I work for a grant making charity and had a discussion with a Trustee regarding risk and the nature of grants made. The awards are primarily made for capital items. If you fund the installation of new windows or purchase of a new mini-bus you can go round and see exactly what the funds granted have been used for, little risk. A nice clean process.
However it is often difficult to monitor and follow the use of funds granted towards running costs and salaries and in addition if the recipient of the grant is not successful is obtaining additional funding once one grant has expired dire financial consequences can result. The Trustee explained that over 15 years ago the organisation funded a support group for three years to a considerable extent but at the end of the period the group failed to get further funding and had to close. Regrettably the group went to the press blaming the funder with headlines such as "charity slashes funding, 5 redundancies etc."
I explained that I felt we were not serving a key sector "those in need", a key objective, and that many had suffered over the last 15 years because of the ruling. A degree of movement was achieved in that the premises rental costs would be considered more favourably but salaries/wages would still be excluded.