Background
Social exclusion, disadvantage and deprivation remain huge priorities to address in Scotland. Levels of poverty were increasing long before the shocks of the last four years. The impact of the cost-of-living crisis on quality of life is profound, with a particularly devastating impact on vulnerable people who are more susceptible to experiencing harm, discrimination, or disadvantage.
Through our new five-year strategy – Building a Brighter Future for Scotland – our Trustees agreed that the needs and aspirations of vulnerable people should drive our work going forward. Our renewed focus on smaller charities who put vulnerable people at the heart of everything they do is where we believe we can make the greatest impact on those we partner with, and our new combination of multi-year, unrestricted funding and additional strategic support is designed to help charities grow stronger and thrive beyond the lifetime of their grant.
How our journey to unrestricted funding began
Our first tentative venture into unrestricted funding was in 2022, through our multi-year ‘Change’ grants programme, offering charities the opportunity to apply for core funding, project funding or unrestricted funding. Most charities applied for core funding, with twelve grants ultimately awarded totalling almost £1.5m, six of which were for unrestricted funding. Our unrestricted funding grantees demonstrated that they used their funding in the ways that help them best, and reassuringly remained accountable with strong, trust-based relationships developed.
As a responsive funder, over the last few years we also adapted our 2019-2023 strategy by enabling unrestricted funding to feature again, helping us to better support charities through two crises. We knew how important it was to get funding to charities during the pandemic and, in April 2020, we were proud to be the first Scottish funder to offer Covid-19 Contingency Fund awards, providing our grantees with almost £700,000 of additional unrestricted funding to help them adapt and continue their services. In November last year, in response to the growing cost-of-living crisis, our Trustees agreed that all our current grantees should be offered a share of almost £2.5m unrestricted funding enabling them to continue to support challenges such as homelessness, addiction, domestic abuse and family breakdown.
Our strategy for the next four years
With positive experiences of unrestricted funding over the last five years, thoughts turned to our 2024-2028 strategy. With a renewed focus on vulnerability, we assessed a move to unrestricted funding, recognising that going forward, our funding would be less focused on funding projects and overheads and more on the shared aim of putting vulnerable people at the heart of everything we do.
An important consideration for us was the alignment of unrestricted funding to our values. We have a set of four values which give us clarity on what’s important to us and how we work together and the themes of trust, people-first, inclusive and bold represent our ways of working:
- We trust each other to achieve more together – unrestricted funding enables our grantees to use their grants in the way that helps them best but does not mean funding without accountability. Unrestricted funding allows us to develop strong, trust-based relationships.
- We put people-first to go further for charities – with multi-year unrestricted funding comes deeper relationships. We have a new relationship approach with our grantees, ensuring regular charity visits, two-way feedback and mutually beneficial outcomes.
- We’re inclusive to value everyone – the challenges faced by charities over the last few years have changed and now include volunteer shortages, skills shortages and staff wellbeing alongside the more typical challenges of rising core costs, cash flow constraints and fundraising difficulties. Unrestricted funding can lead to longer-term solutions for charities, their teams and their beneficiaries rather than short-term outcomes for projects or overheads.
- We’re bold and take action – recognising that our historical ways of working were unsuited to the current fast-pace of change, we took action. Our offer of unrestricted funding provides charities with agility, flexibility, and the ability to respond quickly to shifting conditions.
Taking into account our values alignment; the results of IVAR’s review for us, covering external stakeholder feedback, analysis of our place/benchmarking in the funding landscape in Scotland, input from external experts, open and honest feedback from charities; and significant discussion and challenge between the Trustees and Foundation team, the decision was made to allocate 85% of our £7m budget to unrestricted funding in 2024. At the same time, we also joined the Open and Trusting grant-making community, whose focus on greater mutuality in funding relationships aligns closely with what matters most to us as an engaged and inclusive funder.
Unrestricted funding is a revolutionary idea … or is it?
So far this year, we’ve awarded over £3.3m of unrestricted funding to 77 charities across Scotland through our new Empower and Energise grants programmes. Feedback from our grantees has been overwhelmingly positive indicating our unrestricted funding has given ‘stability’, ‘security’, ‘confidence’, ‘trust’, ‘greater resilience’ and has been ‘transformational’. This echoes key findings from IVAR’s research on the benefits of unrestricted funding.
That said, we recognise we are still at the beginning of our unrestricted funding journey and throughout the next five years, we’ll keep listening and learning, and monitoring and evaluating to continually improve ourselves and ensure we work effectively and efficiently in partnership with our grantees to maximise our joint contribution.
Interestingly, the Foundation’s annual donation from our own funder Lloyds Banking Group is unrestricted and has been since our launch in 2010 … we also have a strong, collaborative relationship … our purpose and values are well aligned … we’re trusted to use our funding in the ways we see best . and we’re held accountable …
On reflection, perhaps unrestricted funding is not such a revolutionary idea after all …
