More charities are applying…far more than funders can handle
The surge in grant applications is unprecedented. The City Bridge Foundation, for example, temporarily closed to new applications after what it described as a “surprising” increase in funding requests. One VCSE programme reported a 40% rise in applications in just one year…a trend echoed throughout the sector.
For funders, this means rejecting more applications than ever before, a painful process even for the most seasoned grantmakers.
Why charities are turning to trusts and foundations.
Years of shrinking local government budgets and public contracts that don’t cover true service costs are taking their toll. On average, charities are now subsidising public sector contracts by 35% (NPC, 2024).
Local Age UK branches have been forced to shut down, citing “severe financial challenges” and dwindling income opportunities. As donations fall…both from the public and philanthropists. Many organisations are relying heavily on foundation funding just to stay afloat.
When one Funder steps back…the whole sector feels it
Each closure of a major funder sends ripples through the sector. The recent strategic pause by the Tudor Trust left a noticeable gap. As one door shuts, others see a spike in applications…causing a domino effect.
Funders like Tudor are shifting their strategies, often to better support racial, social, and economic justice. But these strategy resets, however well-intentioned, often leave frontline charities scrambling for support.
Has better equity led to more competition for grants?
Increased efforts to reach underfunded and marginalised communities are finally making an impact, that’s a positive thing. More organisations, especially those led by or serving underserved communities, are now aware of and applying for funding.
Some funders believe their success in equitable outreach is partially behind the surge in demand. While this creates pressure, it also shows progress in funding access.
Devolution & Single Settlement
Often prioritise economic development over public service reforms. Voluntary sector in the past could typically bid for work from multiple government departments. With a single settlement, this sector has to ensure they have a good relationship with their Combined Authority, as there is only one place to go to get this funding.
Charities at Risk of Collapse
With more applications and less availability, many fear the worst: closures based not on merit or impact, but on cash flow. This raises key questions:
- Who is applying?
- Who is getting funded?
- Are smaller or community-based charities losing out?
Without clear data, we risk losing the organisations doing the most vital work.
The funders’ dilemma in a post crisis world
Should funders be spending more today to prevent charity closures or hold back funds for future emergencies? It’s a difficult choice.
As Heather Taylor of Trust for London put it: “Our trustees could have decided to spend all our resources after the Second World War… If they had, there wouldn’t have been any funding to support Londoners through future crises.”
Still, the sector must ask: are we facing a future crisis already?
Should funders commit to a minimum annual spend?
In some countries, grantmaking foundations must spend a fixed percentage of their assets each year. In the UK, there’s no such rule.
NPC advocates for greater transparency, encouraging trusts to publish their payout ratios and justify them. This could help ensure foundations respond appropriately to today’s challenges.
Why this isn’t just a funder’s problem
Foundations may only provide about 10% of the sector’s income (Charity Finance Group, 2024), but their closures have an outsized impact. The issue extends beyond funders…governments also rely on charities to deliver essential services.
We need new funding models. More sustainable contracts. And closer collaboration between charities, funders, and policymakers.
Because this isn’t just about grants…this is now about survival.