Research is suggesting that most grants offered to good causes are still short term, contrary to advice to funders to ensure long term funding is available to secure the future of charities.

Concerns have been raised in recent years that funders, including government and foundations, are not offering long term grants charities need to survive post Covid pandemic and amid the cost-of-living crisis.

But analysis by the charity 360Giving of latest available figures for 2021/22 from charity regulators UK wide has found that the duration of grants is mostly short term.

Of those that shared data on the length of grants, only 13% of funding stretched for three years or more. This represents just 4.7% of grants overall.

360Giving adds that a factor could be that some Covid-19 emergency grants were still being made in 2021.

The figures have emerged amid widespread concern that short term funding is a barrier for charities in their planning, hiring of staff and to secure their long-term future.

Calls for long term funding

A report by think thank New Philanthropy Capital, published in May this year, found that inequalities in communities were being “stymied” by systemic issues including “short term funding cycles”.

Meanwhile, in December last year report by think tank Pro Bono Economics’ Law Family Commission on Civil Society called for an overhaul of the UK grant making system to ensure it is focused on long term support.

Grant making is “beset by short-termism, sub-optimal processes and the reproduction of wider social inequalities”, it found.

Short termism is also blighting government contracting, according to a report by Social Investment Business in July last year. This found that most available contracts are low-value and short term.

Charitable grant making outstrips government grants

The research by 360Giving has also found that funding by charitable grant makers for 2021/22 amounts to £7bn and accounting for more than a third (35%) of total grants for charities. This outstrips government funders, who handed out grants worth £6.4bn, accounting for 32% of the market.

However, researchers point out that when giving by funder Wellcome Trust is excluded the figure for charitable grant makers drops to £6.2bn.

Most (61%) of grant makers are small, offering under £100,000 a year in total and there are only 28 organisations giving more than £100m a year. Of these grant makers only five are charitable grant makers, including the Wellcome Trust, with the majority of large-scale finders made up of government, lottery bodies, and operational charities giving to partners and donor advised funds.

Among recipients, just under three quarters (74%) have a turnover below £1m.

Charities supporting children and young people received 63% of grants. Other good causes to be popular among funders are charities supporting older people and those with disabilities.

Meanwhile, only 14% of funding is handed to charities supporting people of a particular ethnic or racial background.

Most grants overall are small, with over half made for £10,000 or less. Just 1.4% of grants are for more than £1m, representing 5,700 large grants that are mostly awarded by government funders.

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