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Navigating the Changing Landscape of Charitable Funding for Small Charities

Empty wallet, no funding

Lately, the ratios of yeses to noes that small charities are seeing is widening. But not in a good way—there’s much more of the latter compared to the former.

I’ve also seen more than a handful of prominent trusts and foundations announcing the winding-up of their funds. Whether this is connected is anyone’s guess.

Securing charitable funding from within the third sector has always been difficult. However, in recent months, grant-makers have found themselves facing a conundrum. Their resources, i.e. their funding pots, have become smaller, but demand for funding continues to grow. Competition for financial awards in the third sector has acutely intensified over the last couple of years. A decline in public funding for some frontline services has also seen more charities being created or an expansion of their services—these also need funding from the third sector, once the government redirects its money from their area of delivery.

The knock-on effect of this is that it’s becoming increasingly difficult for charitable organisations and good causes to secure the financial support they need to make a meaningful impact.

Grant funding has long been the lifeblood of nonprofit organisations, enabling them to pursue their missions and drive positive change in their communities. However, the landscape has shifted dramatically since the pandemic, and further again, following the cost-of-living crisis. Economic fluctuations, changing priorities of philanthropic foundations, and global crises have all contributed to the dwindling size of grant pots available for distribution. Grant-makers are facing the challenging task of allocating limited funds to a growing number of deserving projects.

Nonprofit organisations across various sectors are vying for the same limited resources, creating a situation where many worthwhile initiatives are left without the financial support they require. The third sector, encompassing areas such as education, healthcare, social services and environmental conservation, is home to a diverse range of organisations, all striving to make a positive impact.

Securing grant funding is not just about achieving short-term goals; it's about ensuring the long-term sustainability of a charitable organisation’s programmes and initiatives. The uncertainty of funding availability can create an environment where organisations are forced to constantly adapt and adjust their strategies. This state of perpetual uncertainty can hinder their ability to plan for the future and invest in impactful, sustainable projects.

Grant-makers are often overwhelmed by the sheer number of compelling projects seeking support. This has led to an increased emphasis on measurable impact and outcomes. Grant-makers predominantly fund projects that can demonstrate a clear and quantifiable benefit to their target communities, further raising the bar for organisations seeking funding with a greater proportional impact on smaller charities.

Amidst this challenging landscape, charities and nonprofit organisations must adopt innovative strategies to enhance their chances of securing funding:

  • Clarity of purpose: Organisations must clearly articulate their mission, goals, and the positive change they aim to bring about. A well-defined purpose can help distinguish an organisation from the sea of applicants

  • Impactful communication: Effective storytelling is crucial. Organisations need to convey their impact in a compelling manner, demonstrating how their work aligns with the grant-maker's priorities and addresses pressing issues

  • Strategic partnerships: Collaboration can create synergies that enhance a charitable organisation's capacity to achieve impact. Partnerships also showcase a charity's ability to work across sectors and leverage resources effectively

  • Innovative approaches: Charities must showcase their ability to adapt and innovate. Creative solutions to persistent problems can capture the attention of grant-makers looking for fresh perspectives

To navigate the challenge of shrinking grant pots and intense competition, charities and nonprofits, grant-makers, and policymakers need to collaborate and adopt a holistic approach, which should include engaging in open dialogue to understand each other's perspectives.

Perhaps most crucially, charities should explore a mix of funding sources, including individual donors, corporate sponsorships, and community fundraising events. This diversification can help reduce reliance on a single funding stream. A small charity has the benefit of agility, deeper relationships and innovation over larger organisations, which are things they should exploit in their locality. They don’t have to ask a handful of departments to sign off an idea for a fundraiser event. They can proactively ‘knock on the doors’ of local businesses and individuals (in the case of the latter, this is an analogy, unless they have the right licence to actually do this!). They can forge personal connections as well as demonstrate impact within the communities that these donors will instantly know and understand. The funding they require will also be a fraction of that of a household name charity, and therefore easier to obtain if they become comfortable with the diversification of their income streams.

In the current landscape, small charities shouldn’t worry that funding pots and grants are either shrinking or disappearing altogether. They can pivot. They just need the confidence and knowledge to do this.


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