Small Charity Funding During the Coronavirus Recession

The economic consequences of the coronavirus pandemic are now becoming more and more apparent. We were asked the following question about how a small charity, in particular, can attract funds in the current environment:

With recession looming and belts tightening, focus from funders seems to have already switched to the big charities and well-known projects. What can small charities, who had planned expansion and new projects for this year and next, get a piece of the reduced funding pie?

Funding Trends

Before considering the pandemic and related economic concerns, it’s worth us considering the broader trends in funding. Before any of us had ever heard the word ‘covid’ there was some evidence that smaller charities were finding it increasingly difficult to access funding.

An NCVO blog posted in January 2019 (though some of the data was from a few years prior to this) suggested that small charities had seen income fall by 20% in the past decade, whilst large to super-major charities had seen their income increase by 30%. Small charities had also seen government funding reduce from 2.7% of total income to 2.1% in the same period.

Research from the FSI also showed that small charities were already facing an uncertain time financially, and in 2017/18 30% of small charities reported it likely that they would have to close in the next 12 months. One reason given for this was a flatlining in government funding, making small charities more vulnerable to changes in the external environment.

Exacerbated by the Pandemic

It’s incredible to think back over the past few months and consider how much has happened. The pandemic has been such a fast-moving situation and we’ve had to adapt so quickly. Generally accessing grant funding would take a good few months from start to finish. Given the exceptional need during the pandemic, many funders were condensing this process into a much shorter timescale.

To get funds out quickly, some funders offered additional funds to charities they already supported – perhaps leading to funds being more accessible to larger charities. Meanwhile, others tried to shorten their assessment and due diligence processes, which perhaps led to familiar, larger charities being deemed ‘safer’ options.

It’s quite difficult to draw any firm conclusions, as there hasn’t yet been any detailed research that we can find, and there are such discrepancies between different types of charities. However, the vast majority of charities have lost out because of covid, so even if small charities haven’t been disproportionately affected, the pandemic has certainly exacerbated the challenges small charities were already facing.

The Answer for a Small Charity

This really isn’t the answer I would like to be giving, but having spoken to a few charities before writing this answer the overriding objective for all of them was to still exist in 18 months time. A really risk-averse approach is being taken to finances; unless income is guaranteed to come in, then it isn’t being banked on. Some charities have even been told that grants that had been provisionally accepted by the government are now under review, as some funding pots are linked to the economy, for example, the foreign aid budget is 0.7% of Gross National Income.

To get a piece of the reduced funding pie, a few top tips were shared:

    1. Approach existing grant funders and explain your situation – unless it’s been paid in the past few days, the world has fundamentally changed since you received your grant. The grant is only going to achieve its purpose if your organisation is around to achieve it, so explain this to funders and ask if they can assist, particularly with unrestricted funds.
    2. Be transparent to supporters about your situation – make sure that supporters are aware that the charity is in a delicate financial position and what benefits would be lost if your charity could no longer function.
    3. Invest in fundraising – it may seem counterintuitive when there is more need than ever, but in this blog Giles Pegram explains that the short term pain of scaling back projects to fundraise will protect projects in the longer term.
    4. Don’t be afraid to ask for help – some charities are holding back from asking supporters to help, as they know that so many people are facing financial insecurity. However, a recent survey of donors found that no donor felt like they had been asked for support too much since the beginning of the pandemic.
    5. Focus your case for support on the medium term – it’s difficult to think about the long term at the moment, with so much uncertainty. This is no different for funders, long term ambitions may seem fanciful and impossible to predict, so focus your case for support on the next 18 months.

     

These are exceptionally challenging times for small charities, but hopefully the advice shared in this answer has helped in some small way. Most small charities are in the same boat, so one final piece of advice would be to keep talking to each other and share what is working well for you to help other charities out!

 

You can access more resources to help your charity through this challenging period in our Recovery Hub.

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