News Analysis: Charities dream of no-strings cash

Mathew Little

Most charities want to increase unrestricted income, and some funders are acquiescing.

Lawrence Wood, chief executive of the Multiple Sclerosis Resource Centre, is prepared to tell the unvarnished truth about the typical charity grant application.

"For just about every source of income out there - from the National Lottery onwards - we practically have to make up a project or pretend we're going to do something because the money is there," he says.

"But that's not what we want do. What we need more than anything else is money to do what we do as a charity - unrestricted funds."

Wood's confession is likely to produce more knowing smiles than disapproving tuts. According to research by voluntary sector think tank nfpSynergy, published last week, charities are desperate for money they can spend as they wish.

Nine out of ten respondents said they wanted to increase their percentage of unrestricted income. Many were prepared to sacrifice income if they could access more 'no-strings' finance.

Projects

The perennial lament from charities is that their funders - be they government, the lottery or independent trusts and foundations - see value only in projects.

A therapy centre, a plan to save an endangered animal or a scheme to encourage low-income children to eat healthy food will attract grants.

But the day-to-day work of charities - the jobs, the offices and the computers - do not.

As a result, the gleaming new therapy centre gets built but closes two years later because there is no money to pay the staff.

"It would be helpful if the donor side of the community had a little more understanding of the non-project-specific needs of the charity sector," says Will Travers, chief executive of the Born Free Foundation. "We are constantly being asked to be professional and long-term in order to provide continuity of support. But projects, by their very nature, don't offer continuity."

Wood expresses the unfulfilled wishes of most charities when he says: "There is a great need for funders who say 'you are running this charity, we like what you're doing and you know the best way to help the people you're there to serve'."

Predictably, the funders are gazing down the other end of the telescope.

They invariably want tangible outcomes, desire credit for what their money has bought and are fearful of being drawn into a dependency relationship by supporting organisations over several years.

"We'd all like money without strings," says David Emerson, chief executive of the Association of Charitable Foundations. "But a responsible grant-maker can't just say 'here's two million quid - go away and play with it'. They do need someone to come back and explain what they did with the money and what difference it has made."

Some funders are loosening the reins. Last month the Tudor Trust widened its grant guidelines after realising applicants had been "shoehorning" their work to fit in with funding priorities.

The trust now wants to help charities "follow their noses" and is seeking applications from groups committed to growth, progression and development.

"The importance of unrestricted funding should not be underestimated by funders keen to obtain the maximum value from their grants," says Nicky Lappin, research and information manager at the trust. "Our new funding guidelines give us the chance to hear what organisations really want from us. It is then up to us to trust them to go ahead and do the work."

The Big Lottery Fund has also abandoned its project-only funding policy in favour of full cost recovery and grants of up to five years. "Three-year project funding has, in a lot of cases, had a very negative impact on the sector," says Vanessa Potter, director of policy at the BLF. "We are moving towards more of an investment approach."

Dilemma

But Emerson cautions that there is no ideal solution in the debate between restricted and unrestricted income. More long-term, 'no-strings' grants will mean less money for projects. "That's the dilemma for trusts and foundations," he says. "There will be fewer but happier grants recipients and more people complaining that they can't get any money.

"There is not an infinite pot. Is it better to have a smaller number of well-funded, well-resourced, core cost-provided charities and lots of others not getting grants?

"Or is it better to have the hotchpotch we have now with all the problems of mission drift? I don't have an answer to that."

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