Many arts charities are hampered in their ability to plan for the long term by short-term statutory funding, according to a new review of the Paul Hamlyn Foundation’s grant-making.
The review, which was published today, analyses lessons learned from 450 grants awarded through six funds over the past three years.
It says that the fact that statutory grants often remain at the same level as in previous years is also causing challenges for the sector because they are not rising with demand for services or inflation.
Arts charities are hindered by government budget reductions, which have increased inequality of opportunity for beneficiaries across the UK, the review says.
For youth organisations, a lack of attention to policy across government and an overwhelming focus on volunteering and social action ahead of statutory services are the big challenges, according to the review.
The review says that, without core funding, youth organisations are "vulnerable and reactive", and many are pursuing social enterprise models as a reaction to the pressure to diversify and generate sustainable income.
The review also sets out some of the requirements of grant-makers, such as the need for longer-term investment and contributions to cover core costs.
Earlier this year, the foundation announced that it was launching the Backbone Fund, which provided grants of £1.5m to seven organisations to help cover their core costs.
The grant-maker says in its latest review that it also wants to help fill evidence gaps, improve evaluation practices and enable access to evidence to help charities make clear the good that they do to the government and the general public.
Some grantees also require more non-financial support than others, the review says.
Jane Steele, director of evidence and learning at the Paul Hamlyn Foundation, said: "Our commitment to openness and transparency means that we aim to share what we are learning, in the belief that this knowledge can be valuable to those we fund and others.
"We also know this is valuable insight for those working with us, applying to us and investing in similar areas of social justice. So we hope that this review of our grant-making helps others, in particular those we support and partner with."