Making it count: Overcoming the barriers to better grant-making

Grant-making occupies a special place in the finance landscape for the social sector. Grants are the lifeblood of the sector, enabling charities and community groups to innovate, plan, develop and collaborate, often unlocking other income streams. However, not all grant-making currently achieves its full potential.

There are long discussed weaknesses in the approaches and processes of some grant-makers. Happily, there is also a well-developed set of solutions to these problems, and pioneering grant-makers who have experimented and demonstrated the feasibility and benefits of both incremental improvements and more transformative change.

This study has focused on understanding why such improvements do not seem to be spreading across the wider grant-making community, the barriers that hold back some grant-makers from adopting them and how more widespread changes can be achieved.

Along with greater awareness and appetite for change, the research highlighted the need for more grant-makers to be emboldened to invest in their own capacity for good grant-making. The understandable desire of many grant-makers to maximise their payout rates and minimise staff and other costs needs to be tempered by greater understanding of the problems caused by short-term, restrictive funding accompanied by overly laborious processes.

Grant-seekers value longer term, flexible funding extremely highly. The dominance of short-term, restrictive funding can detract from charities’ impact and effectiveness. The constant ‘hamster wheel’ of complex and often poorly designed grant applications is a drain on the sector’s resources, and lands especially heavily on smaller grant-seekers and those led by ethnic minority people and those from marginalised communities.

Moving towards more efficient and effective approaches would be greatly facilitated by grant-makers increasing their engagement with grant-seekers and the communities they serve, prioritising the needs of those communities and encouraging trustees to relinquish some control and rebalance power towards staff and the organisations they support.

The research uncovered a distinct lack of mechanisms for driving widespread change across the sector. The independence of social sector grant-makers is one of the sector’s strengths, but it can also bring difficulties where independence slips into unaccountability, holding back the pace of change.

In consultation with sector experts, the study has identified three steps which can contribute to spreading good practice more widely, while maintaining the independence and respecting the diversity of grant-makers.

First, the Charity Commission can use its unique reach and authority to raise awareness of good practice and the problems caused by poor practice among powerful trustees.

Second, expanded and scaled benchmarking can raise awareness, stimulate improvement and increase accountability among grant-makers, especially those with greater resources and who are engaged in networks with their peers.

Third, the voices of grant-seekers can be amplified by charity infrastructure bodies, helping to shape and inform Charity Commission advice, benchmarks and directly influencing grant-makers by making visible the damage caused by less effective practices, and the gains to be seized by those who choose to embrace improvements.

Helen Barnard and Max Williams

Pro Bono Economics

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