It is a well known fact that the demand for voluntary sector services in the UK is on the rise; the withdrawal of public sector services, coupled with the growing levels of loneliness and social isolation, has meant there is a greater need for the type of support often provided by charities.
Whether it is help with transport to medical appointments, befriending networks or community cafes, the help given by voluntary groups is now an intrinsic part of community infrastructure.
However, this growth in demand for services has coincided with a dramatic reduction in funding from statutory bodies: our research has shown that funding is now the biggest challenge to charities in Buckinghamshire. In particular, many charities and community groups which we at CIB are in contact with are concerned about their sustainability and in particular how to fund their ‘core costs’.
This problem arises from the fact that some funders and commissioners state they are not willing to fund overheads or core costs. This is despite recommendations such as the Select Committee on Charities statement in 2017: “We recommend that public sector commissioners should have regard for the sustainability of the organisations which they commission to deliver services and that realistic and justifiable core costs should be included in contracts.”
Ultimately, without sufficient funding to cover the costs needed to run an organisation as a whole, many charities will be unable to deliver to their beneficiaries.
So what can the sector do to secure the money needed to fill this funding hole?
One answer is to approach the few grant funders or supporters who specifically fund these costs – they are in the minority but of course they can be taken advantage of where they exist.
Another route may be in improving the way charities and groups ‘demonstrate their impact’. Rather than just clearly showing how they have helped beneficiaries, organisations need to be better at explaining the difference they make whilst also clearly stating what it costs to achieve that. This way commissioners, funders and potential supporters have a real understanding of what funding can achieve.
We also encourage groups to have a comprehensive understanding of their full costs. By using a full cost recovery model (see our online FAQ on Core Costs) organisations can see clearly the true cost of a project, including support staff and overheads, and be able to explain this to potential funders. Even where funders are financing ‘projects’ and covering the direct costs, it is important to check what they will accept in terms of indirect costs and overheads. With some cases, they will accept these ‘additional’ costs provided that there is an agreed rationale behind them so it is vital to have a full understanding of the costs.
Adopting a full cost recovery approach also means the charity/group will be clear on how much of its core costs are covered. If a funder is only willing to finance the direct costs (or a proportion of the indirect costs), the charity could go ahead with the proposed partial funding whilst knowing exactly how much it will need to secure from other sources or reserves.
We would also suggest that voluntary organisations look outside their historic sources of income. Two possible routes are by looking to diversify the sources within a type of funding (e.g. different commissioners, grant funders) and to develop alternative income streams for example, by working with corporates, trading services, or crowdfunding. By building this into a fundraising strategy, it will help charities and groups become more sustainable.
More advice and ideas on funding can be found on Community Impact Bucks’ website including:
- Resources and information on our website on sources of income, help getting funding and demonstrating impact
- Access to the Bucks Funding Search to identify potential funders, set up alerts to your inbox when new funds are released or open
- Advice sessions on funding and governance to discuss approaches to funding tailored to your organisation
- Workshops and training, including Getting Fit for Funding
- 1-1 Sessions like the National Lottery Community Fund which helps you improve your funding applications as well as further training on different aspects of fundraising
- Signposting to other support which will help them be more sustainable
If you would like to discuss a specific funding issue or would like general advice, please contact me on firstname.lastname@example.org or tel 01844 348828.Back