All funders owe it to the sector to continue to improve their thinking on continuation funding

Charities or community organisations receiving a grant will almost inevitably confront a dilemma.  At the point of receiving their grant, the funder will tell them that their funding is only for a time limited period, and that there is no guarantee of future funding beyond this point.  But what many charities want isn’t just a single grant for one, three or even five years, but some funding to try things out, and then more funding to keep their activities going and develop them further.

This creates a number of problems.  For example, charities often do not know until a few months before their grant ends whether their funder will continue to fund their work.  This makes staff retention and long term resource planning difficult.  They believe that they are more likely to get funding if they present their work as a new project, even if that’s not really what’s needed.  Replacing a grant often requires securing grants from multiple different funders – in a funding environment which is particularly challenging for small to medium sized charities and likely to continue to be so.

Brutally honest

There is a brilliant blog imagining how charities would answer questions from funders if they were being brutally honest, rather than telling funders what they think they want to hear.  In answer to the question about how the applicant plans to sustain their work after the grant ends, they say:

‘We will leave you alone and harass other people, continuing to spend half our time trying to convince other foundations that our programmes and communities are worth being supported, instead of running and improving the programmes that our communities desperately need. Then, after a year or so, when hopefully you forgot that we applied earlier, we’ll reapply to your foundation.’

Systemic failure

At its worst, this creates a systemic failure.  Statutory funders achieve ‘sustainability’ when independent foundations choose to pick up the activities which they used to fund.  Independent foundations achieve ‘sustainability’ when the statutory sector funds the charities which they’ve supported.  And charities are stuck on this carousel, writing and rewriting proposals rather than being able to plan for the long term and fulfil their mission.

No wonder that in IVAR’s report, Thinking about Sustainability, they challenge funders to be ‘prepared to consider continuation funding as a mark of development and success rather than a sign of dependency’.  Or as Dawn Austwick, Chief Executive of the National Lottery Community Fund, argued, ‘the flexibility of long term grant funding makes it particularly well suited to enabling the shift to high quality early action services. Making that long term commitment isn’t always easy for grant funders and often needs courage and an appetite for risk’.

So what can funders do differently?

As the UK’s largest grant maker, we’ve been making a number of changes to how we work:

Firstly, we have made our funding more flexible, including support for core costs and capacity building as well as project activities.  This means that from the start of a grant we can support organisations to think about how to develop and fund their activities for the long term.  Over the past few months, we’ve seen the average length of our grants increase, and increased the proportion of our funding which goes to smaller and medium sized charities and community groups.

Secondly, our funding staff are based in communities across the UK, so it is easier to build up relationships with outstanding charities and community groups and know more about how we can support them to fulfil their mission and enable communities to thrive.  That’s not just about money, sometimes offering the opportunity to work with other charities or share learning can be just as important.

Thirdly, we’ve introduced dedicated funding for partnerships. Organisations that have achieved longer term financial stability and have more capacity to think about how to develop their work will increasingly work together with others, rather than on their own. We expect this will increasingly mean that when people come to us to continue their work, they’ll want to tell us how they’ll collaborate with others in doing so.

Fourthly, we can now identify opportunities where our funding can be a time limited part of longer term growth plans, especially for social enterprises, or where charities can use our support to leverage funding from other sources. At the same time we recognise that this will be appropriate in specific situations rather than as a default assumption for all grants.

Lastly, while continuation funding is important and valuable, funders like us always need to be finding and supporting people with great ideas that we’ve never worked with before.  Maintaining a balanced approach including both continuation funding and becoming more open and accessible is crucial – especially as our sector and our communities continue to change and experience new kinds of challenges and opportunities.

Ben Cairns – Director for the Institute for Voluntary Action Research – responded to this blog with four questions for funders to ask themselves when considering continuation funding. 

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