Funders may find it more effective to use unrestricted grants more often, as well as longer-term funding and covering core costs. Application processes and transactions costs are too high. Foundations can offer more than money, such as expertise, experience and contacts.

Key findings:

  • Funding approaches can feed the perception that money spent on administration is wasteful.
  • Funders who have done due diligence on an organisation and found shared aims should consider whether an unrestricted grant would have a bigger impact than a restricted one.
  • Unrestricted grants can be important in enabling charities to ‘find the headspace’ to respond to changing circumstances.
  • Unrestricted grants require a different approach to thinking about the impact a funder will have – shifting to focusing on contribution from attribution.
  • Charities value unrestricted grants very highly and (some reporting they) would accept over 30% less if unrestricted.
  • Funders agree limited short-term timetables for long-term goals, which require long-term interventions.
  • ‘Knotty problems’ need loose funding over sustained periods of time. But how long is too long to spend funding an approach that is not yet working?
  • Charities want to cut down on the vast amounts of time and energy spent on application processes. A similar number think more core costs and unrestricted grants are needed.
  • Many grant-making trusts are reluctant to provide funding for core costs, seeing such restrictions as the ‘very stuff’ of grant-making, without which they cannot lay down restrictions lose their ability to set up goals, measure them and effect change.
  • Foundations can offer more than money, such as expertise, experience and convening power.

“Funders’ ‘tough love’ stance is paradoxically the thing that prevents sustainability. Starving non-profits with purposefully small restrictive one-year grants decreases their chances to achieve this elusive state of self-sufficiency.” – nonprofitwithballs.com[1]

“Many critics talk of mission creep in the voluntary sector, largely as a result of project funding. But as funders we are part of the problem. There is sufficient evidence out there of the benefit and value of unrestricted funding.” – Jo Wells, Blagrave Trust

“All of us in the non-profit ecosystem are party to a charade with terrible consequences – what we might call the ‘overhead fiction.’ Simply put, because of this fiction, foundations, governments, and donors force non-profits to submit proposals that do not include the actual costs of the projects we’re funding.” – Darren Walker, The Ford Foundation[2]  

“Charities cannot be trusted and so are commissioned to run programmes at 75% cost of sale… This hamstrings innovation, partnerships, advocacy and dissemination, and encourages competitive isolation amongst charities.” – Jake Hayman

[1] www.nonprofitwithballs.com

[2] https://www.fordfoundation.org/ideas/equals-change-blog/posts/moving-the-ford-foundation-forward/