objectives. The money can’t achieve anything on its own, and foundations are very aware of that.”
Being mindful of the fact that foundations have specific objectives to fulfil is an important part of ensuring a positive relationship.
This extends to being aware of a foundation’s funding criteria before making an approach, Mack says.
The Directory of Social Change maintains a range of resources helpful for charities seeking to connect with funders. These include the trustfunding.org.uk database, and the Guide to Major Trusts and Directory of Grant Making Trusts publications.
DSC’s head of research Tom Traynor echoes Mack’s sentiments of the importance of ensuring the aims of the funder and applicant are aligned before an approach is made. Indeed, he says a failure to become familiar with eligibility criteria is one of the most common complaints about applications.
This includes not reading the criteria, or reading the criteria and applying anyway despite not being a suitable grant recipient.
“A lot of these charities are desperate for funding, so on the one hand you can understand a blanket approach to fundraising,” he says. “But operational charities need to do their homework, they need to do their research. They need to find foundation funders that are compatible with what they do so they’re eligible for support.”
Value for money
ACF’s research has recorded year-on-year increases in foundation giving for the past three years, reflecting a recognition of increased demand. The diversity of the foundation space means there has been a variety of responses to the post-financial crisis environment, Mack says.
“Since 2008 there has been declining funding from the public sector and increasing need,” Mack says. “There is greater pressure than ever on foundation resources and the choices about who to fund and who not to fund have become ever more difficult and acute.”
An important change to note is an increased focus on value for money by grant makers, Traynor says. While this has always been a priority, he says it has become more pronounced as demands on trust and foundation resources have increased.
This increased focus on value means it is all the more important for charities to demonstrate evidence of the need any grants are going to satisfy.
“That means saying: ‘we need this money to serve the beneficiaries that we serve, and we’re the right organisation to help the foundation address this particular need’,” Traynor says.
Seeing the relationship between foundation and operational charity as an ongoing one is also an important factor.
“Often you will hear foundations talking about working in partnership with the organisations they fund, because it is only together that they can achieve charitable aims,” Mack says. “Foundations are on the same side as those that they fund.”
Mack says foundations are also looking at how they can help charities over and above funding, for example by offering additional support and advice.
Providing clear, timely updates on how funded projects are progressing is also often appreciated by funders, according to Traynor.
Not all foundations will have the capacity for a very close, hands-on relationship with the charities they fund. City Bridge Trust is London’s largest single independent funder, and is therefore restrained in how much ongoing support it can offer. However, Sufina Ahmad is leading the funder’s strategic review and says many foundations are looking creatively at what they offer charities.
“I think this is something that all funders are looking at - how do you create an environment where you can have really open and honest conversations with the people you’re funding. That means if things need tweaking because they’re not going as anticipated and how they’re outlined in an application, we can have that conversation and avoid crisis moments.”
Prioritising communication extends beyond the two-way relationship between funders and operational charities, taking in greater collaboration between funders themselves.
City Bridge Trust is one of several foundations providing funding data to 360Giving in order to improve the overall understanding of what is happening in the funding space. Traynor has noticed a definite trend toward a more joined-up funding sector in recent years.
“There have always been organisations that collaborate, and the foundation world is quite connected on an individual level. But now it’s all about collaboration and working together to try and solve or alleviate issues,” Traynor says. “We’re talking about big, intractable problems and collaboration is the best way to approach them. That includes bringing the charities themselves into that conversation. It’s a collaboration between all of these voluntary sector organisations to tackle these serious problems and help the most disadvantaged people in society.”
Matt Ritchie is editor of Charity Times