Chantal Hughes: Core funding is crucial for small charities

Letting charities determine how to allocate funds and deliver services effectively is the difference between a charity thriving or closing its doors

Chantal Hughes
Chantal Hughes

Working in the third sector in the current financial climate is tough, with many charities struggling to secure funding to pay for their core resources. I have worked in the charity sector for more than 20 years, so dwindling core resources is something I have experienced first-hand.

Without premises, staff, working IT systems, stationery and functioning kitchens, most charities simply could not continue to keep their doors open and provide much-needed services. It is these costs that core unrestricted funding can deliver.

In many ways the modern funding cycle can be a double-edged sword. As grant-givers demand that charities become more procedure driven and vigilant (rightly so when public money is at stake), more money is required to meet these demands. Insurance, for example, is a massive expense for many smaller charities. The Hampton Trust recently had to pay for cyber security to ensure all our sensitive material and data is secure, bringing our annual insurance bill to an outrageous amount for which it has proved hard to find funding.

Among grant funders I increasingly see a preference for change and innovation as they constantly look for exciting new projects to back. Most grants from commissioners such as local authorities and police forces are tied to certain projects and promises because of ever-curtailed budgets. In Hampshire, where the Hampton Trust is based, the council has made cuts of more than £400m in the past 10 years, with a further £80m of cuts expected by 2021.

This model of project-driven funding can be restrictive and sometimes crippling for smaller charities, with no money left to allocate to overheads.

As a result, I’ve seen so many smaller charities lose funding to large charities that can afford to swallow the overheads, or merge in a bid to reduce costs by sharing office space or senior management teams. Very rarely do I see it work. Small charities have an unwavering dedication to what they do and unique expertise and skills that are hard to replicate or share.

Thankfully, we are seeing a very welcome turning of the tide from grant funders, led by the likes of the Lloyds Bank Foundation and the Esmée Fairbairn Foundation, which see the value of investing in resources. It shows a willingness to support the third sector, recognise that the services we deliver are necessary and trust that we are the experts in what we do.

These longer, unrestricted grants allow our charities to become stronger, sustain more services and become more adaptable to changing polices. The application process for core funding is also more rigorous and regulated,because it is unrestricted and relies on building long term relationships, something I believe will benefit service providers and users in the long run.

In essence, funders are investing in us, our ethos and our mission, and letting us determine how best to allocate funds and deliver the services effectively. This shift in allocation and grant-giving is channelling limited public money in a more efficient way. Quite simply, it is the difference between charities closing their doors or continuing to deliver important, life-changing services.

Chantal Hughes is chief executive of the Hampton Trust

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