Written by Collective member Suzie Rees
Is your organisation ready to start fundraising from trusts and foundations?
It’s great to hear you are interested in starting to fundraise from trusts and foundations.
Read on for some key pieces of information you need to understand before you get started.
There are also some essential building blocks you need to have in place in order to be successful with this fundraising stream - use our checklist to find out if your organisation is ready.
What is a trust or foundation?
A trust or foundation (also known as a grant funder) is an organisation set up specifically to award grants. Often, they are set up by a wealthy family, individual (either during their lifetime or left in their will) or sometimes a company. Sometimes a large chunk of money has been invested and the interest is given away each year as grants. Some have new income added regularly (e.g. donations from a company) which is then given away, others have one initial donation and plan to keep spending the money in the trust until it’s all gone. Decisions on who to fund are generally made by a board of trustees, although sometimes these decisions are delegated to a grants officer or lead trustee who then makes a recommendation to the rest of the board.
Restricted v unrestricted
Unlike community or events fundraising, individual donations or even corporate fundraising, grants from trusts and foundations are usually restricted for a specific project, activity, service or ‘thing’. You can’t just spend the grant on whatever you want! Occasionally unrestricted grants are available, but this is pretty rare especially when first starting out (sometimes funders will give unrestricted grants once they know and trust your organisation). You will need to evidence you have spent the funds in the way you said you would, and provide a report once the grants have been spent. How detailed the reporting needs to be will depend on the funder and how big the project is.
It is important to know that trusts work very slowly and are not a quick win. So, it’s essential to build this into your planning. Once you start developing a trust fundraising programme, your trust fundraiser will need to spend a chunk of time doing prospect research to find what grants you can apply for. Once you know where you want to apply, depending on the potential size of grant and complexity of the application process, applications will take time to develop, especially when you’re first getting started. After an application is submitted it’s not unusual to have to wait 6 months or even longer to hear whether you’ve been successful or not. Some have several stages, and some trusts will require relationship building first.
It’s worth knowing that trust fundraising is competitive, and has become increasingly so over the last few years, especially since the pandemic. Many charities turned to trust fundraising when other income streams dried up during lockdown (e.g. community or events fundraising), and trusts report they are receiving more and more applications. Trusts usually have only a set amount to give away each time the board meets, and with more and more applications, the very best application, project or fundraiser is not guaranteed to receive a grant.
This means that you have to expect some, if not most, of your applications to be rejected, especially at the beginning when you have no track record with trusts and no ‘warm’ previous funders to turn to. Pre-Covid, success rates for ‘cold’ applications were 1 in 12 (LarkOwl benchmarking, 2019); now some trusts are only funding 1 in 20 of the applications they receive (Steel Charitable Trust, 2023). This high rate of rejection is not a reflection on your charity or your trust fundraiser’s skill, but simply a fact to be built into your planning to ensure you submit enough applications to raise the amount you need to.
In this competitive climate, it’s essential you have the key building blocks in place to give your organisation the greatest chance of success with trust fundraising.
Complete the checklist below to see if your organisation is ready to get started…
1. Do you have evidence of the need for your activities?
This could be external reports or statistics, or it could be your own consultation with the communities you are working in.
2. Can you clearly outline what the problem is that your organisation is trying to solve, what activities you are doing to address that problem, and what impact you are trying to achieve through each of these activities?
In other words, does your organisation have a theory of change, and do you know what the outputs and outcomes of your work are?
3. Do you know what each of your activities cost to run, including staff costs and an allocation of your overheads?
4. Do you have some quantitative and qualitative evidence of your organisation's impact? Ideally qualitative data should not just be the numbers you’ve reached, but the difference you’ve made to them.
This could be information you’ve gathered through your own monitoring processes or an external impact report. Do you also have some impact stories/case studies of people you’ve helped?
5. Can you clearly describe how you measure your impact on an ongoing basis?
What is your monitoring and evaluation process (for example, do you ask people to complete questionnaires before and after they have accessed your services to show improvements)?
6. Have you got strong financial management in place to show you are a safe pair of hands to manage a restricted grant and to meet the reporting obligations specified by the funder?
7. Have you met all charity filing deadlines and other regulatory requirements over the last few years?
If you answered no to some of these questions, you should work on getting these things in place to get the most value out of investing investing in trusts fundraising.
If you answered yes to all, you’re good to go! If you'd like a helping hand with your grant applications, Fair Collective can match you with one of our wonderful fundraisers like Suzie.