We often get asked by charities and social enterprises for advice on how they can raise more unrestricted funding from trusts and foundations.
Many organisations are very successful at securing grant income, yet still find themselves in a tight financial position because the majority of funding tends to be restricted to a specific purpose. While project funding is vital, it rarely gives you the flexibility you need to thrive as a resilient and innovative organisation.
We've compiled some of our best tips on how to achieve the holy grail of unrestricted grant income - from some obvious funders to approach, to how to think outside the box when it comes to improving your financial position through trusts and foundations fundraising.
1. APPLY TO SPECIALIST CORE FUNDERS
While it’s understandably tempting for funders to want to fund tangible and exciting projects, this doesn’t give organisations the freedom to pay key staff or cover central costs. Not unlike yoga, strengthening your core is vital and will make you much better at everything else you’re trying to achieve too.
There’s a growing recognition in the sector that smaller organisations in particular need access to more flexible funding if they are to survive and thrive, particularly at a time when so much local authority funding has dried up. Lloyds Bank Foundation CEO Paul Streets has been particularly vocal about the damage caused by 'projectitis'.
Here are a few funders that give core funding to a broad range of charitable causes:
If you’re looking for core funding, here are a few tips:
2. IDENTIFY YOUR ORGANISATIONAL DEVELOPMENT NEEDS THEN APPROACH SPECIALIST FUNDERS
It's easy to focus on core funding, but what are your specific development needs which mean that project funding isn't suitable? For example, you might be looking to scope out an innovative new idea, invest in a building or specific piece of equipment, or improve your digital capabilities.
For each of these areas, there are specialist funders who can help. For example:
Clearly these types of funding will be a little more restrictive than no-strings core funding. However, being specific about your needs will enable you to make a more convincing case for support and open up a broader range of potential funders, thereby increasing your chances of securing that much-needed investment.
3. BUILD GREAT RELATIONSHIPS WITH FUNDERS
Many funders don’t explicitly provide core funding, but will consider providing unrestricted grants to organisations they know, value and trust. But getting in position to access these opportunities takes time, effort and patience.
You’ll probably need to secure at least one, possibly several project-specific grants from a funder first, then focus on building a relationship with them. It helps to go above and beyond expectations by thanking funders quickly and in a memorable way, then reporting well on the grant you received – either by demonstrating that the project went well, or by reflecting honestly on any challenges or complications experienced.
We recently blogged about the importance of building relationships with individual donors and how many organisations get this wrong. The same principles apply to trusts fundraising. A funder that’s engaged in your work is worth 10-20 funders on a cold prospects list, yet so many organisations prioritise the wrong thing.
Once a funder knows you well, they could support you by inviting you to apply for an invitation-only funding round, proactively supporting you with an urgent fundraising campaign, recommending you to other funders, or even just sending you an unsolicited extra cheque. This happens surprisingly frequently but almost never by accident - you need a strategic focus on building great relationships.
4. IMPROVE YOUR BUDGETING AND FULL COST RECOVERY
This tip isn’t so much about securing unrestricted funding, but reducing how much you need in the first place. Trusts and foundations fundraising isn’t just about writing applications – with a better approach to project planning and budgeting, you can ensure you have a smaller funding gap to fill.
Create a budget calculator for staff, with fixed rows for venue hire, volunteer expenses, travel etc. This helps people to cost up projects accurately in the first place and avoid budget overspends which then need to be covered by unrestricted funds.
Calculate staffing costs for projects carefully, checking with every funder what you’re allowed to include. Don’t just include the main project staff – if other staff (e.g. your Director) are committing time for line management or evaluation, include a percentage of their time if possible. This ensures your project funding fully covers the true cost of your projects, meaning your unrestricted funds can go on something else.
Include a contribution towards overhead costs in each project budget – this could be a blanket 10% or a more specific calculation, depending on the funder's requirements. Collecting lots of small core contributions in this way is often easier than leaving yourself with a big funding gap to cover with core funding requests.
5. SEND SPECULATIVE CORE FUNDING REQUESTS TO SMALLER FUNDERS
Trusts and foundations fundraising is not a numbers game, and we don’t recommend the ‘spray and pray’ approach of sending generic funding applications quickly to lots of funders.
That said, if you’ve conducted prospect research to develop a funding pipeline, you might find you build up a collection of potential funders who have very broad funding interests and no specific application form or guidelines, making it difficult to identify a specific project to approach them about.
You could therefore consider putting together a core funding template, broadly explaining your work and impact in 2-4 pages and giving a couple of examples of how a small grant would benefit you. You could then send this to batches of say 10-20 funders at a time. Expect a low success rate (even 5% might be optimistic) but treat this as a shot to nothing with funders whom you wouldn’t otherwise approach.
This is likely to work best for smaller, community-rooted organisations whose work is easy to explain and has emotional impact, and who don’t have high reserves. It’s only worth trying in some circumstances, and the usual recommendations for trusts fundraising still apply – you should try to contact the funder first to check if they can give you any advice on applying, and you should tailor each application to their funding interests and average support level as much as you can.
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