RAISING MONEY FOR CAPITAL PROJECTS IN A CRISIS FUNDING LANDSCAPE

It's tricky to generalise about how the pandemic has impacted organisational grant funding levels. While inevitably many charities and social enterprises have struggled, many others with a grassroots community focus have thrived. Some have even unexpectedly smashed their fundraising targets.

However, if there's one thing that’s been consistently difficult in the past 12 months, it's securing funding for capital projects. From talking to various funders, I think there are two (overlapping) reasons for this:

Capital projects are unavoidably high-risk, and many funders are understandably playing it safe

There's no getting away from the fact that renovating a building or creating a new space is complicated and risky. Capital projects often run over budget and behind schedule, and sometimes fail entirely. Even if you've never managed one before, you may know this if you've ever done work on your house – once work begins on the roof or walls, new issues are uncovered, then all bets are off.
 
This is before you even factor in Covid and Brexit, which will inevitably impact the cost of materials, the availability of labour and the complexity of working on a crowded site.
 
Funders know all this, and it can worry them. As we recover from the pandemic, they'll continue to be inundated by countless worthy and urgent causes, and won't possibly be able to fund them all. So it’s not surprising that many choose to play it safe. Put yourself in a funder's shoes – would you rather award £10,000 towards a grassroots community food bank that will have a definite and immediate impact, or a complex capital project that might be subject to delays and complications?

No capital project is without risks and unexpected surprises - just ask anyone who's done work on their house

Capital projects take a long time, and in a crisis landscape, funders inevitably focus on the short-term

Trusts and foundations often award capital funding in a different way to project grants. If you apply for £25,000 towards a £200,000 project, rather than a funder immediately awarding a grant, they might make a conditional pledge that you can draw down on later, once you’ve raised enough for the project to start.
 
This approach helps funders to manage risk, but it introduces other problems. If you're in the early stages of a capital campaign, their pledge might remain unused for 6, 12 or even 18 months while you fundraise the rest – and in that time, they’re not having any charitable impact.
 
Remember that many trusts and foundations are registered charities themselves, so they have their own charitable objectives to work to, and need to report back on their impact. So as well as focusing on lower-risk projects, a funder might well prioritise applicants that can achieve shorter-term impact.

None of this is makes a capital project impossible - but there are a few key steps you can take to help convince sceptical funders:

1. Be crystal clear on your outcomes

With a capital project, it's easy to get wrapped up in the specifics of what you’re fixing or building, and the implications for your organisation. This stuff needs to be in an application somewhere, but it's less important the why.

Who will benefit from your capital project, and in what specific ways? What will they do or experience in the new space you're creating, and how will this change their lives and/or improve the local community?

Try to distill this into four or five clear and distinct bullet points. If you can tie this in with the impact of the pandemic (for example, if this has exacerbated certain needs among the people you support, or resulted in the closure of alternative services), this will help to convince a funder that your project is needed now​.

2. Explain how you will deliver your project safely and reliably

As mentioned above, Brexit and Covid bring further complications for capital projects. So the more you can show that you're a safe pair of hands, the more you'll get a risk-averse funder on side.
 
For example, have you created a risk assessment and detailed contingency plan? Have you consciously chosen suppliers that work in a Covid-secure way? What is your ‘Plan B’ to avoid disruption to services if there are delays? Have you allowed some flexibility in your budget for unexpected costs? Don’t expect a funder to assume these things are in place - you need to convince them that you've been diligent and methodical.

In the current climate, you need to prove you're a safe pair of hands to convince a funder to open their wallet for your capital project

3. Make a virtue of your previous expertise

For similar reasons, your previous track record will be a factor for funders. Has your organisation successfully delivered other capital projects? If not, do any of your leadership team or Board bring relevant experience from elsewhere? Evidence of previous experience in areas such as project management, financial management and architecture / accessible design can be a real plus.
 
If you can't point to this, a funder might reasonably expect you to show how you're buying in the appropriate professional expertise and guidance, or assembling an experienced project steering group.

4. Ensure you have all the necessary supporting materials in place

​Capital funders often insist on specific criteria such as you having an architect’s plan, proof of building ownership or a long lease, and a certain level of match funding secured.
 
There’s good reason for this. An architect’s plan shows that a project has been professionally designed and can be an insurance policy against nasty surprises that crop up once work has started and threaten to delay or derail a project. A long lease ensures that a project will definitely have long-term charitable impact rather than benefitting a private landlord for unknown purposes. Match funding reduces the chance that a funder's pledge will remain unused for a long time while you scrabble to raise the rest.

Many funders insist on you having an architect's plan - it gives confidence that your project has been professionally designed

Sadly, no amount of engaging project information is a substitute for meeting these requirements, for a risk-averse funder with plenty of worthy projects to choose between. Make sure you know exactly what a funder expects you to have in place before deciding to apply. Even if these items aren’t mentioned as essential requirements, provide them where possible anyway – you can always link to digital files to avoid sending bulky additional material through the post.

5. And finally, consider breaking your capital project into phases

​There's no getting around the fact that capital projects are high-risk, even if you can action all of the above, and many funders might continue to be more risk-averse and short-term in their thinking for a while.
 
You might benefit from dividing a complex capital project into several independent phases, each with their own smaller fundraising target, project timeline and set of outcomes. This could be particularly helpful if you haven’t raised much yet and don’t have previous experience of managing capital projects. It'll enable to get started, demonstrate impact and improve your track record of successful delivery sooner, even if it means temporarily compromising on your ambitions.