Funding in tough times

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1. How do we maintain our level of funding?

If you are an ‘endowed’ foundation this is a critical issue. Just as your applicant’s needs rise, your income drops. It is important here to consider the long term.

• Should you reduce your overall assets in the expectation that you can re-build them in the future?
• Is the real value of your assets higher or lower over the last ten years? What might you deduce from this? 

Further information: 21st Century philanthropy

2. How do we ensure our funding is properly targeted?

Clarity about who and how many people benefit from your funding and how can have a significant impact on the effectiveness of your funding.

• How do you know that your funding is reaching the people who need it most?
• Can you profile the people you expect to benefit from your funding?
• What sorts of activities are you most likely to fund?
• Are there groups who could benefit who you are not reaching?
• Do you have a really clear vision about what you want your funding to achieve?
• What sort of organisations and projects are the most likely to apply?  

Further information: Funding process 

3. How do we know what we’re funding is achieving results?

Money spent on evaluating the effectiveness of your funding can be money well spent even though it may reduce the amount of money available to applicants.

• You expect the organisations you fund to have a monitoring and evaluation framework for their project, but do you have one for your funding programme overall?
• Just how much do you really know about what happens to your funding?  
• Without overburdening organisations are we getting enough information about whether our funding is bringing about the changes we want to see?  
• Are you funding organisations because they are sound operationally or because they are most likely to achieve your policy goals?
• Should you be investing more in your own evaluations?
• What role should you play in sustaining the work you fund and at what level?
• When was the last time your reviewed your methods of application and distribution?  

4. Are we using all our resources effectively?

Most funders have investments of some description. These often hugely exceed to amounts they disburse in grants each year.  Clearly at a time of plunging stock markets you will be closely examining your investment policies.

• Are your funds invested in support of your aims and objectives? 
• Is it time to look seriously at mission related investment for example?
• Should you be looking at spending some of your capital?
• Would your goals be best achieved by a plan to spend out your assets over a set period?
  

Further information: 21st Century philanthropy

5. How should we respond to changes in government policy?

Government will clearly be making changes to its policies that affect charities. It will be cutting back funding in some areas and increasing it in others. How will this affect what you do?

• Should you review policies that prevent you from ‘stepping in’ to fill gaps left when statutory bodies pull their funding out?
• Do you want to take a stance on reduced statutory funding or will you continue to focus on your intended outcomes and do what is necessary to achieve them?
• How will you respond to gaps in services left by reduced funding?
• Will you make emergency funding available?

6. What are other funders doing and how should we respond?

Knowing what other funders are doing or planning and how your work relates to their can be very helpful.

• Are there opportunities for you to work with other funders and achieve more by pooling resources?
• Is there a role for you in the current economic climate to fund the continuation of organisations and projects that are of proven worth?
• Should you consider funding for longer periods so that organisations can plan their future and sustain services
• Is any funder funding innovation and what is the impact of this in the policy area you are working in?

7. Should we invest in maintaining existing services, starting new ones or both?

As funding availability reduces there are some dilemmas to be faced. It is easy to be distracted by operational issues rather than concentrating on the purpose of your funding and how best this can be achieved.

• Should you support a new organisation when there are already so many others in need of funds?
• Could continuation funding or lack of it have a significant impact on existing services?
• How likely is it that alternative funding will be found; should you risk the impact of your funding already given or consider a change in policy in response to changing circumstances?
• What is the best way of achieving your policy goals?

8. Is our money better spent on funding the ‘full costs’ of organisations or just their activities?

Funding based on full cost recovery for the recipient has started to become more frequent in recent years. This means fewer grants overall or another change to compensate.

• Will your money really go further if you retreat to a position of direct project costs only?
• Are there other ways you can invest in the sustainability of organisations?
• Should you change our policy from direct costs only to full cost recovery?
• Is it better to continue funding an organisation or to spread your funding around?

9. Does funding ‘outcomes’ add value or is it unrealistic for us to expect organisations to be familiar with this way of working?

Assuming you are a funder that has a clear vision about what you want to see changed (or not changed) in society it is clearly far better to expect your funds to achieve changes rather than just fund activities. Outcome funding has also become more popular in recent years. However there is, as yet, not a great deal of evidence that a majority of recipients are geared up to respond to this challenge, especially in self-evaluating the outcomes their projects are achieving.

• Does outcome funding mean that you are funding larger, better resourced organisations rather than smaller ones who may be better placed to achieve the outcomes you want?
• Are there things you can put in place to help smaller organisations you want to fund that develops their practice and what would this achieve?
• Who needs to know the most about outcome funding - the funder or the funded organisations?
• Is your work as a funder outcome-driven and can you demonstrate this in the context of your organisation?

10. Should we concentrate on funding a smaller number of organisations?

Less money means fewer grants, or does it? There are many ways of looking at this. Perhaps smaller grants and more of them could have a similar impact.

• How much do you really know about the stakeholders and the needs of their client groups in the your funding area?
• What are the gaps that present real difficulty for them?
• Are there groups not receiving funding who simply can’t compete with some of the larger players?
• Are there different types of funding that could have a greater impact?
• Could investing in organisation development provide a lasting legacy?

Useful links

• Association of Charitable Foundations
• Tracking the impact of recession on giving (Philanthropy UK)

Have your say

How has the economic climate affected your funding or how you give grants? Join the discussion on the fundraising forum.