How will long-term consequences of the pandemic and plans for ‘levelling-up’ change the
way regional charities are able to access increasingly competitive funding pots?

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In terms of economic opportunity and political power, nowhere in the UK comes close to London and its hinterland. Of course, the city’s streets are not paved with gold: they run through some of the most economically-deprived areas in the country. But this combination of wealth, deprivation and its sheer size helps the capital to dominate the third sector, in terms of the numbers of charities, other voluntary organisations and funders based there or close by; and the share of sector income that flows through those organisations. This has always been the case – but could the long-term consequences of the pandemic, or of government’s plans for “levelling up” lead to change?

London-based organisations absorb between 40 and 50% of all the sector’s income each year, according to figures from the NCVO. In 2018/2019 this included 43% of funding coming direct from the public, 45 % of government funding for the sector; and 65% of funding allocated by independent voluntary sector funders.

However, a lot of that money goes to national organisations that are headquartered in London but then spread those resources across the country, or overseas. As Anya Martin, research and insight manager at the NCVO puts it: “What we can’t see from the data is where that funding is spent around the UK.” ONS figures and statistics gathered by government departments also only reveal parts of the full picture.

London-centric

Nonetheless, research produced by other organisations in recent years has confirmed that organisations based – and focusing much of their work – in London and south-east England benefit from higher levels of funding than those in other regions of England or in Wales. 2019 research from the Young Foundation highlighted lower amounts of funding in Lancashire, the Midlands and the east coast of England; and much higher levels of funding in a band stretching across the south from London to Bath.

It is also clear that organisations based in or close to London also gain from physical proximity to grant-giving organisations and networks. “They are more likely to have worked with funders in the past; and may find it easier to attend face to face meetings with funders,” says Martin.
Duncan Shrubsole, director of policy, communications and research at the Lloyds Bank Foundation, says it is to the detriment of the sector as a whole if independent funders do not work with the full range of third sector organisations across the country. The Lloyds Bank Foundation aims to avoid this problem by working via a network of regional managers based in locations across England and Wales. “The role of informal networks and knowledge on the ground is invaluable,” says Shrubsole. “You need people embedded in communities around the country.”

Not that this means London itself should be neglected. Richard Sagar, acting head of policy at the Charity Finance Group (CFG), stresses that it is wrong to think of this issue as being about London versus the rest of the country, because many communities in London are also in great need of support from the third sector. “The question should not be ‘How do we reduce funding to London?’ but ‘How do we increase funding to the rest of the UK?’” he says.

Government cuts

Sagar also highlights the impact of government cuts to local authorities’ budgets since 2010, affecting a key source of third sector income. “There’s been a reduction in the amount of money available for grant giving, so for commissioners at local authorities it can be a race to the bottom in terms of cost, and they’re not looking at wider questions of social value,” he says.

Within that long-term context, the pandemic has reset the strategies of charities and funders alike. When lockdown disrupted income sources for the sector, many funders provided emergency funding, increased availability of unrestricted funds, extended contracts and/or made monitoring and evaluation requirements much more light touch. Some altered communications and grant application processes to encourage other organisations to apply for grants. New funding sources have been developed, inspired in some cases by the Black Lives Matter movement and related campaigning. All these positive changes have benefitted a wide range of organisations within the sector, across the country.

But the picture is not completely positive. “Lots of independent funders gave extra cash to those people they already knew,” says Shrubsole. “Those who didn’t have good connections struggled.”

Regional inequality

Grant-giving data collected by 360Giving suggests a persistence of regional inequality. As of mid-November it records 10,174 ‘Covid19 grants’ (those with terms like covid, coronavirus, pandemic or similar in grant descriptions/ titles etc.) having gone to organisations in London, with the region in England that received the second highest total, the North-West, receiving 5,887. The region with the next highest volume of grants was southeast England (5,654); that receiving the least was the East Midlands (2,972).

But Jay Kennedy, director of policy and research at the Directory of Social Change (DSC), sees grounds for optimism. Some smaller charities may benefit from funders having realised during the pandemic that some elements of their funding application processes may be unnecessary. “It’s debateable how long or short-lived these things will be, but maybe they don’t need so much bureaucracy?” he says.

Mass adoption of new technologies across the sector may also help some organisations based in the regions to reach new service users or beneficiaries. More use of remote and flexible working could also enable charities to recruit staff from across a larger geographical area. “I think remote working will become more common,” says Sagar. “Some organisations have decided to forgo a head office entirely.”

Government policies could have a significant effect on regional inequality in the sector. The long-awaited white paper on levelling up, due within the next few months, should outline how this nebulous concept could be translated into practical benefits for charities and the communities they serve, in part by making up for the loss of local government funding sources since 2010.

“We would definitely see levelling up as a good thing, because it allows investment in places that haven’t had it yet,” says Chris Walker, policy and public affairs manager at the NCVO. “But alongside that you need adequate local government funding.”

He is also concerned that too much levelling up money will only be made available via bidding processes. “If every pot of money is about bidding then you might have some areas that end up even more left behind, because, for one reason or another, they don’t submit winning bids,” he warns. “Without some decent baseline funding there will be areas that lose out.”

Devolution

Regional devolution in England may also have a positive impact, although there is not much indication this is happening, says Shrubsole, in part because the devolved authorities may have a limited capacity to make a difference.

“It depends on the people in power,” he says. “Andy Burnham in Manchester has made a priority of tackling homelessness, for example. But most of the money that the voluntary sector uses is at local government level, or sits with central government. A good mayor can champion the voluntary sector, but it’s not making much tangible difference.”

New Philanthropy Capital (NPC) head of policy and external affairs Leah Davis thinks policymakers and the sector need to work together to take the initiative and force some progress. “There’s a real opportunity for devolved and other local authorities to get more involved in how charities are powering communities,” she says. She also thinks it is essential for both government and third sector bodies to gather and share more data about where money coming into the sector is actually spent: “That would help to ensure that funders know where best to target their funding.”

With central, regional and local government organisations working alongside charities and funders, it should be possible to address regional inequality, says Shrubsole. “There are some positive things happening in part because covid-19 has highlighted inequalities of all kinds,” he suggests. “We’ve all become more aware of geographical disparities. So there’s a renewed spur for action, but we all need to be working at it, asking ‘Where’s the need; and how do we meet it?” ■

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