Imagine a world where small and medium-sized charities can plan for the future, invest in their people, and respond to community need — without being shackled by short-term, project-specific grants. That’s the world truly flexible funding creates, and the evidence of its effectiveness is becoming clearer than ever.
Eight charity leaders told us, in their own words, what changes when funding stops being short-term and restrictive.
As funders contemplate the switch to flexible funding, it is not unreasonable for them to ask: What evidence is there that making multi-year unrestricted funding will generate greater impact?
This report examines the impact of multi-year unrestricted funding on small and medium-sized local charities that support people facing complex issues.
We identify five main benefits of flexible funding:
- Better strategic management and long-term planning
- Improved financial stability
- More secure workforce
- Stronger organisational infrastructure
- Greater responsiveness to people’s needs
- Cover senior staff time for strategic work
- Build external partnerships
- Maintain continuity between grants
- Build financial reserves
- Offer permanent contracts
- Fund training & wellbeing
- Fund finance, HR and IT
- Adapt services to urgent needs
Drawing on interviews with eight charities funded by Lloyds Bank Foundation, we found that multi-year unrestricted funding enables more stable, responsive, and person-centred support, which plays to their strengths and enhances their ability to serve people’s complex needs. In short, it improves their effectiveness.
Implications for funders
Short-term restricted grants provided by most funders are misaligned with the unique value of small and medium-sized local charities. A shift to most funders giving multi-year unrestricted funding would greatly enhance the capacity and effectiveness of local charities, enabling them to realise their full potential. The effect on our communities could be profound.
Written by Ben Cairns and Chris Mills
