Grants are also money donated to voluntary organisations. They are usually larger amounts of money than gift donations and are given by a funding organisation for a specific purpose or project.
The voluntary organisation will usually write an application to receive a grant from a funder. Grant funders include charitable trusts and foundations set up by companies or individuals to distribute funding to a particular cause: for example the Joseph Rowntree Charitable Trust, which was founded by an individual to address conflict and injustice, or The Lloyds Bank Foundation, set up by the bank to help to break the cycle of disadvantage in the UK. The government also gives out grants at both a local and national level. Most grants are given for specific projects or pieces of work covering a period of two to three years. Grants account for around 10% of the voluntary sector’s income.
In the UK, many voluntary organisations with an annual turnover of between £500,000 and £5 million have traditionally been ‘grant-dependent’. This means that they are receiving most, if not all, of their income from grants.
Can you think of any reasons why being ‘grant dependent’ may be a problem?
The grant(s) might stop: Being dependent on any one source of income is risky in case it suddenly stops or reduces. The voluntary organisation is unlikely to have enough funds to continue the work or time to raise alternative funds to keep staff or volunteers. If a grant ends or is withdrawn then the amount of funding lost is usually quite large, compared to losing one individual donation.
There are fewer grants around: There have been fewer grants available in the UK in recent years. This is mostly due to the reduction in grants from government sources, especially Local Authorities. For more than a decade the government has been gradually moving to offering more funding through contracts rather than grants. Overall income to the voluntary sector from government has fallen since a peak in 2009/10.
Risk of ‘mission drift’: Voluntary organisations that are too dependent on grant funding are sometimes in danger of deciding what activities to run depending on what is most likely to win grant funding, rather than what will contribute the most to the organisation’s purpose. There is a danger that they might try to bid for work that has drifted outside of the organisation’s mission.
Even though they are getting harder to find, grants do have some big positives for voluntary organisations, including:
once a grant is secured, it can often provide a large and reliable income for several years. This means grants often have a good ‘return on investment’ as the cost of securing and administering the grant is often relatively low in proportion to the amount of money received.
grants will often pay for activities that might not be particularly attractive to the public or other supporters.
Charities can often build up good relationships with grant funders to make the case as to why an activity is important and help them to understand their area of work.