A shocking statistic about the charitable industry is that only 40 charities (0.02 per cent) represent 18.4 per cent of total sector income, while 96 per cent (approximately 160,000) have incomes of less than £500,000 a year (of which 41 per cent, or 68,000, have annual incomes below £10,000*). This 96 per cent is especially vulnerable to external factors such as cuts in government spending and/or charitable grants over which they have no control but which have a huge impact on their funding.
These smaller charities typically operate within their local communities and are often experts on local social issues and needs, but are usually supported by part-time fundraisers who can’t compete with the big, national charities when it comes to completing the multiple, tailored application forms required to apply for funding.
The established but reactive approach of requiring fundraisers to apply for grants one at a time, and the subsequent allocation of grants to those that have the resources and time to submit applications tailored to each individual grant-maker’s criteria, might have worked successfully in the past, but today’s age of web platforms has created an opportunity to challenge the status quo.
Amalgamating data through an online platform builds a complete picture of what or who needs funding and clearly identifies the gaps. In addition, the instant matching of funders with shortlists of relevant fundraising projects from which they can conduct due diligence and offer grants without having to fundamentally change their procedures, simplifies and speeds up the application process, a win-win for all parties.
Instead of considering only their own list of discrete applications for grants, technology enables groups of funders to work together to rapidly and proactively identify and provide funding to those in need, even if they did not previously know each other. Because funders rarely cover 100 per cent of any project’s costs on their own, these technology-enabled collaborative networks of funders can ensure projects are fully funded without the need for multiple applications, sharing funding information easily and transparently. This could make the difference between a small charity continually struggling to pay the bills and facing closure and being able to deliver its core service well into the future.
The biggest pushback we’ve heard from grant-makers is that they don’t want to hand over their personal input and management of the decision-making process to technology. But that’s not what it’s about. Technology is the catalyst for change, giving funders control of the bigger picture by enabling them to work strategically and collaboratively to address the root causes of major social issues rather than just addressing the part of a problem that is relevant to them or that they have budget to fund.
Technology platforms that automatically match local and national projects to grant-makers’ specific funding criteria can be used to facilitate strategic thinking, drive collaboration and eliminate a huge amount of administrative overhead for charities, while enabling funders to align grant management with operational goals and overall charitable purposes.
Technology can be used to unite funders and the fundraising public through match-funding grants to incentivise donations. Think of a "reverse crowdfund" where funders initiate grants, and donors and fundraisers collaborate to drive and build a community around a social cause or local need, closing the funding gap with a mixture of grants, donations and fundraising activities. What a difference it would make.
*Figures from nfpSynergy Understanding Charities in the UK. Ed Gairdner is chief executive of the Good Exchange