UK charities spend £900m a year applying for grants, research has found.
The burden is especially heavy for small and medium-sized charities, which can end up dedicating more than one-third of their resources to preparing fundraising bids, according to the think tank Pro Bono Economics.
The findings are included in PBE’s paper, Giving Pains, which urges funders to scale up work on making application processes simpler and more streamlined.
The report says: “There are longstanding concerns that the ways in which many foundations choose to distribute their grants use a disproportionate level of resource from across the sector.
“The system should ideally be designed to contribute to achieving impact, effectiveness and value for money. However, there is no evidence that this is the case.
“In particular, the costs arising from charities making applications for funding for which they are ineligible, and from the laborious nature of some application processes, can be fairly viewed as ‘wasted’ resources, which could be better spent on charitable activities.”
The analysis also found that the cost “does not fall equally” across the charity sector.
Small and medium-sized charities, defined as those with annual incomes of less than £1m, both spend more than one-third of their total resources on fundraising applications, while the figure is just 16 per cent for the largest charities.
“This cost is particularly worrying because of the high number of ineligible applications made by charities – applications which have little chance of success – and the extent to which many funders are oversubscribed, meaning that the majority of funding applications are unsuccessful," the report says.
It says charities applying to more than one funder “usually have to enter similar information many times, often in different formats and with small changes required to answer slightly different questions or criteria”.
One person interviewed for the research said they had to complete a 60-page form in order to apply for a grant worth just £500.
The paper describes the resources taken up applying for funds and meeting monitoring conditions imposed by funders as the “cost of capital” for the charity sector.
It calls for funders to work together more closely on designing application processes and sharing more information about whether funding streams were suitable for potential applicants.
Helen Barnard, research and policy director at Pro Bono Economics and the author of the paper, said the “crucial pipeline of charitable funding embeds inefficiencies which are requiring many charities, especially smaller organisations, to spend significant sums of money on the application process”.
She said: “There are various examples of innovative funders already taking action to streamline their processes and cut down on inefficiencies, but this needs to be done at scale across the sector in order to save charities from considerable expense each year.”
The analysis was conducted by the consultancy Giving Evidence, which carried out economic modelling and interviewed more than 30 experts across the charity sector.