Foundations plan to maintain or increase grant funding despite pandemic impact

A survey by the Association of Charitable Foundations found 40 per cent of funders believed their impact would be negatively affected by the Covid crisis

New research has found that almost nine out of 10 foundations plan to maintain or increase funding to charities this year despite many reporting that the pandemic had a negative impact on their finances.

A survey by the Association of Charitable Foundations asked its members what their forecast was for 2021, in comparison to the impact Covid-19 had on their work in the year previous. 

The ACF collected responses from 80 charitable foundations across the UK, it said, with balanced representation from small, medium and large grant-making charities.

Researchers found that foundations have not been immune from the impact of the pandemic, and many referenced strains on their own staff and systems. 

Two fifths of foundations estimated their finances will be negatively impacted by the pandemic, which could result in constricted grants budgets, redundancies, and operational challenges - although half predict no change, according to the report.

Despite this, 45 per cent plan to maintain their 2020 level of grant spending in 2021 and 41 per cent plan to increase it, with only 14 per cent intending to allocate less. 

Researchers revealed that three quarters of small funders were most likely to predict no impact from the pandemic on either their finances or their grants budgets. 

In comparison, the largest foundations that allocate more than £5m per year expect to be the most affected, with half forecasting a negative impact on their finances. 

A quarter of these anticipate that their grant budgets could decrease, but a third predict an increase.

In addition, respondents identified the culture, health, education, employment and training, and housing sectors as the most in need of funding.

While several foundations reported plans or actions to create specific funding programmes

or ring fenced funding for black, Asian and minority ethnic-led organisations and communities.

ACF’s findings follow two reports published over the last week that called for more funding for such organisations.

In her foreword to the research, Carol Mack, chief executive of the ACF, highlighted how foundations, and the charities and community groups they work with, are emerging into a different environment after the economic and social scarring of the last year. 

Mack warned that even after national lockdown restrictions are lifted, there is considerable uncertainty about whether the public will be willing and able to increase their charitable giving given the threat of increasing unemployment and decrease in household incomes. 

She added: “At the same time government support, whether from emergency funding directly for some charities or more universal help like furlough, is coming to an end.

“All this means that foundations have become more important players in the funding mix for charities.” 

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