How Small Charities Can Maximize Income from Grant-Makers

The hallmarks of a model
grant-maker in the eyes
of charities
Cian Murphy and Elin Lindstrom
December 2012

The research
- Free report:
STAGE 1

Survey, Taking nothing
Finding what an telephone for granted
ideal grant- interviews, open - Powerpoint
maker looks like forum with presentation
charities with detailed
results
STAGE 2

Grant-makers’ Report in
Interviews
point of view January 2013

Finding new sources of
funding in tough times

CM 3

Trusts income is still growing in the
recession
Individuals 14.3

Statutory services 13.9

Voluntary sector 1.3 2.1

Income from
Investments 2.4
grants

Private sector 1.6

0.6
Trading subsidaries

National lottery 0.5

Source: NCVO, What is the voluntary sector’s total income and expenditure?, http://data.ncvo-
vol.org.uk/almanac/voluntary-sector/finance-the-big-picture/what-is-the-voluntary-sectors-total-income-and-expenditure/ 4

Trust-fundraising sees quick rewards with
high return

Source: Gimme, gimme, gimme – A guide to fundraising for small organisations, 2011 5

Putting the
Improvements to
grants where Making grants
the application
they’re needed go the furthest
process

EL

Income from grant-making trusts
All respondents

Average income from grant-making trusts:
£411,000
30%

20%
17%
15%
13%

5%

Nothing <£100,000 £100,000-£150,000 £150,001-£300,000 £300,001-£500,000 £500,001+

Q14: “What is your approximate total income from grant-making trusts (in the last 12 months)?”

Base: 300 not-for-profit sector workers, Jan-Mar 2012
Source: Fundraising from charitable trusts in 2012, nfpSynergy 7

Small charities rely the most on trusts
2%
income Largest charities
% of income from trusts
Smallest charities £978,000
% of income from trusts
33%

Mean income from grant-
making trusts

£452,000

£283,000

£82,000

Charities with less than 500k £501k - £2.5m £2.51m - £15m Charities with more than
total income £15.1m total income
Q14: “What is your approximate total income from grant-making trusts (in the last 12 months)?”


Amount spent on fundraising from grant-
making trusts
All respondents

Average amount spent:
£5,400

24%

19% 20%

15%

10%

3%

None Very little/ not £500 or under £501-£1000 £1001-£5000 £5001+
much

Q14: “How much do you spend on fundraising from grant-making trusts, excluding staff salaries?”


Staff salaries for grant fundraising

All respondents

Average amount spent on salaries:
£36,000

23%

17%
15%
12%
11% 10%

6%

Nothing £15,000 or under £15,001-£25,000 £25,001-£30,000 £30,001-£40,000 £40,001-£50,000 £50,001+

Q14: “How much do you spend on staff salaries for people working on grant-making trusts?”


Few charities have large trust fundraising
teams
All respondents

Average number of staff:
1

27%
26%
24%
23%

None Less than 1 1 (1-1.49) More than 2 (1.50+)

Q14: “How many full-time staff (FTE) are devoted to grant-making trusts?”


Larger charities outperform smaller ones

All The largest The smallest
respondents charities charities
Average grant £411,000 £978,000 £82,000
income
Average costs £41,600 £86,600 £13,800
(salary plus non-
salary)
Income per £9.9 £11.3 £5.9
pound invested

Base: 279-307 not-for-profit sector workers, Jan-Mar 2012

The story so far......

• Smaller charities much more dependent on grant-making
trusts
• But smaller charities have the lowest return on
investment
• What can grant-makers do to make sure funds reach
those who need them most?

Putting the
Improvements to
grants where Making grants
the application
they’re needed go the furthest
process

CM

Imagine a grant-making trust had just offered
you £1 million as a grant for a restricted project…

…They then offer to give you a grant which you
can spend on any of your work but for a lower
amount than £1 million…

What is the smallest sum you would accept in
place of the £1 million restrictive grant?

15

Charities are willing to accept lower grants
in exchange for income being unrestricted
£100k 18%

£200k 3%

£300k 5%
The average lower amount accepted
£400k 3% for an unrestricted grant was
£630,000
£500k 15%

£600k 4%

£700k 8%

£800k 11%

£900k 7%

£1 million - same as the original grant 28%

Q5: “Imagine a grant-making trust had just offered you £1 million as a grant for a restricted project. They then offer to give
you a grant which you can spend on any of your work but for a lower amount than £1 million. What is the smallest sum you
would accept in place of the £1 million restrictive grant? (please select one option only)”


But larger charities are far less concerned
about getting core funding
Mean score

£1,000,000

£800,000 £766,292.13

£666,666.67
£621,978.02
£600,000
£488,596.49

£400,000

£200,000

£0
Charities with less than £501k - £2.5m £2.51m - £15m Charities with more than
500k total income £15.1m total income


Arts charities are eager for core funding,
while medical charities are least concerned
£1,000,000

£800,000

£627,480.92 £643,636.36
£586,666.67 £582,142.86
£600,000 £557,692.31
£527,272.73

£400,000

£200,000

£0
All respondents Medical/ Overseas aid/ Disability Arts/Culture/ Environment/
Health/ Famine relief Heritage Conservation
Sickness


Different perspectives on unrestricted
funds
“This is too hypothetical a
question, as it entirely depends “Our clients need reliable and regular
what the restricted project is - if on-going support, they often tell us
it is of strategic importance then that it is far more valuable to them
£1m restricted is as useful as than short-term projects. This means
£1m unrestricted.” that unrestricted funding - funding
that we could use to sustain and
improve these core services - is hugely
“I don't understand the question. valuable to us.”
Why wouldn't we accept the
larger grant with the restriction?”



93% of respondents were keen for more
unrestricted funds to be offered
Agree Strongly agree

I would like grant-makers to give better
32% 65%
feedback on applications

I would like grant-makers to provide more
funds that were unrestricted or grants for 29% 64%

core costs

I think it would be/is very helpful when
grant-making trusts allow multiple
46% 28%
applications for different projects from the
same organisation

0% 20% 40% 60% 80% 100%

Q7: “Please indicate how strongly you agree or disagree with the following statements by ticking the appropriate box”


‘Grants plus’ less of a priority
Agree Strongly agree

I like online application processes 45% 25%

I think the two-stage application process is a
big improvement over a single-stage 42% 19%
application process

We often have to manipulate existing
projects to meet grant-makers' guidelines or 48% 18%

restrictions
I would like grant-makers to provide more
support other than grants (e.g. fundraising
23% 10%
training, business planning support, comms
advice, etc)
0% 20% 40% 60% 80% 100%

Q7: “Please indicate how strongly you agree or disagree with the following statements by ticking the appropriate box”


• Smaller charities much more dependent on grant-making
trusts
• But smaller charities have the lowest return on
investment
• Potential win-win to make sure grants reach those who
need them the most?
• Unrestricted is worth more than restricted for many
organisations
• And particularly for smaller organisations and those from
certain sectors
• Charities think they can make grant-makers money go
further if it is unrestricted

Putting the
Improvements to
grants where Making grants go
the application
they’re needed the furthest
process

EL

Application process a high priority for charities
Top 5 attributes “Trusts that speak to the
charities and help with the
• Clear guidelines application process. Those
that have good means of
• Easy, fast application process communication, encourage
questions and exploration of
• Good communications relationship building.”

• Relationship building
• Helpful, providing guidance

Q15: “Which charitable trusts do you think should be role models for others and why?” NB Please refer to verbatim document
for full comments.


Charities want a mix of restrictions and
flexibility in guidelines
“Trusts that give very vague
Very clear restrictions
12%
guidelines about their priorities and
receive lots of applications and then
Quite clear
restrictions with only
reject most of them are annoying
very limited flexibility
11%
and a waste of everyone's time.”
Some restrictions
and some clear 59%
flexibility
Few restrictions and
12%
plenty of flexibility
No
restrictions/complete 6%
flexibility
0% 20% 40% 60% 80% 100%

Q9: “What would your preferred approach be to the restrictiveness or openness of a grant-making approach?”


Reporting back on grants is working well

Very difficult 1%

Quite difficult 29%

Not very difficult 53%

Not at all difficult 14%

Not sure/ Don't know 2%

0% 20% 40% 60% 80% 100%

Q10: “In general, how difficult or burdensome is the reporting back on grants once awarded?”

Base: 416 not-for-profit sector workers, Jan/Mar 2012
Source: Fundraising from charitable trusts in 2012, nfpSynergy

Waiting for a decision

27

Ideal time to wait for a decision on a grant
application
All respondents

A month or less 42%

Around 3 months 57%

Around 6 months 1% Average ideal time to wait:
2.2 months

Around 9 months 0%

Around a year 0%

0% 20% 40% 60% 80% 100%

Q8: “What would be your ideal length of time for a decision to made on a grant application?” NB the scale on this slide is 100%,
whereas it is 50% on most other slides.


Similar priorities from the Open Forum for
charities

“Feedback is really useful and
important. It would also cut down
on pointless applications. Guidelines and criteria
Acknowledgement of a failed
application would also help
planning.” Contact and relationships

Fund core costs, continuity

Feedback, acknowledge
applications

We asked the 60 fundraisers taking part in the Open Forum to divide into groups and write down ideas for improvements in
fundraising from grant-making trusts. We then asked them to rank their suggestions according to how important they thought
they were.

Base: 60 fundraisers, 27 March 2012
Source: Open Forum on fundraising from grant-making trusts, nfpSynergy 29

But charities could do better too!

CM 30

Success rates for the sector as a whole could
be improved
The average charity
makes 166 applications a
year, a success rate of
41 24.7%

Average number of
125 unsuccessful
applications
Average number of
successful
applications

Q14: “How many grant applications would you say you make a year? (approximately)” and Q14: “How many applications
would you say were successful in a year? (approximately)”


Different sectors have different success
rates
Average number of grant applications per year Average number of successful grant applications per year

300
Medical/ Health /
Sickness had one of the 258

lowest success rates:
21% Overseas aid and
Famine relief had one
of the highest success
rates: 46%

110 116

71
55 54
38
30
12

Arts Culture Heritage Disability Environment Medical Health Overseas aid Famine
Conservation Sickness relief


While larger charities have a much
higher success rate
Average number of grant applications per year Average number of successful applications per year
296
Success rate for the largest charities: 31%
264

Success rate for the
smallest charities:
19%
88 93

60 55

24
11

Charities with less than 500k £501k - £2.5m £2.51m - £15m Charities with more than
total income £15.1m total income



Professional fundraisers are crucial to the
success of big charities

Mean number of successful applications per year

109

37
18
7

No FTE staff working with <1 1 (1-1.49) More than 2 FTE staff working
grant fundraising on trust fundraising
Q14: “How many applications would you say were successful in a year? (approximately)”


How charities can reduce the number of
unsuccessful applications

Tailor applications Avoid straying Consider collaborating
to the trust outside of guidelines with other charities

35


• Smaller charities much more dependent on grant-making trusts
• But smaller charities have the lowest return on investment
• Potential win-win to make sure grants reach those who need them the
most?
• Un-restricted is worth more than restricted for many organisations
• And particularly for smaller organisations and those from certain sectors
• Charities think they can make grant-makers money go further if it is
unrestricted – potential win-win
• Huge number of applications made, with quite low
success rates
• Small charities struggle to get through and have a
particularly low success rate
• Cutting the number of hopeless applications: clear,
accessible and up to date criteria and guidelines

Things to think about

Less wasting of
Putting funds More time and
where they’re unrestricted and resources on
most needed core funds application
process

What to do next...

Grant-makers’
perspective

http://nfpsynergy.net/free-reports-and-presentations 38

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020 7426 8888
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Registered office: 2-6 Tenter Ground Spitalfields London E1 7NH. Registered in England No. 04387900. VAT Registration 839 8186 72

Methodology
Sample:
417 charity sectors workers

Methodology:
We conducted the survey using an online questionnaire

Fieldwork:
The fieldwork was conducted in-house by nfpSynergy

Fieldwork dates:
30 January 2012 – 9 March 2012

41

What sectors the respondents work in
All respondents

Medical/Health/Sickness 29%
Disability 11%
Children/Young people 10%
Accommodation/Housing 8%
Overseas aid/Famine relief 7%
Environment/Conservation 7%

Education/ Training 6%
Economic/Community development/Employment 5%
Relief of poverty/Social welfare 4%

Arts/Culture/Heritage 4%
Animals 3%
Elderly 2%
Religious activities 2%

Justice/Rights 2%
Families/Family welfare 1%
Advice 1%
A/o answers 7%

Q2: “Which sector does your organisation primarily operate in? (e.g. animal welfare/environment/etc.). Please choose what best
describes your sector.”


Percentage of restricted income
All respondents

34%

19%
17% 17%

13%

0-20% is restricted 21-40% 41-60% 61-80% 81-100% is restricted

Q4: “What percentage of your income would you estimate is restricted in some way (e.g. comes from a grant-making trust, the
Big Lottery or local or central government)?”


Income of the organisations taking part
All respondents

29%

11% 12% 11%
10% 10%
7%
5% 5%
1%

Less than £501,000 - £1.1m - £2.51m - £5.1m - £10.1m - £15.1m - £25.1m - £50m+ Not sure
£500k £1m £2.5m £5m £10m £15m £25m £50m

Q3: “What is your organisation’s total income (approximately)?”


Sector of work by percentage of restricted
income 18%
Medical/Health/Sickness 35%
14%
Disability 10%

Children/Young people 10%

Accommodation/Housing 11%
7%
7%
Overseas aid/Famine relief
7%
Environment/Conservation 8%

Education/ Training 6%

Economic/Community development/Employment 10%
3%
7% 61-100% restricted income
Relief of poverty/Social welfare 3%
4% 0-60% restricted income
Arts/Culture/Heritage 3%

Animals 1%
4%

Elderly 4%
2%
1%
Religious activities 3%

Justice/Rights 4%
2%

Families/Family welfare 1%
2%
Advice
Q2: “Which sector does your organisation primarily operate in? (e.g. animal welfare/environment/etc.). Please choose what best
describes your sector.”


How Small Charities Can Maximize Income from Grant-Makers

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