Funding in an age of austerity

by Chris Read, Business Support Officer

There are many differences between the third sector and the public and private sectors – the unique relationship between the Board of Trustees and the staff team, the identification of a mission and client group in the charity’s constitution, and our unusual legal status, for example. But in day-to-day terms, one of the most pressing differences must be how we are funded.

While the private and public sectors acquire funding in relatively straightforward ways (profits from sales and public taxation respectively), charities fund their work through a peculiar patchwork of grants, legacy funds, trusts, savings accounts, investments, public tenders and sporadic income-generating activity.

It is often said that running a charity is like keeping a number of plates spinning in the air at one time. This is especially true of acquiring and sustaining funding. Funding is all-important. Without it, a charity simply cannot function, like car with no fuel. Yet it requires staff capacity, time, effort and hard work to acquire funding. And once it is granted, the funder understandably expects it be put to use promptly and project activity to begin.  Funders naturally also expect any underspend to be paid back and project activity to cease at a designated time. This leaves fundraisers with little room for manoeuvre.

‘Austerity’, a process of belt-tightening that began with the financial crash in 2008, has made the funding environment trickier still. Central and local government budgets have been cut, as have statutory bodies’ budgets, such as NHS, Police and education services. Funding streams that depend on government cash releases have become rare. Low interest rates, intended to re-stimulate public spending and borrowing, have led to low returns on savings and investments. Not only do charities rely on savings to generate extra revenue, independent funders often issue grants based on the return from long-established savings and investments, which have dwindled.

All this has occurred at a time when demand for social services has risen markedly. The move to universal credit, to Personal Independence Payments, the rise of in-work poverty, the spare bedroom tax, cuts to welfare and local authority services and cuts to NHS services have led to a rise in the need for third sector intervention. All this is a kind of perfect storm. This means that the third sector has had to show extraordinary resilience, innovation and forward thinking.

How has Fast Forward adapted?

Fast Forward has adapted to the changing funding environment in a number of ways. This has included:

• Carefully choosing funders that clearly parallel our own aims and expertise. With limited time and staff, it’s important that charities reduce the number of applications they make on a wing and prayer. It’s a much better idea to research a funder and make sure you know exactly what they’re looking for. Quality is better than quantity.
• Carefully reading the funder’s guidance and ensuring the project is designed in accordance with their guidelines. Is the fund looking for projects that are client-led? Or ones that explicitly address equalities issues? Or complement Government strategic documents? Again, you have to ensure you’re giving the funder what they’re looking for. If you’re having to shoehorn an application to fit their criteria, it’s probably a waste of precious time and effort.
• Ensuring you apply for full-cost recovery. This means making sure that your organisation is not going to be out-of-pocket at the end of the project. This is very tough in the current environment where competition leads to a tendency to cut application budgets to improve chances of funding. But it’s a false economy if you don’t ensure you have adequately provided for management and administration costs, utilities and IT support.
• Be clear about your key areas of expertise and experience. And find a partner if a funder wants an approach that requires more. You might have a great service that works with ex-offenders looking to sustain a new tenancy. But you won’t be experts in employability. If you’re wanting to establish a service that provides advice, support and mentoring on housing and employability, you can easily partner with another charity. Partnerships are much easier to form than you might think, and funders love them.
• If you can, talk to the funder before making your application. Are they the right funder for your bid? Do they know another funding source that might be more appropriate? Can they give you any helpful tips? It’s amazing how much more intelligence and info you can get from as phone chat compared to just reading the guidance notes. A face to face meeting is even better.
• Have a think about where need is greatest. Spend a morning reading through third sector magazines, publications and e-bulletins. Talk to the Board and staff team. Try to identify emerging issues and trends. You’ll probably be aware of these already but by properly naming them and focussing on them, you can start to think how to address them.
• Finally, it’s always a good idea to read funder’s feedback if you’re unsuccessful. If they don’t provide much, ask for more. Often the feedback will simply state that you didn’t meet the essential aims of the funding stream. But if they do give you any tips about where your bid weaker, such as monitoring and evaluation or demonstrating need, do take their advice. Don’t be afraid to borrow techniques used in journalism or professional writing – put your most impactful sentence first, use clear concise terms and build your case for funding.

Fundraising is one of the most important tasks in the third sector. Without it, the third sector cannot function. It might feel like an uphill struggle but when a project is up and running and delivering its outcomes, you can tell yourself: none of this would have happened without that first bid.