Funders have shifted from providing restricted funding to providing unrestricted funding since the pandemic, a new Third Sector Trends report finds.
In 2019, 46% of third sector organisations surveyed received unrestricted funding, which jumped to 60% in 2022.
At the same time, the percentage of organisations that reported grant funders “took the time to get to know them” fell from 57% in 2019 to 48% in 2022.
More organisations had reserves after the pandemic
The latest Third Sector Trends report, published yesterday, received 6,070 responses from voluntary organisations in 2022, around 65% of which were charities, while others included community interest companies and faith organisations.
The research is authored by Durham University’s Tony Chapman, director of policy and practice at its department for sociology.
The reports have been funded by Northern Rock Foundation, Community Foundation Tyne & Wear, Power to Change and more.
Third Sector Trends research found that more organisations held reserves after the pandemic – with 76% doing so in 2019 to 83% in 2022.
The report reads: “Now, grantmakers face a conundrum. Should they continue to rely on and trust in the way they offer grants – or refocus attention on specifics so that they can account for the impact they achieve?
“During the pandemic, many grantmakers were thinking hard about future strategy, suggesting that unrestricted funding may become less common again when objectives are closely aligned with specified social goals. In such circumstances, grantmakers tend to be more stringent when stipulating the purpose of funding and inviting applications from TSOs.”
‘There’s often an assumption that funders do not fund core running costs’
During the launch event yesterday, Stephen Miller from Power to Change said the funder had seen a lot of benefit in providing unrestricted funding.
“Certainly, we’ve seen a lot of benefit in stepping aside in working with a partner. It's really about how we enable and support them to achieve the sort of impacts and outcomes they want to achieve.”
Rob Williamson, chief executive of Community Foundation Tyne & Wear, also sat on a panel with Miller alongside Jane Ide, chief executive of ACEVO, and Sara Llewellin, chief executive of the Barrow Cadbury Trust.
Williamson said lots of organisations assume that Community Foundation Tyne & Wear does not provide core funding because it is not under the term unrestricted.
He said: “In terms of core running costs, there’s often an assumption that funders don’t do it. And we sort of have the sector that we deserve because we’ve created a culture in which very large funders, particularly the lottery distributors fund on a project basis, and the sector has adapted to that and has a project mindset. And it’s going to take a lot of unpicking to reframe that culture, but it also means that we need to be really clear about what we mean when we are assessing an organisation, not an activity.”
Related articles
