November 14, 2017 : Ilse Mackinnon
Building on strong foundations: charitable trusts gave £300m last year
Would you be surprised to hear that Scottish grant-making trusts and foundations gave £300million to Scottish charities last year? Or that the amount donated by grant-making trusts has doubled in the last decade, up from £128m in 2007? Or that it now accounts for 6% of the sector’s income, up from 4% a decade ago?
The way modern charities fund their activities has changed so much in the last decade, with public sector contracts and social enterprise driving huge growth in turnover, from a total sector income of £3.2billion in 2007 to over £5billion in 2017. But it turns out traditional funding has kept pace with the cool new funding kids on the block. The importance of grant-making trusts has actually increased, rather than decreased. If we look at some of the big foundations we can see a couple of reasons for this:
- growth of the Postcode Lottery – launched in 2007, the Postcode Lottery has grown steadily and the various strands disbursed a total of over £40million last year, single-handedly accounting for a large portion of the growth
- continued growth through public donations – we’re still seeing big names like Comic Relief and BBC Children in Need drawing in huge public support
- increase in philanthropic individuals, often business leaders, setting up large foundations – in recent years we’ve seen the Wood Foundation, the Weir Charitable Trust, the G Salvesen Charitable Trust, and the Pirie Rankin Foundation to name just a few
- as well as these big foundations, we have hundreds of small grant-making trusts in Scotland and new foundations, benevolent societies, charitable trusts and funds being set up and joining the Scottish Charity Register every year.
Many large and small charities rely on grant-making trusts, some to fund core activities, others for investment to try out new ideas. Medium-sized charities are particularly reliant on grants from foundations, with those grants accounting for a sizable 15% slice of their overall income. As pressure increases on public sector funding, many charities are looking to build income from other sources. In our most recent Sector Forecast one in five charities told us that they hope to increase funding from trusts. However, there was also concern that this would lead to increased competition for limited resources.
In our Insights paper on Grant-Making Trusts I’ve also highlighted a couple of issues that emerged in our research, both for applicants and funders. One of these areas is the benefits that might come from better intelligence and co-ordination of effort, for example knowing more about who is funding what types of activity or beneficiaries and in which geographical areas, and what types of services remain under-funded – so-called hot spots versus cold spots. The current focus on Open Data is opening up interesting new avenues for the sector. Initiatives such as 360 Giving are using new technologies and publishing data from funders to help “people to understand and use the data in order to support decision-making and learning across the charitable giving sector”. Anyone interested can search the funding histories of over 50 big funders on the 360 GrantNav site, which provide info on over 200,000 individual grants made across the UK in recent years.
While to those on the outside some grant-makers still move in mysterious ways, the hundreds of charities out there bidding for funds will appreciate this increased transparency if it means they can improve their applications and tailor their fund-raising efforts to the most appropriate funder.
One thing is certain – grant-making foundations are, will continue to be, a vital and much appreciated source of funding for many Scottish charities, funding both tried and tested local projects as well as allowing our sector to try out innovative new ideas.