Charities are likely to be allowed to include an element of organisational overheads - or core costs - in future applications to the Community Fund.
Overall, however, it will become much harder to obtain a grant if it does not fall within one of the Community Fund's priority areas.
At the moment, the Lottery distributor will only provide funding for new projects and not the central overheads of the organisation running the project - although exceptions are made where the organisation can show which central costs can be directly ascribed to the project.
However, Gerald Oppenheim, director of policy at the Community Fund, hinted strongly last week that a more flexible approach was on the cards as part of the Government's planned reform of Lottery distribution. He was speaking at the voluntary-sector exhibition, Charity Fair.
"We have had a look at that,
said Oppenheim, who was reluctant to give any details prior to a new strategic plan for the Community Fund that will be put before Parliament on 15 April. "There are significant implications for us. We have to account for everything our grants are spent on, and there still has to be a way to do this. We also have to avoid the risk of double funding, where we might end up paying for something that is already covered in a grant from someone else. And we also have to guard against the risk of pushing up the average grant size."
This last point is of particular significance as the Lottery fund distributors expect much less money to be spread around over the next few years. "A smaller amount of money is going to have to work a lot harder to have a real effect,
said Oppenheim. "We will also be placing a much greater emphasis on evaluation of the projects that we support."
This, he added, would mean placing much more emphasis on targeting the money where it could have a long-term effect on people's lives, and on priority groups and geographical areas.
The Community Fund expects to have distributed £287 million by the end of the current financial year, and £275 million next year. By 2004/5, the figure is expected to be down to £213 million.
- Awards for All in England, which makes grants of up to £5,000 from a fund that all five of the main Lottery distributors pays into, is also being simplified. Tessa Jowell, the secretary of state for Culture, Media and Sport, announced the changes at Charity Fair last week.
The biggest change involves the creation of a new "joint pot", instead of individual applications having to be allocated to one of five funding streams, each with separate rules and criteria. It would, said Jowell, lead to fairer and faster decision making.
"Instead of making awards against five different distributor budgets of unequal size, giving different success rates for each distributor, decisions will be made against a single 'joint pot' budget,
"All applications will have an equal chance of being funded under this new scheme."
This change does not affect Scotland, Wales or Northern Ireland.
Tessa Jowell's new plans for the Lottery have addressed many of the voluntary sector's concerns, p10.